China - Draft Environmental Code

Date of Adoption: 

In April, the draft of the People's Republic of China (PRC) Environmental Code was released for public consultation, and is now being reviewed by the National People's Congress (NPC) Standing Committee. Official adoption of the Environmental Code is pending the approval by the NPC.

The PRC Environmental Code is China's first unified Environmental Code. The released Draft Code consolidates into a single legal instrument many of China’s environmental laws.

When finalized by the NPC, the Draft Code will become a general framework environmental code for China’s legal system, taking precedence over existing sectoral rules and administrative measures.

The PSCI is not a certification or compliance body but it offers tools to members that can used as part of your company’s due diligence processes.

Please note that this summary was drafted by the PSCI Secretariat. PSCI members and suppliers are advised to read the legislation in its entirety.

Full text of the Draft Code available here

Climate Change

Legislative provisions

The following legislative provisions are included:
  • Companies are encouraged to:
    • Increase their investment in the R&D of green technologies and products
    • Promote green transformation in their production and business activities, including:
      • Monitor the consumption of resources and waste generated in their production and services provided
    • When necessary, audit their production and services against green standards
    • Improve energy efficiency and reduce waste and GHG emissions generated
    • Implement green packaging practices and reduce packaging materials used
    • Voluntarily disclose environmental information, including emitted pollutants and greenhouse gas (GHG) emissions.
  • Major greenhouse gas emitters in the national carbon market, as identified by the authorities, must control emissions, adhere to regulations, and monitor data quality. They must submit annual emission reports and pay carbon quotas on time after verification by local authorities.
    • Major emitters can trade carbon credits on the national market to meet their emission targets. Provincial governments, along with relevant departments, compile a list of key emitters based on criteria set by the national environmental authority.
For detailed requirements, see the legislation draft:
Article 136, 945, 1033

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Climate Change
Suppliers shall monitor and reduce their GHG emissions and support their suppliers to do the same.
Environment Environmental authorizations & reporting
Suppliers shall comply with all applicable environmental regulations. All required environmental permits, licenses, information registrations and restrictions shall be obtained, and their operational and reporting requirements followed.

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:

Environment Section:

  • Question 33: Does the facility have documented environmental objectives or goals for performance improvement, including metrics and targets, [on greenhouse gas emissions]?
  • Question 41: Indicate which of the following types of air emissions are generated at the facility, and describe the types of pollution control activities if used: [...] Ozone depleting substances, [...] Other Pollutants (e.g., GHG, cyanides, sulfides, ammonias, bromines, phosgene)

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Ecological Compensation

Legislative provisions

The following legislative provisions are included:

Companies are encouraged to participate in the ecological protection compensation mechanisms by purchasing ecological products and services in accordance with market rules.

For detailed requirements, see the legislation:
Article 110

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Biodiversity Conservation
Suppliers shall understand their impacts on biodiversity, reducing and mitigating their footprint wherever possible.

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Environmental Management & Compliance

Legislative provisions

The following legislative provisions are included:
 

Environmental data quality management

  • Companies should establish an environmental data quality management system, and they are held accountable for the accuracy of the data.
  • Manipulating environmental monitoring data through tampering with samples, falsifying records, or forging reports is strictly prohibited.

For detailed requirements, see the legislation:
Article 75-76

Environmental impact assessment: For construction projects that have impacts on the environment, companies should submit the following documents for the authorities' approval:

  • Prepare a comprehensive Environmental Impact Report for projects with significant ecological and environmental impacts.
  • Submit an Environmental Impact Report Form for projects with minimal environmental impacts, analyzing specific aspects of potential ecological and environmental consequences.
  • Fill out an Environmental Impact Registration Form for projects with negligible impact and no need for a full environmental assessment.
  • Companies have the option to appoint third-party entities for conducting environmental impact assessments and preparing Environmental Impact Reports or Environmental Impact Report Forms for their projects. Alternatively, companies possessing the requisite capabilities can perform these tasks in-house.
  • Under any of the following circumstances, the authorities shall decide not to approve the Environmental Impact Report or Environmental Impact Report Form for construction projects:
    • The type, site selection, layout, or scale of the construction project does not comply with environmental laws and regulations;
    • The region's environmental condition does not meet national or local standards, and the measures proposed for the construction project cannot satisfy the regional environmental condition improvement targets and management requirements;
    • The pollution prevention and control measures adopted by the construction project cannot ensure that emitted pollutants meet national and local emission standards, or necessary measures have not been taken to prevent and control damage to the environment;
    • Reconstruction, expansion, and renovation projects have not proposed effective prevention and control measures targeting existing environmental pollution and ecological damage;
    • The basic information and data in the Environmental Impact Report or Environmental Impact Report Form of the construction project are evidently untrue, with significant defects, omissions, or unclear and unreasonable conclusions in the ecological and environmental impact assessment.

For detailed requirements, see the legislation:
Article 91-94

Responses to ecological and environmental incidents: Companies must:

  • Maintain necessary supplies and equipment for ecological and environmental emergencies as per relevant national regulations;
  • Conduct regular emergency drills and be prepared for emergencies;
  • Take immediate action in response to the incident, promptly notify potentially affected stakeholders and residents, and report to relevant authorities for investigation and resolution.
  • Develop emergency plans for ecological and environmental incidents and submit them to authorities

For detailed requirements, see the legislation:
Article 117-119

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Environmental authorizations & reporting
Suppliers shall comply with all applicable environmental regulations. All required environmental permits, licenses, information registrations and restrictions shall be obtained, and their operational and reporting requirements followed.

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:

Governance & Management Systems Section:

  • Question 10: Does the facility or company maintain documentation for the following: Inspections by Regulatory Agencies, Environmental Incidents / Accidents.
  • Question 14: Does the company have an incident management and reporting system established, covering for example certain types of incidents, reporting lines, consequences and corrective actions required? Does the site apply a systematic root cause investigation process to ensure that true causes are identified? Does the site have appropriate remediation plans in place and are they tracked to implementation and closure? Are corrective actions identified for the incident(s) and are they tracked to implementation and closure?

Environment Section:

  • Question 33: Does the facility have documented environmental objectives or goals for performance improvement, including metrics and targets? (including 'does the facility publicly report data')
  • Question 49: Does the facility or immediate surroundings external to the site have any known recent or historic report of soil, surface water or groundwater contamination?
    • For historic or legacy environmental events (e.g. leaks, spillages), please describe briefly how this is managed (e.g., remediation and monitoring, among others). Does it impact surroundings of the site (e.g., neighboring facilities, companies), adjacent natural habitats?
    • For recent environmental events (e.g. leaks, spillages), please describe briefly how this is managed. Does it impact surroundings of the site (e.g., neighboring facilities, companies), adjacent natural habitats?

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Hazardous Chemical Management

Legislative provisions

The following legislative provisions are included:

  • Companies producing or importing new chemicals* must register with the national environmental agency before doing so, ensuring these substances meet safety and environmental standards
  • It is illegal to produce, import, or use unregistered new chemicals, or to use them for unauthorized purposes. Products made with such chemicals are also prohibited.

*New chemicals: In China, new chemicals are substances that haven't been previously registered or evaluated under the country's chemical regulations.

For detailed requirements, see the legislation:
Article 644-645

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Waste & emissions
Suppliers shall have systems in place to ensure the safe handling, movement, storage, disposal, recycling, reuse, or management of waste, air emissions and wastewater discharges. Any waste, wastewater or emissions with the potential to adversely impact human or environmental health shall be appropriately managed, controlled and treated prior to release into the environment. This includes managing releases of active pharmaceuticals into the environment (PiE).

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:

Environment Section

  • Question 41: Has the facility developed and implemented a hazardous chemicals (including APIs) management program that includes development and maintenance of a current inventory of all hazardous chemicals (including APIs) used, manufactured or stored on-site, including those for production, maintenance, utilities, and laboratory purposes?

Resources

There are currently no PSCI resources on this topic.

Pollution & Waste - Air Pollution

Legislative provisions

The following legislative provisions are included:

  • Companies in the chemical industry that emit dust, sulfur compounds, and nitrogen oxides during their production processes must adopt clean technologies, install appropriate dust removal, desulfurization, and denitrification facilities, or implement other measures such as technical renovations to control air pollutant emissions
  • For companies that produce and use raw/ auxiliary materials and products containing volatile organic compounds (VOCs), the production must take place in closed spaces or within equipment with pollution control facilities in accordance with relevant national regulations, or measures should be implemented to reduce waste gas emissions
  • Pharma companies should implement measures, such as centralized collection and treatment, to strictly control dust and gaseous pollutant emissions. They should also minimize the emissions during the storage, transportation, and handling of internal materials
  • Combustible gases generated from industrial production, waste landfills, or other activities should be recycled and utilized. If recycling and utilization are not feasible, pollution prevention and control measures must be implemented.
    • Combustible gas recycling and utilization facilities that are not functioning properly must be repaired or updated promptly. If it is necessary to release combustible gases during periods when these facilities are not operational, measures such as complete combustion or other techniques for controlling air pollutant emissions must be employed. Furthermore, local environmental authorities should be notified, and repairs or updates must be completed within the time frame specified by the authorities. 
For detailed requirements, see the legislation:
Article 207, 210, 213-214

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Waste & emissions
Suppliers shall have systems in place to ensure the safe handling, movement, storage, disposal, recycling, reuse, or management of waste, air emissions and wastewater discharges. Any waste, wastewater or emissions with the potential to adversely impact human or environmental health shall be appropriately managed, controlled and treated prior to release into the environment. This includes managing releases of active pharmaceuticals into the environment (PiE).

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:

Environment Section

  • Question 45: Please indicate which of the following types of air emissions are generated at the facility and describe the types of pollution control activities if used.

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Pollution & Waste - General

Legislative provisions

The following legislative provisions are included:
  • Companies should eliminate the use (production, import, or sale) of equipment, materials, and products that pollute the environment. The government will release a list of equipment, materials, and products scheduled for elimination, which companies must comply with.
  • Effective measures should be implemented to prevent and control pollution of the environment from waste gas, wastewater, waste residue, medical waste, dust, radioactive substances, and noise, vibration, light radiation, electromagnetic radiation, and other pollutants produced
  • Pollutant emissions should adhere to pollutant emission standards, key pollutant total emission control targets & pollutant discharge permit issued by the government, and relevant regulations
  • Companies should improve raw material utilization efficiency and reduce water pollutants
  • Companies should clearly define internal roles and responsibilities to manage pollution and waste management
  • Pollution treatment facilities in construction projects should be put into operation simultaneously with the main project
For detailed requirements, see the legislation:
Article 964-965, 969-971
 
For detailed requirements, see the legislation:
Article 46, 146-148, 153, 158-160, 162-163, 167, 174-183; Chapter 7, Article 274-278, 282, 286-287, 293, 295, 343-346, 349, 351, 375, 393, 402, 406, 408, 411, 418, 463-464, 475, 479-480
Companies fitting one of the following criteria are required to undergo mandatory clean production audits to improve environmental performance and efficiency:
Companies that exceed national or local emission standards, or surpass pollution quotas even if within limits Companies consuming more energy per unit of product than the set limit Companies using toxic or harmful materials in production, or releasing such substances during manufacturing
 
  • Companies undergoing mandatory clean production audits must report results to local authorities and publicly disclose them, allowing public oversight. However, confidential business information may be exempt from disclosure.
  • Other companies can voluntarily collaborate with government departments to set resource conservation and pollution reduction goals. The authorities will publicly announce participating companies and their achievements in saving resources and controlling pollution.
  • Expenditures on clean production audits and training can be included in a company's operational expenses
  • Product and packaging designs should prioritize human health and environmental safety throughout their lifecycle. Non-toxic, biodegradable, and recyclable materials are preferred to minimize harm
  • Companies must ensure packaging is reasonable, proportional to product quality, and compliant with anti-excessive packaging standards. This reduces waste and prohibits unnecessary packaging.

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Waste & emissions
Suppliers shall have systems in place to ensure the safe handling, movement, storage, disposal, recycling, reuse, or management of waste, air emissions and wastewater discharges. Any waste, wastewater or emissions with the potential to adversely impact human or environmental health shall be appropriately managed, controlled and treated prior to release into the environment. This includes managing releases of active pharmaceuticals into the environment (PiE).

