China’s green washout - China Dialogue
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China’s green washout

The launch of environmental disclosure rules was hailed as a turning point for eco-protection in China's business world. But two years on, they have all but been forgotten, says Huo Weiya.

When chinadialogue organised a talk last May to mark the first year since publication of China’s environmental transparency regulations, “Measures for the Disclosure of Environmental Information” (or “Measures” for short) Ma Jun, director of the Institute of Public and Environmental Affairs (IPE), said the biggest problem had been “the almost total lack of action from business”.

China’s firms may be unwilling to reveal environmental data, but when it comes to green marketing, there is no shortage of enthusiasm. In public, top executives never doubt the importance of environmental protection, nor do they deny their social responsibilities.

The Annual Summit of China Green Companies is a discussion forum established by such “environmentally aware” firms. Since the first meeting in 2008, the member companies have ceaselessly flagged up their concern for the environment with their choice of conference topics, ranging from “green competitiveness” to “green transformation” to this year’s “green evolution”.

April’s summit saw the publication of the China Green Companies Top 100 – one of the products of three years of this “evolution”. The list, compiled by the organisers of the meetings, the China Entrepreneur Club, indicates which enterprises have the most foresight, best meet their responsibilities and take most action on the environment, according to the organisation’s chief consultant, Yang Peng.

When he launched the list, however, Yang also revealed that the compilers, who examined almost 1,500 enterprises during their research, had found that Chinese firms were not in the habit of revealing data. A severe shortage of corporate environmental information had been the biggest obstacle, he said.

But China’s businessmen are never stingy when expressing their enthusiasm for environmental protection.

The attendees at this year’s meeting made constant reference to their personal efforts to protect the environment. Yu Minhong, head of the English education firm New Oriental, said that he had stopped flushing on night-time visits to the toilet, preferring to save water by flushing just once in the morning. And Guo Guangchang, chairman of investment firm Shanghai Fuxing enthusiastically promoted the practice of taijichuan, claiming it to be the most environmentally friendly of sports because people only need a small space to practise it. Some put forward more extreme positions. Alibaba Group chairman Jack Ma said before the meeting that e-commerce aimed to eradicate paper; while Zhang Yue of air-conditioning manufacturer Broad once said that his goal was to eliminate air-conditioning.

In 2004, the ALXA SEE Ecological Association was established by 100 businessmen to work on issues ranging from sandstorm prevention to setting up ecological awards. They now also fund other Chinese NGOs. Some have started investing in private environmental funds. One of the founders of ALXA SEE, property developer Feng Lun, set up the Vantone Foundation, which is modelled on philanthropic funds in the United States and operates independently of its parent firm.

Such open expressions of environmental concern and participation in environmental events have improved the public image of these businessmen. But this does not mean the companies themselves are environmentally friendly. There is plenty of evidence that the greening of Chinese firms has gone no further than the mouths of their figureheads.

In 2009, a report on China by United Kingdom-based charity the Carbon Disclosure Project (CDP) concluded that the gathering and management of data on carbon emissions would be one of the main obstacles for Chinese companies taking a low-carbon route.

Each year, CDP requests the disclosure of carbon data from several thousand companies. In 2008, Chinese consultancy Syntao started working with CDP, asking for data from 100 of China’s largest firms by market value. In 2009, only 11 firms filled in the questionnaire, with 18 listed companies providing related information. In 2008 those figures were five and 20 respectively. Although the situation is improving, the ratio is still very low. In October last year, Greenpeace China carried out a survey of the world’s largest 500 firms and the biggest 100 listed companies in China, finding that none of the 25 factories owned by those 18 listed firms had released pollution data within the time limits set in the “Measures”.

Work by the IPE offers further dismal statistics. Since 2006, the IPE has published and updated maps of air and water pollution in China, having collected a range of official environmental data from 2004 onwards. By March this year, the two databases contained over 58,000 cases of firms being placed under supervision or sanctioned for environmental violations. And, in a report published in March on the role of Hong Kong in overcoming these failures, the IPE found that 175 firms listed on the Hong Kong stock exchange had committed over 750 known breaches of environmental rules on the mainland.

Chinese firms are greening only their image – their actual businesses remain unchanged. The reason is clear: going genuinely green costs, while a change of image is much cheaper. As economist Zhang Weiying said at the annual meeting, “If there’s no green business model, it’s all just slogans.”

One way to change this would be to ensure that firms can make money at the same time as being green. China’s government and many academics view green development as the key to maintaining both economic growth and sustainability, and so the state is currently offering various methods of support. This is the carrot.

At a sub-forum on green financing at the April summit, a number of investors expressed confidence that there was money to be made by backing environmentally friendly projects. But if the government does not change its approach and spur green development, that carrot will not be of any use.

In his article, “A paper victory”, chinadialogue’s Beijing-branch deputy editor Liu Jianqiang explains that certain government departments are sending out false signals that the environment is improving, thus providing cover for the polluters. This is bound to slow down the greening of China’s businesses.

Many environmentalists have placed their hopes for improvement in the “Measures”, as they benefit public participation and, therefore, oversight of corporate pollution. In an interview in April, Ma Jun said “The ‘Measures’ lay the foundation for the regulations and policy for openness of basic environmental information.” But there has been little action to report, and no firms have released information in line with their requirements.

There has also been a marked lack of interest from the Chinese media in noting the second anniversary of the publication of the regulations. The Institute of Environmental and Public Affairs published the Hong Kong report already mentioned, but the government ignored the event. It seems the document has been forgotten.

If there is no carrot to tempt businesses into becoming green, the “Measures” will fail to work. The public will be unable to put pressure on the corporate sector, and nothing more than greenwashing will have taken place.

Huo Weiya is associate editor in chinadialogue’s Beijing office.

Homepage image from daonong.com shows a poster for the 2009 Annual Summit of China Green Companies