China’s State Environmental Protection Agency (SEPA) has become interested in public disclosure because China continues to face severe pollution problems, despite long-lasting attempts to control pollution with traditional regulatory instruments. Since 1989, SEPA and its predecessor NEPA have maintained a list of enterprises with excellent environmental performance. Enterprises are listed on the recommendation of provincial environmental protection bureaus, after vetting by a national Panel of Evaluation and Assessment whose representatives come from SEPA, the General Environmental Monitoring Station of China and other ministries. By 1997 this assessment had been conducted 6 times, and 500 enterprises had been awarded the title, “Nationwide Advanced Enterprise on Environmental Protection.” Over time, numerous enterprises have been removed from the list for failure to maintain standards consistent with the award. However, more than 180 enterprises have retained their excellent ratings.
Recently Chinese regulators have been influenced by the rapid spread of pollution disclosure systems in other Asian countries following pilot projects in Indonesia and the Philippines. These pilot projects were done in collaboration with the World Bank’s Development Research Group (DECRG).
Since late 1998, SEPA and DECRG have worked to establish Green-Watch, a public 
disclosure programme for industrial polluters. Adapted from Indonesia’s PROPER, the Green-Watch rates industrial environmental performance from best to worst in five colours – green, blue, yellow, red, and black. The ratings are publicly disseminated through the media. The Green-Watch draws on five principal sources of information: self-monitoring reports, inspection reports, records of public complaints, regulatory actions and penalties, and surveys that record characteristics of the firms that are relevant for rating environmental performance.
The rating system incorporates six dimensions of environmental pollution: water, air, noise, solid waste, electromagnetic radiation, and radioactive contamination. It includes emissions information for 13 regulated air and water pollutants. Pollutant discharges are rated by total quantity and concentration. Solid wastes are rated in three dimensions: production, disposal, and recycling. The rating process involves a detailed account of a firm’s behaviour in several dimensions. Environmental management is graded with respect to: timely payment of pollution discharge fees, implementation of the National Pollutant Discharge Reporting and Registering Programme, the Standardized Waste Management Measures, and other administrative regulatory requirements. Internal environmental monitoring, staff training, and internal document preparation are taken into account. In addition, the rating system considers the efficiency of resource use, its technological level, and the quality of its environmental management system.
The comprehensive rating scheme allows voluntary entry and offers to participants an opportunity to discuss their rating with the authorities before it is disclosed. After being set, the ratings are sent to the programme’s Steering Board for final checking and ratification prior to public disclosure. To ensure accurate press reports, journalists are invited to a detailed presentation on the programme, including an explanation of the rating system and demonstration of the software that is used for ratings development.
Two municipal-level pilot Green-Watch programmes have been implemented. Reaction to these programmes has been positive, and SEPA plans to launch pilot programmes in other areas, in preparation for nation-wide implementation of public disclosure.
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