1.5 Government Initiatives
In 1994, sustainable development became the national strategy as specified
in the “China 21st Century Agenda” by the State Council of China. Since
1994, new environmental laws and regulations were introduced, with significant
implications for environmental accounting and reporting. Some laws
and regulations increased companies’ environmental compliance costs such
as emission fees, fines for breaking environmental laws, pollution prevention
cost, appropriation of retained earnings for pollution prevention funds, and
environmental protection auditing. Others, which were set to enhance a
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company’s ‘green behaviour’, reduced environmental compliance costs
through, for example, tax reductions and tax exemptions on investments in
more efficient pollution prevention and energy saving technologies and also
focused on sales revenues from the recycling of goods. In 2000, the State
Environmental Protection Administration (SEPA) and World Resource Institute
launched the China BELL program to help Chinese business school
professors with the tools to train the next generation of leaders in sustainable
business practices. In 2003, SEPA issued a regulation, which required ‘dirty
companies’ to publish their environmental reports (Format B) annually from
2004 on the specified websites or in the local newspapers. Since 1997, China
Securities Regulatory Commission (CSRC) has addressed the importance of
environmental protection and cooperated with SEPA. CSRC issued disclosure
regulations respectively in 1997 and 1999 to require listed companies to
have an annual environmental audit before IPO and to disclose environmental
information in the prospectus, which included environmental risk
resulting from probable new environmental protection requirements, financial
effects of compliance/non-compliance with environmental protection
laws and regulations on earnings and competitive position, companies’ environmental
standards and fines for breaking environmental laws and regulations
in the past three years. Both SEPA and CSRC imposed high fines and
penalties for non-compliance. In June 2001, the Accounting Society of
China (ASC) formed an Environmental Accounting Committee (EAC) in
order to motivate environmental accounting research in China. EAC organized
the 1st environmental accounting conference in November 2001. More
than 40 participants, mainly from universities, submitted 30 papers at the
conference. In 2002, EAC conducted a mail survey of 250 companies in order
to investigate environmental accounting and reporting practice in China.