Press Release: IPE and Civic Exchange urge HKEx to require more disclosure from publicly listed companies caught polluting in mainland China

Better environmental disclosure requirements from the Hong Kong Exchanges and Clearing Limited (HKEx) not only would help reduce investment risk and protect investor interests, but could strengthen environmental protection in China, says a report, Hong Kong’s role in mending the disclosure gap, released by the Asia Water Project in Hong Kong today. 
Fifteen percent of companies listed on the Hong Kong Exchanges and Clearing Limited (HKEx) have environmental 
violation records on the mainland and many are repeat offenders, reveals the report, authored by the Institute of 
Public and Environmental Affairs (IPE), a Beijing-based NGO, and Civic Exchange (CEx), a Hong Kong based think tank. 
“According to our findings, of that 15% Hong Kong-owned companies have the largest number of companies with 
violation records,” says Ma Jun, IPE’s director. “H-share companies, meanwhile, have the highest total number of 
violations” since more of these companies registered multiple infractions. 
The report cites, among others, Hong-Kong owned companies Kingboard Chemicals Holdings Ltd (KINGBOARD 
CHEM148) and Kingboard Laminates Holdings Ltd. (KB LAMINATES1888) whose subsidiaries have repeated 
environmental violation records. In May 2009, the Guangdong Provincial Oceanography and Fishery Administration 
censured a Kingboard Laminate factory for exceeding permitted levels of wastewater discharge into the Pearl River 
Estuary for two consecutive years. Three of Kingboard Chemical Holding’s factories are on Guangdong EPB’s 
polluters watch-list this year. 
Tsingtao Brewery Co. Limited (TSINGTAO BREW168), an H-share company, was reported to have more than 20 
environmental violation records in its operations across China from 2004 to 2009. Its factory in Chongqing 
committed environmental violations in 2006, 2007 and 2008. 
Limited disclosure brings growing risks 
The report reveals that most companies such as Huaneng Power International (Huaneng Power902), PetroChina 
Company Limited (PETROCHINA857) and Datang International Power Generation Co., Ltd (DATANG POWER991) 
failed to disclose subsidiaries’ multiple environmental records, whether through annual or sustainability reports, or 
official websites. 
This lack of transparency, says Ina Pozon, manager of the Asia Water Project “presents a growing risk to companies and shareholders. Investors seeking to consider water-related risks when making investment decisions just don’t 
have the data to compare and contrast,” says Pozon. 
And the risks to investors are growing, states Ma, who also predicts that business as usual will only get more costly 
for polluting companies. “While, historically, violation of environmental laws in China has been of little financial 
consequence to companies because of poor enforcement and low fines, the trend is veering towards tighter 
enforcement and higher fines,” says Ma.  
According to the IPE/CEx report, Yulin’s Environmental Protection Bureau imposed a fine of RMB 1 million on China 
Shenhua Energy Co. Ltd’s. (CHINA SHENHUA1088) coal mines for violating wastewater standards in 2008. The same company was fined an additional RMB 1 Million in 2009, when the mine again failed to meet environmental 
Beyond increasing punitive fines, the Ministry of Environmental Protection (MEP) also has ramped up efforts to 
sanction company initiatives that are environmentally non-compliant. In a 2008 report, MEP revealed that in 2007, 
621 papermaking companies were closed for violating national industrial policy and total discharge standards. In 
2008, MEP denied or suspended projects based on the results of Environmental Impact Assessments (EIA). 
According to the IPE/CEx report, in 2008 a subsidiary of China Resources Enterprise Ltd (CHINA RESOURCES (291) located in Nantong was ordered to halt production, costing the factory RMB 30,000 per day. In 2009, the 
government shut down the factory for continued non-compliance. 
Transparency Trend 
The Chinese government recognizes that transparency is a key tool in environmental protection, states Ma, and this 
is evident in the disclosure trend supported by Beijing. In 2008, both the MEP and the Shanghai Stock Exchange 
began requiring companies publicly to disclose information on legal violations, penalties and whether the companies have been ordered by local governments to suspend production, move, or shut down. “These regulations represent a watershed in improving environmental governance,” says Ma. 
While globally investors are showing increased interest in corporate disclosure as the environmental risks to 
business increase, “corporate disclosure in China will inevitably take time,” according to the report’s co-author, 
Christine Loh, CEO of Civic Exchange. “And change will only accelerate if financial institutions and investors join the 
government and NGOs in applying pressure.” 
Recently HKEx drafted proposals to update the Listing Rules for mining companies and develop a Corporate Social 
Responsibility Code. While this is a step in the right direction, says Loh, there is more that HKEx might do to facilitate greater disclosure, “such as requiring listed companies to notify HKEx of environmental violations on the mainland committed by any of its subsidiaries, corrective measures taken, and their latest monitoring data.” The Asia Water Project (AWP) launched today the AWP: China website, an information portal designed to provide 
business and investors with relevant information about China’s growing water crisis. The website can be accessed at AWP is sponsored by Civic Exchange ( and Hong Kong-based ADM Capital Foundation ( 
  1. Since 2006, the Institute of Public and Environmental Affairs (IPE), a Beijing-based nongovernment organisation, has operated the China Water and Air Pollution Database. This web-based resource is the first of its kind in China to publish air and water quality data and feature a government-sourced list of companies cited for environmental violations in the mainland. Since its launch, IPE has uploaded 59,400 violation records from official mainland sources to its water and air pollution databases.
    – IPE’s China Water Pollution Map:
    – IPE’s China Air Pollution Map:
  2.  “Hong Kong’s role in mending the disclosure gap” can be downloaded via
  3. Definitions:
    – H Share company– incorporated in mainland China and traded on HKEx
    – Red Chip company– mainland Chinese company incorporated internationally and listed in Hong Kong
  4. This press release is available on Civic Exchange website: