My friends Caroline, Max and River have produced a remarkable documentary film about sustainable development in China. During the summer of 2007 they traveled to nine cities along China’s rapidly developing eastern seaboard from Harbin in the north to Shenzhen in the south. Their goal was “to investigate common misconceptions about the potential for mass-scale sustainable construction.”
This map shows the 9 cities visited. From north to south; Harbin, Beijing, Tianjin, Qingdao, Lianyungang, Suzhou, Cixi, Shanghai, Shenzhen
They have produced a film which “portrays the sheer scale of China’s construction industry while engaging the viewer in the reality of how this industry works. It also provides an in-depth discussion of the barriers and opportunities for China to ‘go green’. High level developers present their experiences alongside government officials, product manufacturers, architects and lawyers.” Don’t let the mention of that last profession discourage you from buying this film. The Green Dragon filmmakers have miraculously found a lawyer who is not only knowledgeable, articulate, and benevolent, but extremely photogenic as well. An in-depth online multi-media report accompanies the film and can be accessed here. A DVD of the film is only $15, or you can download it for a measly $8 here.
For those of you in or around Washington, DC there will be a screening of the film on March 19:
The Green Dragon – Environmental Film Festival Screening
Wednesday, March 19 2008, 12:00 p.m. – 2:00 p.m.
Jennifer L. Turner, Woodrow Wilson Center; Caroline Harrison, Filmmaker
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In touting the new environmental reporting obligations for listed companies (see last post), Pan Yue noted that “of all listed companies on the mainland, only half included environment performance in their 2006 annual reports. Even for those which did touch on the issue, the quality of reporting was generally poor and cannot help shareholders.” I did a search of Chinese company environmental disclosures for a recent speech, and would certainly echo Mr. Pan’s comments.
Many MNCs now have an “environmental stewardship” page with a picture of a man in a swamp taking a water sample while an alligator looks on appreciatively and the smokeless stacks of the factory peek up in the distance behind the Cypress trees and a link to a 900 page “sustainability” report. In China what I soon discovered was that even when a corporation included an “environmental” section on its website it was often referring to its landscaping or even the interior elegance of its headquarters’ building. Here’s a typical picture:
I remember this was from a chemical company’s site, but I forget what type of chemicals. I have to assume they were in the fertilizer business because that lawn is sweet and something has really perked up the potted plants by the entrance. As a West Virginian parking cars in the front yard doesn’t strike me as unusual, but with just one there is does give the impression that headquarters may be a bit understaffed.
Among the better Chinese reporters was Baosteel Group which has published a thick sustainability report, the 2005 version of which received a A for “intent” and a C for overall execution from the Roberts Environmental Center, Claremont McKenna College Unfortunately, it may be resting on its laurels. I just checked the Baosteel website and found its “Green Baosteel” page was a little heavy on the landscape shots which perhaps explains the D- the current page receives from the Roberts Environmental Center.
There were a series of articles last week regarding 10 IPO applications that were “rejected because their performance had failed to meet government standards or because their reporting was inadequate.”. The rejections were based on regulations issued by SEPA and the China Securities Regulatory Commission (CSRC) going back to 2003, but this news was coupled with the fact that SEPA has issued a new “Guiding Opinion on Strengthening the Supervision and Management of Environment Protection of Listed Company” (Chinese version here) which imposes environmental reporting obligations upon companies that are already listed.
As Pan Yue, deputy director of SEPA, noted “now that the practice of environmental disclosure in the IPO process has become more or less established [based on compliance with the regulations issued in 2003 and thereafter], it is time to tighten disclosure rules for companies that listed before environmental impact became a required reporting item.” Thus, among other things when one of the following events happens that can affect the trading price of a company’s listed shares the company must disclose them:
● Any newly promulgated environmental law, regulation, rules or industrial policy that may significantly affects the company;
● The company is investigated, criminally punishment, or a major administrative punishment is imposed by the environmental administration due to any violation of environmental laws or regulations;
● A major investment such as new building, renovation or expansion project will have significant environmental impact;
● A company operation has been ordered to correct an environmental violation within a specified period of time or be shut down;
● The company is involved in an major lawsuit involving environmental issues and its main assets have been frozen, mortgaged or pledged;
● Any other major events set forth by Measures for the Disclosure of Environmental Information that may considerably affect the trading price of a listed company’s shares.
These moves are in line with other recent efforts (including the Measures for the Disclosure of Environmental Information which are cited in the last bullet point and become effective on May 1, 2008). Remember though that rules applicable to listed companies only catch the low hanging fruit. Companies large enough and sophisticated enough to list on a domestic exchange should be in the vanguard of environmental compliance efforts. It’s a little distressing that 27% of the IPO applications reviewed failed to meet the environmental compliance standards. Imagine what the compliance percentages must be in the hundreds of thousands of companies too small and too parochial to consider listing.