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:
Environment Section
  • Question 36: Does the facility have documented environmental objectives or goals for performance improvement, including metrics and targets?
    • Do you track and/or have a reduction program in place for hazardous waste?
    • Do you track and/or have a reduction program in place for non-hazardous waste?
  • Question 42: Does the facility have a process to select and manage third-party waste treatment and disposal facilities and service providers?
    • What records or documentations of waste disposal are maintained?
    • Please provide specific details on land filling of waste, including categories and volumes.
  • Question 43: Does the facility use any of the following waste disposal methods & locations (explain as applicable)?
    • Include explanation of how hazardous, including API containing waste (e.g. antibiotics), biohazardous, fermentation biomass, sludge/biosolids from waste water, non-hazardous waste is disposed of.
  • Question 44: Please indicate which methods are used to manage process wastewater from this facility.
  • Question 45: Please indicate which of the following types of air emissions are generated at the facility and describe the types of pollution control activities if used.
  • Question 49: Does the facility or immediate surroundings external to the site have any known soil, surface water or groundwater contamination?
    • For historic or legacy environmental events (e.g. leaks, spillages), please describe briefly how this is managed (e.g., remediation and monitoring, among others). Does it impact surroundings of the site (e.g., neighboring facilities, companies), adjacent natural habitats?
    • For recent environmental events (e.g. leaks, spillages), please describe briefly how this is managed. Does it impact surroundings of the site (e.g., neighboring facilities, companies), adjacent natural habitats?
  • Question 50: Please indicate whether the facility has addressed the following potential environmental risks arising from storing and handling hazardous substances incl. petroleum products and APIs.
Pollution & Waste - Hazardous Waste

Legislative provisions

he following legislative provisions are included:
  • Hazardous waste generators must create management plans, maintain records, and report waste data to environmental authorities through a national system to ensure proper handling and tracking.
    • The hazardous waste management plan should outline strategies to reduce waste generation, minimize risks, and detail storage, utilization, and disposal methods. The plan must be filed with local environmental authorities for approval.
  • Entities with pollution permits must adhere to the regulations set forth in the pollution permit management system for handling hazardous waste.
  • Hazardous waste generators must follow regulations and standards for safe storage, use, and disposal. Unauthorized dumping or improper disposal is strictly prohibited.
  • Companies engaged in hazardous waste collection, storage, utilization, or disposal must obtain a license. The government sets specific licensing rules to regulate these activities.
  • Medical waste is managed as hazardous waste.
For detailed requirements, see the legislation:
Article 529-540

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Waste & emissions
Suppliers shall have systems in place to ensure the safe handling, movement, storage, disposal, recycling, reuse, or management of waste, air emissions and wastewater discharges. Any waste, wastewater or emissions with the potential to adversely impact human or environmental health shall be appropriately managed, controlled and treated prior to release into the environment. This includes managing releases of active pharmaceuticals into the environment (PiE).

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:
Environment Section
  • Do you track and/or have a reduction program in place for hazardous waste?
  • Do you track and/or have a reduction program in place for non-hazardous waste?
    • Question 42: Does the facility have a process to select and manage third-party waste treatment and disposal facilities and service providers?
  • What records or documentations of waste disposal are maintained?
  • Please provide specific details on land filling of waste, including categories and volumes.
    • Question 43: Does the facility use any of the following waste disposal methods & locations (explain as applicable)?
  • Include explanation of how hazardous, including API containing waste (e.g. antibiotics), biohazardous, fermentation biomass, sludge/biosolids from waste water, non-hazardous waste is disposed of.
    • Question 44: Please indicate which methods are used to manage process wastewater from this facility.
    • Question 50: Please indicate whether the facility has addressed the following potential environmental risks arising from storing and handling hazardous substances incl. petroleum products and APIs.

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Pollution & Waste - Soil

Legislative provisions

The following legislative provisions are included:
 
  • Companies should adopt effective measures to prevent and minimize soil pollution. They are legally responsible for any soil pollution caused by their activities.
    • Relevant reports, including soil pollution surveys, monitoring data, investigation reports, soil pollution risk assessment and management reports, should be promptly uploaded to the national soil environment information management platform.
    • For contaminated sites generated before January 1, 2019, where the responsible party for soil pollution cannot be identified, and the land user effectively assumes the responsibility for soil pollution risk management and remediation, they may apply for the Soil Pollution Prevention and Control Fund. The fund is dedicated to the centralized management and restoration of soil pollution risks
    • Companies responsible for dismantling facilities, equipment, buildings, or structures should implement appropriate soil pollution prevention and control measures
    • The discharge of wastewater or sludge with excessive levels of heavy metals or other toxic and hazardous substances onto agricultural land is strictly prohibited
For detailed requirements, see the legislation:
  • Article 146-148, 153, 158-160, 162-163, 167, 174-183, 274-278, 282, 286-287, 293, 295, 343-346, 349, 351, 375, 393, 402, 406, 408, 411, 418, 463-464, 475, 479-480

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Waste & emissions
Suppliers shall have systems in place to ensure the safe handling, movement, storage, disposal, recycling, reuse, or management of waste, air emissions and wastewater discharges. Any waste, wastewater or emissions with the potential to adversely impact human or environmental health shall be appropriately managed, controlled and treated prior to release into the environment. This includes managing releases of active pharmaceuticals into the environment (PiE).

