China’s leadership is fiercely committed to cleaning up pollution and stopping the cycle of damage, and has enacted new updates to its Environmental Protection Law as of January 2015. Not only will China be looking to the multinational corporations that benefited from China’s explosive growth in recent years to pay their share of the pollution bill, there will be daily fines for those that do not comply with the new provisions. Chief financial officers of multinationals with operations in China, which will be targeted most acutely in this new push for environmental stewardship, must turn their attention to sustainability within their organizations and be experts in evading the dangers of noncompliance. Among other things, CFOs will need to:
- know the costs of both compliance and noncompliance;
- reduce the risk of environmental regulation-related fines; and
- factor in carbon pricing to operating budgets.
This report provides a detailed picture of what the immediate future will look like for the finance function seeking to protect the company from the risks associated with the new regulations.