Nine Suggestions to Ease Your Way

In two prior issues, Charlie McElwee explored China’s growing environmental sophistication and regulatory oversight. In this issue he offers some guidelines for successfully adjusting to China’s new regulatory regime. If you would like a copy of Charlie’s earlier pieces, click on the links below:

  • “China’s Environmental Laws and Regulations ? Part II of Our Primer on China’s Environmental Laws” (September 2006)
  • “China Environmental Law and the Chemical Industry: A Sleeping Dragon Awakens – Part I of Our Primer on China’s Environmental Laws” (June 2006)

Previously, we explored why you should take environmental compliance in China seriously. This article looks at how you should undertake your environmental compliance activities. While by no means comprehensive, these nine suggestions might ease your entry into China or aid your existing operations.

1. Use the EIA Process as a Blueprint and Calling Card: The Environmental Impact Assessment (EIA) process, to which every company must submit, provides a valuable framework for your environmental goals and can form the basis for your future relationship with the regulators.

In fact, even if your plan sets out some newer, less tested approach, China may be more tolerant than other jurisdictions of experimentation. If a new technology appears to hold great promise for pollution prevention or treatment but has no operational track record, it will probably be permitted as long as its risks are clearly set forth.

The EIA rules require some public participation in the development and approval process. However, scheduling additional public information sessions advertises your desire to be a conscientious neighbor.

If you are undertaking a project in China with a local joint venture partner, you should assume the responsibility for the EIA, as the local partner may not have all environmental impact adequately assessed or may delay matters by obtaining approvals in ways that Western entities would find unpalatable.

2. Hire a Local Environmental Manager: Employ a China environmental manager who reports directly to your global headquarters’ environmental or environmental health and safety department, responsible for all China operations.

Finding a qualified employee for this and other environmental functions will be one of your hardest challenges. Start searching for the right candidates early and hire those who meet your needs, even if the facility is months away from completion. They can begin absorbing your corporate environmental values and culture by working in one of your other facilities first.

3. Articulate Corporate Environmental Values: Best practices include the implementation of an “environmental values deployment program,” especially when you are attempting to inculcate these values into a management team that may be the product of a culture with little or no experience with corporate environmental responsibility.

If your company subscribes to the Responsible Care program, this should be somewhat easier; the China Petroleum and Chemical Industry Association recently signed on to the program and has committed to rolling it out to the domestic Chinese chemical industry. Training programs must be developed to ensure action and must take place across all levels; if yours is a US- or European-based corporation, the program should include applicable provisions of any antibribery laws or treaties your country has enacted or ratified.

4. Set Up a Reporting System: Implement a mechanism to ensure that plant-level environmental personnel fulfill their environmental responsibilities and report the results to the China environmental manager. Define a number of performance outputs derived from the responsibilities of each individual in the chain. A number of contractors provide Chinatailored environmental reporting software.

5. Perform Regular Audits: Do systematic checks regularly, performed either by independent internal teams or outside auditors, to establish whether all activities are being carried out in accordance with the environmental management system, covering both local and corporate-wide standards.

6. Review Supplier and Contractor Performance: Environmental performance guidelines should be integrated into purchasing and contracting policies, and reviews of the environmental performance of suppliers and contractors should be conducted before and after their selection.

The right to conduct periodic audits of their environmental compliance should be part of the contracts with these entities. These contractual provisions promote environmental stewardship and reduce the risk that your suppliers will be shut down (and your supplies and services interrupted) by regulators.

7. Get Employees Involved: Encourage all employees to become involved in environmental management, compliance and innovation.

8. Keep the Neighbors Happy: Many of China’s environmental laws contain provisions that permit private lawsuits (similar to nuisance actions) by neighbors who contend they have been injured or the enjoyment of their property damaged by emissions from nearby factories, so work with neighborhood groups to address concerns before they escalate.

9. Look for Other Benefits: If you have cogeneration facilities, any excess power generated by these units can be sold to the electrical grid in China at competitive prices. Clean Development Mechanism projects, providing Certified Emission Reduction credits under the Kyoto Protocols, can also be undertaken in China with the cooperation of a Chinese partner.