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The Role of Information Disclosure for Promoting Corporate Environmental Management: The Case of China

In IGES Kansai Centre 2010 International Symposium 2011

As a major component of the corporate environmental management (CEM) project conducted at Kansai Research Centre, IGES, during 2007-2009, environmental information disclosure (EID) is believed effective for promoting CEM by assisting in better communications of the firms and their related stakeholders like governmental agencies, investors, communities, consumers and so on. This approach could also act as a strategy to modify the currently dominated regulative measures for CEM in developing countries into a comprehensive policy mix.
This presentation introduces the key findings from a series of empirical studies carried out in China for discussing EID from different viewpoints. The main contents include the status of voluntary EID of Chinese listed companies, and the functions of an existing mandatory EID program in China in promoting environmental performances of participating firms. It also explains the surveys to two selected groups of people, firm’s neighboring residents and general consumers, which aim to monitor their reactions to firm’s process-based and product-based environmental information respectively.
Our studies indicate the big gap in the quantity and quality of environmental information accessible from the firms of China. Even for the large listed companies, EID appears marginal and is highly oriented to satisfy the governmental concerns as so far. The sampled listed companies selectively open their environmental information and are not willing to show their actual impacts to the environment, such as the information on pollutant types, amount, destinations and health risks.
The policy analysis of the ongoing government-oriented disclosure program in China, which rates firm’s environmental performances into simple colors and discloses the results to the public, confirms its effectiveness in improving environmental compliances. The firms with worse records would have greater progress in the following years. The internal information collection and processing help the program participating firms better aware of their environmental problems. Nevertheless, our onsite interviews and hearings to firm’s managers show the weak influences of firm’s stakeholders other than the governments.
The questionnaire survey to firm’s surrounding residents show their reluctance against the neighboring firms, particularly for those activities requiring direct negotiations with the governments and polluters. The residents have a strong tendency to take collective efforts. Accurate understanding of firm’s environmental behaviors significantly determines people’s readiness of environmental protests. An additional meaningful message from the survey is that the residents highly concern about firm’s environmental information on the impacts and risks of pollutant emissions.
Another survey to general consumers indicates a low participation of selecting environmental-friendly products and services. The product-based environmental information significantly affects people’s green purchasing behaviors. Unfortunately, people’s awareness of product’s environmental information is very limited. Providing simple and easily understandable information of the products seems essential since most people would like to check whether there are eco-logos on the products or indicators documenting the product’s energy efficiency while buying the goods.
The presentation finally provides policy recommendations for enhancing the role of EID strategy for improving CEM in China. The government is suggested to play a key role in filling up the information gap existing between the supplying and receiving sides. The minimum requirements for EID are necessary to regulate the firm’s information preparation and disclosure. Serious reactions of the public to the disclosed information shall be strongly supported to form real pressures or incentives to the companies with different environmental performances. The environmental agencies shall share firm’s information in their hands with other organizations, such as commercial banks which hold power to the firms, to push the firms to behave in a more environmental-friendly manner.