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:
Environment Section
  • Question 42: Does the facility have a process to select and manage third-party waste treatment and disposal facilities and service providers?
    • What records or documentations of waste disposal are maintained?
    • Please provide specific details on land filling of waste, including categories and volumes.
  • Question 43: Does the facility use any of the following waste disposal methods & locations (explain as applicable)?
    • Include explanation of how hazardous, including API containing waste (e.g. antibiotics), biohazardous, fermentation biomass, sludge/biosolids from waste water, non-hazardous waste is disposed of.
  • Question 44: Please indicate which methods are used to manage process wastewater from this facility.
  • Question 49: Does the facility or immediate surroundings external to the site have any known soil, surface water or groundwater contamination?
    • For historic or legacy environmental events (e.g. leaks, spillages), please describe briefly how this is managed (e.g., remediation and monitoring, among others). Does it impact surroundings of the site (e.g., neighboring facilities, companies), adjacent natural habitats?
    • For recent environmental events (e.g. leaks, spillages), please describe briefly how this is managed. Does it impact surroundings of the site (e.g., neighboring facilities, companies), adjacent natural habitats?
Pollution & Waste - Solid Waste

Legislative provisions

The following legislative provisions are included:
  • The authorities will define the risks of industrial solid waste to public health & environment, and create a catalog of production processes and equipment that generate industrial solid waste causing severe environmental pollution to be phased out.
    • Companies must halt the production, sales, importation, or use of listed equipment within the deadline set by the government. Users of production processes must also discontinue them by the given deadline. Retired equipment cannot be transferred to others for use.
  • Companies generating industrial solid waste must establish a comprehensive system to manage waste from production to disposal. They should maintain records, ensure traceability, and prevent pollution. Industrial waste cannot be disposed of in household trash facilities.
  • Companies outsourcing industrial waste transportation, utilization, or disposal must verify the contractor's qualifications and capabilities, sign a written contract, and specify pollution prevention requirements
  • Companies generating industrial waste must provide local environmental authorities with data on waste types, quantities, disposal methods, and measures to reduce waste and promote comprehensive utilization
  • Companies storing, utilizing, or landfilling industrial waste must follow national regulations, conduct tests and monitoring, and take necessary measures to prevent pollution, adhering to management standards.
  • Industrial waste generators should utilize waste when feasible and store or dispose of it safely according to regulations. Storage facilities must meet environmental standards, and proper protective measures are required.
  • Companies should adopt effective measures to reduce the generation of solid waste and minimize its potential harm.
    • Companies engaged in the collection, storage, transportation, utilization, and disposal of solid waste should strengthen the management and maintenance of their respective facilities, equipment, and sites to ensure their proper operation and use. Those companies must acquire mandatory environmental pollution liability insurance
  • Relevant information on solid waste pollution prevention and control should be made publicly available, encouraging transparency and openness to public oversight
For detailed requirements, see the legislation:
Article 483, 485-491

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Waste & emissions
Suppliers shall have systems in place to ensure the safe handling, movement, storage, disposal, recycling, reuse, or management of waste, air emissions and wastewater discharges. Any waste, wastewater or emissions with the potential to adversely impact human or environmental health shall be appropriately managed, controlled and treated prior to release into the environment. This includes managing releases of active pharmaceuticals into the environment (PiE).

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:
Environment Section
  • Do you track and/or have a reduction program in place for hazardous waste?
  • Do you track and/or have a reduction program in place for non-hazardous waste?
    • Question 42: Does the facility have a process to select and manage third-party waste treatment and disposal facilities and service providers?
  • What records or documentations of waste disposal are maintained?
  • Please provide specific details on land filling of waste, including categories and volumes.
    • Question 43: Does the facility use any of the following waste disposal methods & locations (explain as applicable)?
  • Include explanation of how hazardous, including API containing waste (e.g. antibiotics), biohazardous, fermentation biomass, sludge/biosolids from waste water, non-hazardous waste is disposed of.

