China Forces Compulsory Insurance on Heavy Polluters
China will force heavily polluting enterprises to join an environmental liability insurance system to ensure they can provide adequate compensation for any damages caused.
Companies that will be forced to join the scheme include mining and smelting industries, lead battery manufacturers, leather goods firms and chemical factories, the Ministry of Environmental Protection and China Insurance Regulatory Commission said in a joint statement.
Enterprises that have been included in the scope of insurance coverage according to relevant local provisions are also required to participate in the environmental liability insurance.
Enterprises with high environmental risks will also be encouraged to participate in this environmental pollution liability insurance, including: petrochemical enterprises; dangerous chemicals management enterprises; hazardous waste management enterprises; and dioxin emission enterprises.
According to the "Guiding Opinions on Carrying Out the Pilot Program on Compulsory Environmental Pollution Liability Insurance," special environmental protection funds will be allocated to companies participating in the insurance scheme, and such companies will also be given preferential treatment when applying for bank loans.
Meanwhile, companies failing to apply for the environmental pollution liability insurance may face negative environmental impact assessments and credit downgrades, which could hamper future development.
The insurance system was introduced in 2007 in an attempt to use a market-oriented approach to tackle environmental degradation and compensate victims for their losses.
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