China Policy Journal Volume 1, Number 1, Fall 2018 | Page 122

Environmental Performance Rating and Disclosure: An Empirical Investigation in Jiangsu, China
vided a strong improvement incentive
for noncompliant (red and black) firms,
with stronger effects on firms with red
ratings (moderate noncompliance)
than those with black ratings (extreme
noncompliance). However, more rigorous
analyses are needed to further
identify the effect of the Green Watch
ratings to controlling for potential confounding
factors.
In 2013, the central government
modified the Green Watch program design,
in response to the call for building
a credit society by the Party. In 2013,
the Ministry of Environmental Protection
issued a policy document “Trial
Procedure for Firm’s Environmental
Credit Rating,” jointly with the National
Development and Reform Commission,
People’s Bank of China, and the
Commission of Bank Monitoring and
Supervision. The new program, or the
Second Green Watch program, keeps
the nature of color-coding environmental
performance, but focus more on
compliance with government regulations.
Indicators and scores are recommended
by the central government, but
provinces can modify them and have
their own design. Up to now, most of
the provinces have started their second
generation of Green Watch programs.
Jiangsu Province started its
new Green Watch program in the
year of 2012, with the firms marked as
state-controlled pollution sources at the
beginning. Table 1-2 provides information
about the new Green Watch ratings
in Jiangsu in the first five years of the
program from 2012 to 2016. The coverage
was stable, with the green ratings
increasing along the years. However,
there has been no serious research conducted
to evaluate the new program.
Table 1-2. Firms’ Environmental Performance Ratings by the New Green Watch Program
in Jiangsu Province in the First Five Years (% for State Controlled Firms)
Years 2012 2013 2014 2015 2016
Green 15.60% 20.40% 31.90% 32.00% 38.90%
Blue 60.60% 53.30% 47.30% 49.80% 46.80%
Yellow 17.20% 17.70% 13.40% 11.00% 8.80%
Red 5.40% 6.80% 4.90% 4.80% 3.70%
Black 1.20% 1.90% 2.50% 2.40% 1.70%
Total % 100% 100% 100% 100% 100%
Total
number of
firms
921 961 878 944 1,064
Source: Website of Jiangsu Environmental Protection Department.
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