While many news stories on the environment in China focus on smog and air pollution, less attention has been paid to the problems of water supplies and damage to water tables.
In recent years, the problem has become so severe that according to the Institute of Public and Environmental Affairs, only 35% of the researched sites across China have water of good quality, 32% are suitable for water supply, another 20% can be used for industrial manufacturing and agriculture but not for human contact.
With this reality, and with the continued pace of economic expansion over the last few decades, it was clear that something had to be done to address China’s pollution problem. In facing this issue head-on with strict new environmental regulations China has begun to make progress in tackling water pollution.
Introduction
Within the textile industry in China, companies have found themselves in the environmental spotlight as well.
As the world’s largest producer of textiles, the industry has historically been one of the worst polluters in terms of carbon emissions and water pollution.
In a January 2018 article in Devex, Kurt Kipka, senior project manager at the Natural Resources Defense Council (NRDC) attributed 1,715 million tons of carbon dioxide, accounting for 5.4% of the global total, for 2015 alone.
Mr. Kipka also stated that these factors make the textile industry one of the top five polluting industries.
Even China’s official data from the Ministry of Environmental Protection show that in the same year, 2015, the textile industry in China was the third largest source of wastewater and released 10.1% or 1.84 billion tons of wastewater effluent into the environment.
Committing to Change
Since the passage of China’s original environmental protection law in 1989, China’s economy has changed drastically and rapidly.
However, the passage of a law is only as good as the commitment and enforcement that go with it.
And while the wording was comparable to environmental laws in other industrial countries, the failure came in the lack of enforcement and accountability and in the commitment to implement a true China environmental policy.
As the crisis worsened in the early 2000’s, it became apparent that more needed to be done to address the overall issue of pollution and environmental damage before that damage became irreversible.
As a result, changes and revisions in environmental law have increased year over year since 2014 to implement oversight and enforcement of industrial impact on the environment:
China environmental law in 2015
Adopted in April 2014, revisions to China’s 1989 environmental law were designed to begin addressing enforcement issues and to bring civil society and the media into the process through awareness and transparency.
The revisions went into effect on January 1 2015, and targeted several areas:
- Clarification of Public Interest Litigation: The 1989 law was vague in its wording for who could qualify as a plaintiff in pollution cases. The new law clarified the process and definition of who could bring cases forward therefore increasing the likelihood that judges would hear the case.
- Enforcement: Previously, fines for pollution were small and irregular in application allowing offending industries to pay the fine as a cost of doing business rather than purchase equipment to mitigate the pollution itself. The revision allowed daily fines and removed the cap on environmental fines making the cost of non-compliance more severe. The changes also allowed for up to fifteen days of detention for company managers who are careless in following the law or who intentionally circumvent regulations.
- Transparency: The revision also expanded and strengthened the requirements for environmental impact studies and made pollution data available to the public. It also implemented a control system for total emissions of certain pollutants and created requirements for emergency control plans.
China environmental law in 2016
As the new laws and regulations began to take hold, 2016 saw changes in participation, awareness and accountability.
As the new Environmental Protection Law went into effect, several trends emerged:
- Local and regional Government Action: As the revisions took hold, local and provincial governments began to increase involvement with most providing an environmental report for their region and many provinces creating environmental protection plans. Spending by these local governments on environmental protection initiatives also increased.
- Law Enforcement and Courts: As the understanding of the new laws became clearer, courts began to accept cases based on the new EPL at a rate 2.5 times the rate of previous years. In addition, direct actions taken in over 22,000 cases brought before courts in 2016 included equipment seizures (44%), work stoppage (25%), daily fines (4%), detentions (18%) and in some cases, criminal charges (9%).
- The Paris Accord: In September of 2016 China fully committed to the Paris accord and set forth intentions to reduce fossil fuel use by 20%.
- Environmental Impact Assessment: This change strengthened penalties and simplified the process to peg penalties to the overall value of the project cost. Penalties could be levied for up to 5% of the total project cost, a considerable amount for large-scale projects.
China environmental law in 2017
This year saw changes to the law that began to specifically target certain types of pollution and increase penalties for non-compliance:
- Construction: Revisions were added for construction firms requiring an environmental impact study. Local governments were tasked with the responsibility of reviewing and approving the study and assuring compliance.
- Local Accountability: Additional changes in 2017 put the focus on local government officials making them accountable for assuring full implementation of the EPL law and regulations by businesses. Local and provincial officials could now be held directly accountable for environmental issues.