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Pollution & Waste - Wastewater

Legislative provisions

The following legislative provisions are included:
  • Companies should set up and use discharge ports in accordance with regulations specified by the authorities
    • Discharging the following substances into water bodies is prohibited: oil, acidic solutions, alkaline solutions, highly toxic slag containing mercury, cadmium, arsenic, chromium, lead, cyanide, or yellow phosphorus; storage facilities for soluble, highly toxic slag must implement measures to prevent water infiltration, leakage, and runoff
    • Cleaning vehicles or containers that have stored oil or toxic pollutants in or near water bodies is prohibited
    • Discharging or dumping radioactive solid waste, or wastewater containing highly radioactive or medium radioactive substances, into water bodies is prohibited
    • When discharging thermal wastewater into water bodies, measures must be taken to ensure that the water temperature complies with the national standards
    • Wastewater containing pathogens must undergo disinfection treatment and meet relevant national standards before it can be discharged
    • Chemical industrial parks and projects must implement measures to prevent leakage and other potential hazards. They are also required to construct groundwater quality monitoring wells for surveillance to prevent groundwater contamination.
    • Key pollutant discharge entities, as identified by the government, are required to install pollutant discharge monitoring facilities in compliance with relevant national regulations, and disclose details about the discharged pollutants to the public
    • Companies must not dump solid waste and other pollutants in rivers, lakes, canals, channels, reservoirs, and the accompanying shorelines and slopes below the highest waterline, as well as in other locations specified by laws and regulations.
  • Companies that discharge certain pollutants (as identified by the government) directly into the environment must pay environmental protection taxes in accordance with regulations.
  • Water pollution incident management
    • Companies exposed to water pollution risks must develop and maintain comprehensive emergency response plans, and conduct regular drills
    • Companies engaged in producing or storing hazardous chemicals must adopt measures to prevent firefighting wastewater and waste liquids generated during the management of safety incidents from directly discharging into water bodies and causing severe pollution
    • In the event of incidents that have caused or may cause water pollution, companies must immediately initiate their emergency response plans, and promptly report the situation to the authorities
  • Companies that discharge industrial wastewater should implement effective measures to collect and treat all wastewater generated. Wastewater containing toxic and hazardous pollutants must be collected and treated separately to avoid leakage or uncontrolled discharge, and dilution is prohibited.
    • Industrial parks are responsible for installing appropriate centralized wastewater treatment facilities and automated monitoring equipment following regulations. These facilities should be interconnected with the monitoring systems of the local authorities.
    • Those companies must follow national regulations for pretreatment before discharge.
  • The discharge of pollutants into the marine environment must strictly adhere to the national or local standards and regulations
    • The selection of locations for marine pollutant discharge points must comply with national regulations. Based on hydrodynamic conditions and relevant regulations, the proposed locations should be scientifically justified and filed with the municipal or higher-level ecological and environmental authorities for review and approval
    • The installation of new industrial wastewater discharge points is prohibited in natural conservation areas, important fishing zones, marine bathing areas, ecological protection zones, and other regions that require special protection.
    • In regions where conditions allow, it is advisable to install wastewater discharge points in deeper waters and implement offshore discharge systems.
    • Medical wastewater and industrial wastewater containing pathogens must be treated to meet the national and local standards before being discharged
    • To mitigate thermal pollution, effective measures must be taken when discharging heated wastewater into the marine environment. These measures should ensure that water temperatures near protected areas and fishing zones comply with national and local marine quality standards
  • The burning of waste at sea is strictly prohibited
 
 
For detailed requirements, see the legislation:
Article 146-148, 153, 158-160, 162-163, 167, 174-183, 274-278, 282, 286-287, 293, 295, 343-346, 349, 351, 375, 393, 402, 406, 408, 411, 418, 463-464, 475, 479-480

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Waste & emissions
Suppliers shall have systems in place to ensure the safe handling, movement, storage, disposal, recycling, reuse, or management of waste, air emissions and wastewater discharges. Any waste, wastewater or emissions with the potential to adversely impact human or environmental health shall be appropriately managed, controlled and treated prior to release into the environment. This includes managing releases of active pharmaceuticals into the environment (PiE).

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:
Environment Section
  • Question 43: Does the facility use any of the following waste disposal methods & locations (explain as applicable)?
    • Include explanation of how hazardous, including API containing waste (e.g. antibiotics), biohazardous, fermentation biomass, sludge/biosolids from waste water, non-hazardous waste is disposed of.
  • Question 44: Please indicate which methods are used to manage process wastewater from this facility.
  • Question 49: Does the facility or immediate surroundings external to the site have any known soil, surface water or groundwater contamination?

