Heavy Polluters Face IPO Hurdle -- china.org.cn

The environmental watchdog is training its sights on heavy polluters seeking listings, with a revised rule that requires its approval for share sales in certain sectors.

The State Environmental Protection Administration (SEPA) has updated a rule for thermal power stations, smelters, cement plants and electrolytic aluminum producers applying for initial public offerings (IPOs). The companies must get the environmental all-clear from the SEPA if they want to list, according to a statement on its website.

"The SEPA will assess the environmental performance of the companies (seeking to list) and their subsidiaries, and provide suggestions to the China Securities Regulatory Commission (CSRC)," the statement said.

"The assessment results will be published on the government website or in major newspapers for 10 days."

CSRC spokesman Liu Fuhua said: "The CSRC has required companies to provide environmental reports in their applications for initial public offerings since 2003. Now, the SEPA has updated some items and the CSRC will be cooperating with the environmental agency."

Environmental performance is a minor part of listing rules and will be of little help in controlling pollution, according to an environmental expert who declined to be named.

But the expert conceded the updated rule would act as a reminder to stock investors of the importance of environmental issues.

It is another move by the SEPA to use financial leverage to cut pollution. The SEPA also plans to work with the insurance regulatory commission to set up coverage for environmental accidents. The two departments have begun pilot research in Jilin and Zhejiang provinces.

And the SEPA sent its first blacklist of 30 polluters to financial institutions last month.

"The environmental watchdog needs to work hand in hand with financial policymakers to find a way to beat polluting factories," said Pan Yue, vice-minister of the SEPA.

China aims to cut 10 percent of emissions and 20 percent of energy consumption per unit of GDP from 2006 to 2010.

(China Daily August 21, 2007)