The research on compliance issues of multi-national enterprises and foreign capital companies in China used to focus on corporate law, contract law, and labor law, etc. However, with the development of China's environmental legal system, some scholars gradually began to notice the compliance and opportunities of multinational enterprises in the industrial upgrading under the framework of Chinese environmental law and the continually increasing environmental protection concept.
Since the implementation of the latest "Environmental Protection Law" in 2014, China's environmental legal system has entered a period of prosperity. For example, in the 2018, “ecological civilization” was included in the Constitutional Amendment. The upcoming first Civil Code in Chinese history also incorporates environmental protection into the Human Rights Section. At the same time, the "Civil Procedure Law" and "Criminal Procedure Law", as well as many judicial interpretations of the two Highs (namely the Supreme Court and the Supreme Public Prosecutors Office), also established a public interest litigation system with Chinese characteristics. These are changes in Chinese environmental law which multi-national enterprises have witnessed since 2014.
Inter alia, multinational companies should pay attention to compliance issues in the following areas:
1. The importance of environmental impact assessment
At present, China's Environmental Impact Assessment (EIA) is mainly focused on construction projects. Construction projects which may have environmental influences involve industrial, agricultural, animal husbandry, forestry, energy, water conservancy, transportation, urban construction, tourism, natural resource development projects, etc. need to be assessed. Construction-related enterprises that have not organized or passed the environmental impact assessment shall not start. Otherwise, it may cause consequent civil, administrative even criminal penalties. In addition, China's environmental impact assessment system is constantly being improved, other industries that have a significant impact on the environment may gradually be included in the environmental assessment system. Therefore, multinational companies involved in major industries affecting the environment in China should also pay attention to environmental impact assessment.
2. Environmental administrative responsibilities
If any legal person or natural persons violate the provisions of the Environmental Protection Law and other environmental laws, Local environmental bureaus and other competent authorities will impose penalties on such enterprises. For example, administrative penalties will be imposed on those who do not pay excessive sewage charges in accordance with national regulations, or introduce technologies and equipment that do not comply with China ’s environmental protection regulations, and companies that do not have environmental pollution control. The means of punishment involve fines, confiscation of illegal income, and order to relocate. Some companies will even be shut down or closed. If a multinational company is part of China's supply chain and violates China's environmental laws, its main body in China will be subject to sanctions by relevant Chinese authorities, and even assume joint and several liability in international environmental protection laws.
3. The rise of public interest litigation with Chinese characteristics
Since 2014, China's environmental public interest litigation system has gradually been established. Non-governmental Organizations (NGOs) with the purpose of environment protection can file civil litigation on behalf of the polluted environment. Through judicial appraisal agency, the plaintiff can assess the cost for environmental restoration, the defendants are required to make civil compensation or restoration. Because the development of China's environmental NGOs starts at a relatively late time point, and the number is relatively small. In order to make up for this vacancy, China's public prosecution offices began to set up specialized departments to conduct environmental public interest litigation in addition to criminal litigation.
It is idiosyncratic for public prosecutors to intervene in civil litigation as public authorities when compared to other peers in the world. In many public interests cases involving environmental restoration costs, if the plaintiff turned to be the public prosecutors, when the cases have not yet entered the stage of litigation, the defendants are already willing to reach a settlement with the public prosecutors to avoid further troubles. Therefore, the legal compliance of multinational companies in China must onsider the issue of compensation in public interest litigation that may amount to tens of millions of RMB if there is any pollution to the environment.
The environmental upgrade of Chinese industry could be a good opportunity for multi-national enterprises and foreign capital companies:
1. Multi-national enterprises and Chinese government can achieve win-win cooperation
The environmental transformation and upgrading for enterprises is not only Chinese society's demand, but also the opportunity for the enterprises' future development. Enterprises focus on their own development while adhering to eco-friendliness. The cooperation with relevant government and other third parties can actually achieve a win-win situation. Chinese government can purchase experiences or offer other opportunities in exchange of advanced eco-friendly development models from multi-national companies.
2. International cooperation to reform energy use structure
China's energy consumption amounts to 21% of global energy consumption, which may reach 35% in the near future. China is one of the main countries which emit carbon dioxide, accounting for about a quarter of the world's carbon dioxide emissions. In order to reduce carbon dioxide emissions and combustible energy pollution to the atmosphere, China actively cooperates with foreign countries to seek new energy technologies. During the global call for green and clean energy, using international technology to increase the use of natural gas and increase the use of new energy vehicles and trams are all good solutions. Energy conservation and energy efficiency improvement has great potential for development in infrastructure. The Chinese government hopes to cooperate with different multinational companies to achieve sustainable development solutions in controlling pollution. Multinational enterprieses have good technical conditions to help them achieve environmental protection goals.
3. Adequate and environmental friendly logistics support
The logistics industry is extremely complex.The logistic development should neither affect the current traffic nor bring pollution, while also provide high-quality services.To do this well, international stakeholders must strengthen cooperation.For example, international trade and investment in commodities must have very good logistics support.This requires participation of both Chinese companies and foreign companies.