Environmental Insurance Made Compulsory for China’s Heavy Industry
The Chinese government has released a guideline promoting a compulsory insurance pilot programme for heavy industries and other businesses that pose high environmental risks.
China’s Ministry of Environmental Protection (MEP) announced on 21 February that the pilot insurance plan is now mandatory for mining and smelting producers, lead acid battery manufacturers, leather goods producers and chemical factories. The programme is being developed in partnership with the China Insurance Regulatory Commission (CIRC) and will provide compensation for damage caused by accidents resulting from environmental pollution.
The pilot scheme already covers more than 2,000 enterprises that pose serious environmental risks, with some renminbi (RMB) 20bn, equivalent to US$3.2bn, underwritten, according to the MEP, which added that petrochemical companies and those involved in businesses related to hazardous waste are “encouraged to be insured” and by doing so will gain access to special environmental protection funds and have priority in securing bank loans.
At the same time those companies failing to apply for insurance may face negative environmental impact assessments and credit downgrading, which would hamper their future development of those companies, the MEP added.