Be Serious of Environmental Protection

The “Environmental Protection Law” was implemented in the early 2015. Since Jan. 2016, the Central Government has dispatched four batches of environmental inspector groups to inspect the environmental work in different provinces and cities. Because both Central Discipline Inspection Commission and Central Organization Department have sent representatives to be involved in these groups, more than 10 thousand people were punished. Following with the inspections, the government is also working on the legislation of a serials laws and regulations related to environmental protection, for example, the “Water Pollution Prevention and Control Law”(Amendment) and the “Environmental Protection Tax Law” have been adopted and will be implemented from 1st Jan. 2018; the draft of the “Soil Pollution Prevention Act” has been released for public comments in the middle of 2017, which might be adopted in the near future, and etc..
Many enterprises take the environmental protection (“EP”) as a burden, which would increase expenses and restrict the development. However, from the long-term development and macroscopic perspective, it is more reasonable to take the risks of EP seriously, make good use of EP policies and catch the commercial opportunities related to EP. For instance:
Firstly, sort out the risks related EP, and establish the regular review and improvement system. The risks related to EP include 2 parts, the internal risk and external risk.
Internal risk refers to the new environmental regulations related to the manufacture of an enterprise. Enterprises shall sort out all kinds rules related to all aspects of the manufacture, such as the manufacturing process, materials, packaging, transportations and so on. These rules include the current laws, regulations, standards, local rules and so on, which shall be set as the basis for the environmental compliance internal examination. In addition, enterprises shall use this basis to check, review the environmental protection situation, and improve the non-compliance issues accordingly.
External risk mainly refers to the risks aroused in the production and business of the upstream/downstream enterprises. The latest case is Schaeffler, which was impacted severely by its supplier Jielong, because Jielong was order to stop production due to it had not meet the environmental requirements. In view of this, in addition to the internal environmental compliance examination, enterprises shall establish the external environmental compliance examination system which shall involve the upstream/downstream enterprises.
In order to reduce the external risks, enterprises could take action in the 2 aspects. Before the cooperation, enterprises shall conduct the external environmental compliance examination, and try to avoid choosing a single upstream or downstream enterprise. For example, enterprises shall examine the pollutant emissions, production technology, equipment usage, energy consumption, water consumption, national laws and regulations, internal EP management and so on. It would be better to stipulate the EP responsibilities and liabilities of the upstream/downstream enterprises in the relevant contracts. During the cooperation, enterprises shall conduct regular examination and adjust upstream/downstream enterprises based on the examination result. For example, to adjust by analyzing the percentage of orders, the production and EP situation of upstream/downstream enterprises.
Secondly, enterprises shall take advantage of policy bonus.
The “Environmental Protection Tax Law” has stipulated several tax relief rules, including 5 tax exemption methods, such as a temporary exemption of taxable solid waste that meets the standard, as well as two tax relief benefits, which could be defined according to the gap between the pollutant concentration discharged by taxpayers below the national and local emission standards, and so on. If any enterprises meet the relevant requirements, it is recommended to pay attention to the follow-up supporting documents issued by local provinces or cities, and prepare the application to apply those tax exemption or relief.
On the other hand, in order to promote EP, local provinces and cities would release some awarding policies to encourage enterprises to implement EP, which are good benefits for enterprises.
Thirdly, to seize the EP legislation period and open up business opportunities in time.
The amendment and implementation of the “Law of Prevention and Control of Water Pollution”, the “Law on Prevention and Control of Soil Pollution” and etc., which would push many enterprises to change, or otherwise those enterprises would be eliminated from the market. On the other hand, it is a good time for those competitors to take advantage of technological superiority, and increase the market share. For those foreign companies which have advanced technologies, such as water or soil treatment and etc., this is a good time for them to develop the Chinese market as well.