Subsidiaries accused of lagging in fulfilling ecological responsibilities

China's office of central environmental inspection has rebuked the subsidiaries of two central government controlled enterprises for "weak awareness of their abidance of environmental laws" and "slighting local environmental authorities' supervision".

Though the two companies, China National Chemical Corp and China Minmetals Corp, have "made some progress in promoting environmental protection", they both still have gaps that need to be closed, according to a report made public on Monday by the Ministry of Ecology and Environment, where the inspection office is based.

Since 2017, China National Chemical Corp has invested over 3 billion yuan ($430 million) in more than 900 projects to enhance environmental protection work. Bringing in foreign experience and technology, the company has made efforts to phase out old, polluting equipment and ramp up its capability in pollution control, the report said.

It also said, however, that the company has failed to show adequate determination in implementing central authorities' decisions, and that "some of its subsidiaries still lag in fulfilling their responsibilities in environmental pollution control and abiding by ecological and environmental laws and regulations."

"China National Chemical failed to attach adequate importance to ecological and environmental protection and genuinely incorporate that into its development," the report said.

According to the report, Chem-China Petrochemical Co, a subsidiary of China National Chemical, indulged five of its subordinate companies in "recklessly producing substandard diesel". In 2018 alone, these companies sold over 800,000 metric tons of the low-quality fuel.

Some of China National Chemical's subsidiaries were found to have "weak awareness of their abidance of environmental laws".Since 2013, 65 of them have received 287 administrative penalties, and one was punished 40 times. These subsidiaries hid all but 36 of the cases from their headquarters, which didn't take any action to investigate and rectify the problems, it said.

"Some of the subsidiaries even repeatedly broke the law and slighted local authorities' supervision," the report said, citing a company in Shenyang, Liaoning province, as an example. The company refused to pay the 2.2 million yuan in fines it received for nine administrative penalties while attempting to transfer the punishment to a third party.

There is a similar problem among subordinate companies of China Minmetals in abiding by environmental laws, though it was lauded for addressing outstanding environmental problems that had lingered for an extended period of time.

Its subordinate companies had been given over 120 administrative penalties in 11 provincial-level regions for environmental violations since 2015. Some of the companies "even refused to accept and coordinate with local authorities' supervision", the report said.

"From 2017, China Minmetals has made little effort to research outstanding environmental problems exposed in previous central ecological and environmental inspections. Neither did it do adequate work on supervising the handling of these problems and implementing inspection teams' requirements," it said.

The report said that a subsidiary of the company didn't include environmental protection in its performance assessment system and even rewarded mines that excessively exploited the environment.

Central ecological and environmental inspection teams are usually headed by ministerial-level officials. The first round of inspection, launched in 2016, had covered all regions on the Chinese mainland by 2017. The country's latest round of inspection has been underway since 2019. The two central government-controlled companies are included in the first batch of regions and companies to be inspected.

Ma Jun, director of the Institute of Public and Environmental Affairs, an NGO, said the central government-controlled status of some major State-owned companies often creates obstacles to supervision by local environmental authorities.

Inspections led by such high-level officials, however, could help "break the obstacles", he said.