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China's Corporate Environmental Credit System

September 2021

Citation: ELR 10752

Author: Zhuoshi Liu, Paul Davies, He Zhu, Tianling Ni, Zoe Liu, and James Bee

In 2014, the central government of China announced a plan to create by 2020 a corporate environmental credit system (ECS), an incentive mechanism to deter companies’ environmental violations and promote a culture of environmental law compliance. The ECS was to be implemented at the provincial level, and by the end of 2020, all 31 provinces, provincial-level municipalities, and provincial-level autonomous regions (collectively “provinces”) of mainland China, with the exception of Beijing, had either published their own corporate environmental credit regulations or adopted in practice or via regulation a standard version developed by the Ministry of Ecology and Environment. This Comment discusss how evaluation under the ECS generally works at the provincial level and the significant inconsistencies among the provinces regarding important aspects of the ECS, including the scope, methods, results, and incentives.

Zhuoshi Liu is a Staff Attorney and Director of the China Program at the Environmental Law Institute. Paul Davies is a Partner at Latham & Watkins, LLP. He Zhu and Tianling Ni are Partners at JunHe LLP. Zoe Liu and James Bee are Associates at Latham & Watkins, LLP.

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