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Resource Efficiency

Legislative provisions

The following legislative provisions are included:
 
  • Companies should adopt effective measures to improve resource use efficiency.
  • Companies must adopt technologies to reuse byproducts like heat, water, and gas from production. They are also required to utilize industrial waste materials like ash and slag according to national regulations.
    • Combustible gases generated from industrial production, waste landfills, or other activities should be recycled and utilized. If recycling and utilization are not feasible, pollution prevention and control measures must be implemented.
    • Combustible gas recycling and utilization facilities that are not functioning properly must be repaired or updated promptly. If it is necessary to release combustible gases during periods when these facilities are not operational, measures such as complete combustion or other techniques for controlling air pollutant emissions must be employed. Furthermore, local environmental authorities should be notified, and repairs or updates must be completed within the time frame specified by the authorities.
  • If a company cannot utilize its waste, it should offer the waste to other businesses capable of reusing it, promoting collaborative waste management.
  • Companies should adopt green procurement practices, build eco-friendly supply chains, and prioritize materials, products, and services that efficiently use resources and protect the environment.
For detailed requirements, see the legislation:
Article 46, 974, 979, 995

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Resource efficiency
Suppliers shall strive for circularity, designing out waste, taking measures to improve efficiency and reduce the consumption of resources, including water, favoring renewable and sustainable sources. They shall also take measures to reuse and recycle.

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:
Environment Section:
  • Question 32: Does the facility have documented environmental objectives or goals for performance improvement, including metrics and targets? If yes, please describe goals, metrics, and/or targets and any improvements made in last 3 years.

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Water Use & Management

Legislative provisions

The following legislative provisions are included:
 

New or renovated construction projects must include water-saving plans and install water conservation facilities. These facilities should be designed, built, and operational alongside the main project. Industrial water use should employ advanced technology to increase water reuse.

For detailed requirements, see the legislation:
Article 788

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Environment Resource efficiency
Suppliers shall strive for circularity, designing out waste, taking measures to improve efficiency and reduce the consumption of resources, including water, favoring renewable and sustainable sources. They shall also take measures to reuse and recycle.

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:
Environment Section:
  • Question 33: If the site operates in a water scarce region, has the facility developed a long-term strategy for future water sourcing and management? Please explain:
    • Is the long-term continuity for future water sourcing and management already covered in the site-based Business Continuity Management plan?
    • Does the facility have an authorisation/permit for water intake from groundwater, river or a public system?
    • Does this authorisation/permit have any requirements that will restrict or stop your ability to obtain water?

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Responses to Ecological and Environmental Incidents

Legislative provisions

The following legislative provisions are included:

Companies must:

  • Maintain necessary supplies and equipment for ecological and environmental emergencies as per relevant national regulations;
  • Conduct regular emergency drills and be prepared for emergencies;
  • Take immediate action in response to the incident, promptly notify potentially affected stakeholders and residents, and report to relevant authorities for investigation and resolution.
  • Develop emergency plans for ecological and environmental incidents and submit them to authorities

For detailed requirements, see the legislation:
Article 117-119

PSCI Principles

The following PSCI Sub-Principles are relevant to this issue:
Governance & Management Systems Emergency prepardness & response
Suppliers shall have effective emergency plans and response procedures.

SAQ & Audit template

The PSCI SAQ & Audit Template collects responses relevant to this issue:

Environment Section:

  • Question 45: Has the facility addressed potential environmental risks arising from storing and handling hazardous substances, including petroleum products as APIs?
    • Are potential emergency scenarios arising from storage of hazardous substances (including APIs) identified in the site Emergency Response Plan? Are controls and responses and detailed in the Emergency plan?

Resources

You may find the following PSCI Resources useful as part of your company’s due diligence process on this issue:

Noise Management

Legislative provisions

The following legislative provisions are included:

  • Authorities can seal off or seize premises, equipment, or items causing severe noise pollution if the responsible parties fail to comply with correction orders.
  • New industrial projects that generate noise are banned in noise-sensitive areas. Renovations or expansions must include noise reduction measures to prevent pollution.
  • Industrial noise-emitting units must implement effective measures to minimize vibrations and reduce noise levels, ensuring a quieter environment.

For detailed requirements, see the legislation:
Article 559, 562-564

Resources

There are currently no PSCI resources on this topic.

Companies in Scope

All companies operating within the People's Republic of China (PRC), including state-owned and private companies.

