Low Rates of Pro-Environment Practices at China’s Largest Companies, Nankai University Professors Report

Title: Research on Green Governance of Chinese Listed Companies (中国上市公司绿色治理及其评价研究)
Journal: Management World (管理世界)
Authors: Li Weian, Nankai University (李维安); Zhang Yaowei, Nankai University (张耀伟); Zheng Minna (郑敏娜); Li Xiaolin, Nankai University (李晓琳);
Publication: May 2019

  • The authors evaluated the environmental friendliness of 712 listed companies in China against seven indicators that included: governance and management systems (e.g. quality and frequency of environmental impact audits); credibility (e.g. voluntarily implementation of pro-environment policies); and environment impact performance (e.g. total greenhouse gas emissions), among others.

  • They noted that most listed companies approached environmental responsibility by complying with regulatory requirements. Companies scored poorly on metrics that evaluated their voluntary adoption of pro-environment policies that went above and beyond minimal regulatory requirements.

  • State-controlled companies received better overall environmental scores than private ones. Companies in the lodging, water, and financial services industries performed the best, whereas companies in the business and commercial leasing, healthcare, sports and entertainment, and agriculture sectors performed the worst.

  • The authors recommended that China adopt green disclosure policies that require listed companies to measure and publicly disclose the impact of their activities on the environment. They also recommended that the government create a public-private sector cost-sharing mechanism to help companies more easily finance activities associated with implementing more environmentally-friendly business practices such as reducing emissions.

Note: Li Weian is a widely cited author and is the Director for the Center for Studies of Corporate Governance at Nanaki University. The Development Research Center of the State Council publishes the Management World journal.