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Interpretation of the Guidance on Environmental Protection in Foreign Investment and Cooperation

A.The Background

Currently, environmental protection has become a common concern of the international community, as well as a common challenge faced by all countries in the world. The Chinese government not only attaches importance to domestic environmental protection and adheres to energy conservation and environmental protection as a basic national policy, but also gives priorities to environmental protection when it comes to enterprises’ implementation of the “going global” strategy. The 12th Five-Year Plan for National Economic and Social Development indicates that companies going global and cooperation projects overseas should fulfill their social responsibilities and benefit the local people. The 18th CPC National Congress sets forth the ecological progress concept that underscores the need to respect, follow and protect the nature so as to contribute to global ecological security.

Since the inception of the "going global" strategy, Chinese businesses have quickened their pace in carrying out investment cooperation overseas. As companies going global increased in terms of number, scale and sectoral coverage, the implementation of “going global” strategy has contributed positively to the economic and social development of China and host countries. As of the end of January 2013, China's non-financial direct outward investment amounted to US$ 439.5 billion. Chinese companies in general give priorities to environmental protection while investing overseas, and adhere to the laws and regulations of host countries, and proactively fulfill their social responsibilities. However, guidance from the government is required as some enterprises lack the experience in environmental protection overseas.

In order to join efforts with all countries to cope with the challenges of environmental protection, and guide Chinese enterprises to do well in environmental protection in the process of "going global", and promote sustainable development of investment cooperation overseas, MOFCOM and the Ministry of Environmental Protection jointly issued the Guideline on Environmental Protection, based on China’s national conditions and international experience and concepts. The spirit of the Guideline is to establish the concept of environmental protection, and encourage enterprises to fulfill their responsibilities in environmental protection according to law, to require enterprises to abide by laws and regulations of the host country in environmental protection, to fulfill such legal obligations of environmental protection as environmental impact assessment, discharge standards and emergency management, at the same time to encourage enterprises to research to meet international standards.

B. Significance

Strengthening the guidance for enterprises "going global" to protect the environment could help them improve environmental protection with the host country under the framework of local laws and regulations, so as to promote sustainable development of the host country, and achieve mutual benefits and common development.

Strengthening guidance for enterprises "going global" to protect environment could help them enhance their capacity of transnational operations, and accelerate the integration process, so as to achieve long-term development and promote sustainable development of outward investment cooperation.

While "going global" is a corporate behavior, to serve and guide is the responsibility of the government. The Guideline on Environmental Protection is the first of its kind whereby the government provides a directional guidance for enterprises on environmental protection in their outward investment, reflecting the concept of “management through services”, while at the same time being a concrete measure to build service system for outward investment cooperation.

C. Main content of the Guideline on Environmental Protection

There are 22 articles in the Guideline, including the following main aspects:

(A) Identifying the purpose of the Guidance. The purpose of issuing the Guidance is to guide enterprises to protect the environment, and to fulfill their responsibilities in environmental protection so as to facilitate the sustainable development of the host country.

(B) Identifying environmental and social responsibilities. The Guideline on Environmental Protection encourages enterprises to respect the religions and ethnic customs of the host country, protect workers' legitimate rights and interests, fulfill their responsibilities for environmental protection, establish the concept of environmental protection, and carry out cooperation on the basis of mutual benefits and win-for-all, so as to achieve a win-win outcome both for the enterprises themselves and for the environmental.

(C) Establishing a system on environmental management and pollution prevention. The Guideline on Environmental Protection puts forward opinions and suggestions to guide enterprises to protect the environment in such areas as establishing an internal management system for environmental protection, training employees to protect the environment, environmental impact assessment, biodiversity, social impact assessment, discharge standards, environmental monitoring requirements, environmental due diligence, hazardous waste management, prevention and emergency response for environmental accidents, ecological restoration, clean production and green sourcing.

(D) Strengthening communication and awareness of environmental protection. The Guideline on Environmental Protection encourages enterprises to publish regularly information on environmental protection, and announce enterprises’ plans to enforce laws and regulations on environmental protection, while strengthen communication with the government and the public, and actively participate in social activities relating to environmental protection.

(E) Researching in and learning from international experience. The Guideline on Environmental Protection encourages enterprises to meet with international standards, research in and learn from the environmental principles, standards and practices of international organizations and multilateral financial institutions.