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In This Issue
Editor's Note
Increasing Environmental Protests Are Disrupting Investments
In the past few years, new investments in China have been cancelled, postponed, or significantly disrupted due to concern over their environmental impacts, both potential and actual. Protests by local residents have surged, with recent actions affecting a chemical plant in Kunming and a battery plant in Shanghai. The success of these protests will no doubt inspire increased levels of social action, which will have a significant impact on business. The government is responding by increasing standards, punishments, and pollution-reduction targets, all of which may increase costs for businesses that fail to meet the regulations.
In this issue’s feature article, BSR Advisory Services Manager Adam Lane reviews the causes of these protests and their implications for investors. In many cases, the problem is not poor environmental performance, but rather lack of transparency, which breeds distrust among local residents.
Feedback and comments on this newsletter are encouraged and should be directed to Adam Lane at alane@bsr.org.
In Depth
As Environmental Protests Increase, New Implications for Business and Investment
In recent years, growing public awareness of environmental violations by companies and a fear of potential environmental impacts from large projects in China have led to an increasing number of protests across a range of industries, such as manufacturing, chemicals, waste incineration, and transportation. As they have increased in scale, these protests have resulted in projects being cancelled, postponed, or relocated, with significant financial consequences for companies and their investors.
Learn more →
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News to Know
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Lack of Water Will Raise Costs and Affect Coal Industry (May 9, 2013, China Water Risk)
More than 50 percent of industrial water is used in coal and coal-related industries, while 83 percent of China’s coal lies in water-scarce and water-stressed regions. The author asks whether there is enough water for the coal industry, and what the costs will be for the industry to respond.
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Guizhentang’s IPO Cancelled (June 5, 2013, South China Morning Post)
Fujian Guizhentang Pharmaceutical was among 269 companies that pulled their IPO applications this year, according to the CSRC, which has increased scrutiny of IPO applications. Last year, animal rights groups heavily criticized Guizhentang for extracting bile from bears for its products.
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2012 State of Environment Report Launched (June 6, 2013, China Water Risk)
The government rejected or suspended approval for 24 projects for failing to meet environmental requirements. Additionally, the report names 56 companies that violated groundwater pollution standards.
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China Orders Firms to Curb Pollution (June 15, 2013, BBC)
The government will require companies in heavy-polluting industries to reduce emissions by 30 percent by 2017. Non-compliers will be penalized for excess emissions.
On the Horizon
Upcoming Events
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The China Greentech Report 2013: China at a Crossroads (June 26, 2013 | Beijing)
Part of AmCham China’s “China and the Environment Speaker Series,” the presentation will examine the country’s pollution challenges and progress made in achieving green tech targets in the 12th Five-Year Plan.
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Value Creation Forum: China 2013 (July 3, 2013 | Beijing)
Organized by Private Equity International, BSR will moderate a panel on how to sustain programs of operational excellence, including the role of ESG in creating sustainable growth companies.
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UNEP FI Global Roundtable: Financing the Future We Want (November 12-13, 2013 | Beijing)
The flagship biennial event of UNEP FI will be held in China for the first time. The event will focus on emerging markets and bring together high-level representatives from financial institutions and other industries and sectors to galvanize action on sustainable finance.
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