Investigation reveals Chinese listed firms suspected of making false statements about environmental violations
This year is the tentative deadline for establishing mandatory environmental information disclosure by all Chinese listed companies. According to the 2016 ‘ Guiding Opinions on Establishing a Green Finance System’ (CN), and the division of labour (CN) discussed in 2018, all listed companies will need to disclose environmental information in 2020. Given the approaching deadline, IPE and environmental group Lvse Jiangnan embarked on doing a status check on where the listed companies are on environmental information disclosure. Our current investigations found some stock listed firms have yet to fulfill their disclosure obligations and are even suspected of making false statements about environmental violations in their annual reports.
This month, IPE and Lvse Jiangnan published two case studies: Henan Xinye Textile Co., Ltd. (stock code: 002087) and Anhui Shengyun Environment-Protection group Co., Ltd. (stock code: 300090), for suspected false statements in their 2019 annual reports. The two companies and/or their subsidiaries have more than a dozen environmental violations recorded by the Blue Map Database from 2016-2019. Most of the violations were related to exceeding emissions of exhaust air and wastewater pollutants, with over 2 million RMB (approximately 287,400 USD) penalties for each company. However, the 2019 annual reports published by these two companies clearly state that “no penalties or rectifications were found during this reporting period” and “no issues related to exceeding emissions”.
Such misleading statements are not uncommon; but at the same time, with progress made in China’s environmental supervision and information transparency, corporate environmental violation and penalty records are easily accessible via third-party platforms such as the Blue Map Database. At present, major banks and financial institutions are seeking to incorporate environmental information into their decision-making so as to prevent the financial risks resulted from environmental mismanagement.
The two case study reports can be downloaded in Chinese on the IPE website. More green finance investigation reports are coming soon -- stay tuned.
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