China environmental law in 2018
As 2018 dawned, additional revisions and restrictions were made to existing law to further strengthen the China environmental policy:
- Environmental Protection Tax Law: This law replaced the emissions discharge fee and moved all tax proceeds to the local government. Local and provincial governments may set rates applicable to their conditions to promote compliance and fund initiatives.
- Water Pollution Prevention and Control Law: This law defines responsibilities for government officials along the waterway and holds them jointly responsible for pollution control and maintenance. The law is designed to encourage officials to pool resources to work toward environmental control instead of addressing only the concerns for their specific area. The law also vastly increased fines for illegal discharge into a waterway.
The Environmental Protection Law’s Impact on Textiles
As China’s new environmental policy matures and as companies, state and provincial governments, and civic organizations begin to gain experience in their new roles there has been a resulting impact on the textile industry.
The stringency of the laws and regulations are such that whole industrial sections of cities or regions are being temporarily shut down for inspection.
Officials can conduct surprise inspections to assess compliance and those companies found in violation may find themselves subject to heavy fines, production curtailment, equipment seizure and work stoppage and in extreme cases where flagrant violations are found, company executives and principals can be detained or even charged criminally.
As companies rush to become compliant with ever-increasing statutory stringency, production costs have increased as well.
Capital must be expended to upgrade equipment, training must be conducted for staff, and the costs are being passed down to consumers.
Moreover, if the upgrades and training must take place during a production limitation or work stoppage due to inspection, the entire supply chain is threatened as mills struggle to meet quoted lead times.
The additional impact to textile enterprises include:
- Over 90% of China’s textile companies are small to medium enterprises (SME). With only a three-year deadline to meet water pollution targets, many of these companies will not be able to raise the capital expenditures required to upgrade their equipment. That deadline drops to two years for those companies that reside in a water-challenged area where currently 80% of China’s yarn and cloth are made.
- China’s environmental policy has placed textiles in a list of industries that are required to develop “circular economies”. In this model, the industry focusses on reuse, remanufacture and on completely closing the loop so that little is lost in the way of resources. This represents not only an increased cost but an entirely new paradigm for manufacturing and how goods are sourced and produced. When coupled with daunting capital expenditure requirements, many firms are facing higher costs and in some cases, consolidation with other firms to share costs or closure if the company cannot take on the additional burdens to meet the requirements.
- Public reputation may suffer if litigation by NGOs progresses after a complaint or published lack of compliance. The result could affect brand awareness for end-use consumers and impact the entire supply chain and profit structure as customers abandon the brand in favor of greener and more sustainable goods.
Meeting the Challenge
China’s new environmental policy represents a major shift in pollution mitigation and control. There are, however, proactive steps that textile manufacturers and importers can take to achieve compliance:
- Understand the EPL: A key step for all companies should be in understanding the Environmental Protection Law and all the year over year changes and being vigilant to additional changes as they occur. This not only applies to the national law but also to local municipal and regional differences as well. The 2018 Environmental Protection Tax Law and the Water Pollution Prevention and Control Law as well as other regulations adopted in the last four years allow regional and local differences that could result in higher standards than those required by the national law. Understanding the law will reduce the chance of a company making a good faith but costly mistake.
- Assess the Company’s Financial Position: As most textile companies in China are SMEs, a full understanding of what a company can financially accomplish ahead of deadlines will help define their path. Relocation, mergers and strategic outsourcing through a compliant company outside of China could reduce the burden of a looming deadline and allow a company to allocate scarce funds wisely to more critical aspects of moving to compliance.
- Partner with and Centralize Abatement: As one of the most water-intensive industries, textile companies may find some help by locating within industrial parks with a centralized water treatment facility. While not a panacea, this allows the company to operate within an area designed to address pollution on a scale with large manufacturing facilities and prevents the burden from falling onto a single entity. It is more controllable and more cost-efficient.
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become to more sustainable?
China is moving aggressively away from a passive environmental policy that existed mostly in name only prior to 2015.
China’s Environmental Protection Law and environmental policy today has the teeth to make it work in a way that will impact the environment as well as all industry within the country.
Textile companies who respond slowly or who do not take China’s new environmental policy seriously to become compliant quickly risk negative repercussions to their business and perhaps even the life and health of the business itself.
Manufacturing in China is still sustainable, but it will require proactive and creative steps to become compliant and remain so.
One way to smoothen the transition to compliance is by engaging professional industry expertise.
Working with over 4500 factories around the world on an annual basis, SgT can assist in providing expert technical advice on compliance.
Their experience in all phases of testing, inspection, certification and other industry-specific standards across entire product line supply chains within textile and apparel allow them to leverage skill sets to assist your company in mitigating or avoiding any environmental or legal issues.
