Companies that pollute the city's skies and waters now face a new punishment: a black mark against their credit rating and decreased ability to obtain a bank loan.

The new muscle in the battle against pollution is the result of an arrangement announced yesterday between the Shanghai Environmental Protection Bureau and the city's credit information network.

From now on, a company's environmental compliance record will be part of its creditworthiness.

Awards and other honors for contributions to environmental protection will boost a company's chance of landing a loan, and fines for bad performance will work against it.

"The move will increase the cost for violations of environmental laws and enhance legal awareness among the city's enterprises," the environmental bureau said in a statement.

The database is run by the Shanghai Credit Information Services Co, a city-backed credit bureau authorized by the People's Bank of China.

Established in 1999, the service conducts credit assessments on individual consumers and companies in the city.

Technicians began plugging compliance track records into the information system yesterday.

Among the items on the plus side of the ledger is ISO14001 certification for energy conservation and environmental compliance.

Information on hundreds of enterprises that received administrative punishments last year was also loaded into the network.

The violators were mostly chemical and metallurgy plants, construction companies and restaurants. From April to December last year, 729 businesses and industries were punished for water, air or noise pollution.

But current administrative sanctions -- fines up to 200,000 (US$24,691) -- are not enough to stop the heavy polluters, officials said.

Authorities believe the amount is far from enough to cover cleanup and other costs in serious pollution cases.

(Shanghai Daily June 5, 2006)