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China’s Environmental Protection Law 2014 Amendment

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Page 1 ©EcoVadis2015 White Paper China's EnvironmentalProtectionLaw2014 Amen dment:ImpactsandImplications Overview TheenvironmentaldegradationcausedbyChina'sunprecedentedeconomicdevelopmentduringthe last30yearsisimmediatelyevidenttovisitorsofBeijingbythethicksmog.O nnumerousdaysover thelastseveralyears,smoglevelshaveexceededlevelsthattheWorldHealthOrganizationdeems safe,whichistheresultofChina'srelianceonburningcoalfor70percentofitsenergyneeds(Xu 2014,3).Estimatessuggestthat40 percentofriversarealsoheavilypolluted(Yang2012,1).China's environmentaldegradationhas,accordingtonumerousfigures,costthecountryanestimated9 percentofitsGDP(Xu2014,1). Thishasincreasinglybecomeasocialissueinrecentyears, asenvironmentalprotestshaveincreased byaround30percenteachyear(Liu2013,1),indica tinggrowingpublicskepticismo nthe government'swillingnessandabilitytoholdcompaniesaccountableforenvironmentalviolations.To addresstheenvironmenta ldegradation,theChineseparliament,in2014,amendedits1989 EnvironmentalProtectionLaw (EPL) tostrengthengovernmentandenterprisetransparencyby imposingharsherfinancialandcriminalpenaltiesonpollutingcompanies.ThenewEPLexposes companiesan dtheirtradingpartnerstosignificantlevelsofriskifoperationsarenotmanaged appropriately.TheeffectivenessofthenewenforcementmechanismsprovidedunderthenewLaw willdependgreatlyonthecommitmentandcapacityoflocalgovernments.Each oftheseelements, whichcreateanuncertainregulatoryenvironmentforcompanies,isdiscussedindetailpaper. Part1:EnhancedEnforcementMechanisms Topromoteenvironmentaltransparency,China'sextensiveenvironmentalregulatorysystem requiresen terprisestodiscloseenvironmentalmanagementinformation,includingenvironmental impactassessments(EIAs)anddatafromon goingpollutionmonitoring.Theinformationanddata disclosedbyenterprisesisthenrequiredtobereleasedtothegeneralpubl icbyc ounty governments, providingcitizenswithaccesstothenecessaryinformationtoholdpolluting companiesaccountable.Compliancewiththeenvironmentalregulations,bybothcompaniesand localgovernments,hasbeenweakfornumerousreas ons,includingcorruptionandalackof enforcementmechanismsnecessarytoholdcompaniesandlocalgovernmentsaccountablefor

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