On January 9, SEPA, China’s State Environmental Protection Agency, publicly criticized three multinational corporations that despite repeated warnings had consistently broken the country’s environmental laws. They were among the 3,000 companies — including 130 multinationals — blacklisted by SEPA last summer for their breach of pollution limits from 2004 to 2007.
By blacklisting major international corporations, China intends to send a message that the days of exploiting the country’s legacy of lax environmental policy are over. And while it may be late in coming, the policy shift is more important now than ever. As many Western companies are entering the country, there has been a swift rise in multinationals that flaunt pollution laws in China, according to Ma Jun, head of the Beijing-based Institute of Public and Environmental Affairs (IPEA).
SEPA’s move on multinationals has been described by some commentators here as “unusually harsh” and a sign of the agency’s growing intolerance to heavy polluters, but it is also another sign of China’s growing scientifically informed culture. Big foreign businesses have been coming to China for years to take advantage of the lower costs of production. Now, with the country rapidly changing course on environmental policy as a result of IPCC reports and domestic research, big foreign multinationals are being hauled into the spotlight for their abuse of China’s water, air, and land.
Kevin May, a spokesman for Greenpeace, argues that certain multinationals explicitly choose to manufacture in China to avoid environmental standards they otherwise would have to meet: “The first thing some business representatives ask when they meet local officials has been, ‘what is the lowest standard for environmental protection?’” Ma was informed by representatives of multinationals that two reasons to set up plants in China were cost of labor and the fact that environmental protection was much lower than in developed countries.
Ma says some of the blacklisted multinationals, such as Panasonic, have subsequently responded by cutting down their pollution. Others, like global food brand Nissin — which lists environmental protection as one of its corporate principles and enjoys a good reputation in developing countries — do not think that they are responsible for the behaviors of their affiliates in China.
U. Thara Srinivasan, an environmental scientist at the Pacific Ecoinformatics and Computational Ecology Lab in Berkeley, California, points out that some multinationals are, “in effect, passing pollution to developing countries.” A recent study led by Srinivasan and published in the Proceedings of the National Academy of Sciences shows that poor nations are disproportionately shouldering the burden of environmental damage.
Local officials in China, keen to attract the multinationals that help to boost the regional GDP — a key measure of their achievement — have been known to turn a blind eye to the environmental damage that they may inflict. And if businesses are caught exceeding the pollution limits, the penalties are relatively cheap (the maximum water-pollution penalty is 1 million yuan, or $125,000), so it has historically been easier to pay the fine than clean up.
The shift in China’s thinking about pollution will take some time to filter down from Beijing to local leaders and corporate headquarters. “We want to make sure foreign businesses observe China’s own standards, but some of them don’t seem to be able to mange even that,” Ma says. Over the past few years, in a growing effort to get a handle on the extent of China’s pollution and environmental problems, IPEA has systematically analyzed the official figures of polluting industries and mapped out their locations across the country. According to Ma, the latest air and water-pollution maps feature about 320 multinationals — including Pepsi, Denisco, Nissin Foods, Dupont, Suez, and Sharp Electronics — that all have good environmental-protection records in the West.
China’s legacy of pollution is one it wants to bury; it’s a message that international business needs to hear, and soon. “The current model of development is totally unsustainable,” Ma says. “Ultimately, China’s environmental problems affect not only China but the entire world.”
Originally published March 7, 2008