Business Requirements

Alignment with Environmental Protection Goals:

Companies should adopt effective measures to:

  • Prevent and reduce environmental pollution and ecological degradation
  • Improve resource use efficiency
  • Reduce GHG emissions

Companies will be held legally accountable for any resulting harm or damage.

Voluntary Environmental Information Disclosure:

Companies are encouraged to voluntarily disclose environmental information, including emitted pollutants and greenhouse gas (GHG) emissions.

Penalties/ Non-compliance/ Enforcement & Sanctions
  • Companies will be held legally accountable for any resulting harm or damage to the environment. Key personnel, including legal representatives and managers, must face legal consequences for their roles in the incidents.
    • In cases where companies violate relevant provisions in the Environment Code, resulting in significant environmental pollution, ecological degradation, or if the company has destroyed or concealed the evidence of such violation, the responsible authorities are authorized to seal and confiscate the company's properties, including the operation venue, vehicles, and equipment. Violation records will be documented in a national platform and made publicly accessible.
    • If a single illegal act breaches multiple environmental laws, the highest applicable fine should be imposed.
    • Damages caused by unforeseeable, irresistible events do not incur liability for compensation unless specified otherwise by law.
    • If companies continue violating pollution laws after fines and orders to correct, authorities may impose daily penalties equal to the original fine, starting from the day after the initial order.
  • Unauthorized pollution can lead to fines (CNY 200k-1M), restrictions, or closure. Noise offenses result in fines (CNY 20k-200k).
  • Illegal pollution evasion tactics, such as tampering with data or bypassing regulations, may lead to criminal charges, license revocation, and business closure, in addition to environmental penalties.
  • Violating environmental regulations by starting projects without approval can lead to fines (1-5% of project cost), work stoppage, and restoration orders. Non-compliance may result in detention (5-15 days) for responsible personnel.
  • Severe inaccuracies or falsifications in environmental impact assessments can incur fines for companies (CNY 0.5-2M) and individuals (CNY 50k-200k), emphasizing accountability for truthful evaluations.
  • Failing to construct or utilize environmental protection facilities as required can lead to fines (CNY 200k-1M), potential shutdowns, and penalties for responsible individuals (CNY 50k-200k). Severe cases may force closure.
  • Hiding or falsifying environmental data can result in fines (CNY 20k-200k), public exposure, and possible production restrictions. Transparency is crucial for accountability.
  • Fines for air and waste pollution incidents are calculated based on the damage caused: 1-3 times the loss for minor incidents, 3-5 times for severe cases. Penalties escalate with the accident's severity.
  • Illegally releasing untreated industrial wastewater can lead to fines (CNY 100k-1M), production halts, or closure.
  • Companies failing to create or implement water pollution emergency plans face penalties (CNY 20k-100k). Preparedness is key to minimizing harm during accidents.
  • Soil pollution violations, such as falsifying data, inadequate cleanup measures, or poor facility management, incur fines (CNY 20k-200k) and possible shutdowns. Stricter penalties apply for severe cases.
  • Violations like illegal waste facilities, unmonitored garbage disposal, improper waste transport, or poor storage practices may result in fines (CNY 100k-1M), confiscation of illegal gains, and potential business closure. Accurate record-keeping is also mandatory.
  • Failing to track or improperly handling sewage sludge can lead to warnings, fines (CNY 100k-200k), and corrective measures at the violator's expense. Compliance ensures sludge management aligns with national standards.
  • Non-compliant hazardous waste generators who refuse correction may face enforced cleanup by authorities, with costs borne by the violator. Failure to pay can result in penalties up to triple the cleanup cost.
  • Operating without a permit for hazardous waste management can lead to fines (CNY 1M-5M), confiscation of illegal earnings, business closure, and individual penalties (CNY 100k-1M) for key personnel. Proper licensing is essential.
  • Violations involving unregistered new chemicals, unauthorized use, or non-compliant production/import can incur fines (CNY 200k-2M), shutdowns, and permit revocation. Adherence to chemical regulations is critical for safety and environmental protection.
  • Failing to conduct mandatory clean production audits, falsifying results, or not reporting findings can lead to fines (CNY 50k-500k) and corrective orders. Honest audits ensure companies adopt environmentally friendly practices.
  • Carbon market participants who fail to follow data management rules, miss reporting deadlines, or violate other regulations face fines (CNY 50k-500k) and potential production halts. Compliance ensures accurate emissions tracking and accountability.
Key Definitions
New chemicals: In China, 'new chemicals' are chemicals that haven't been previously registered or evaluated under the country's chemical regulations.