Environmental compliance China: Managers and legal departments should act now

published on 25 July 2025 | reading time approx. 3 minutes

China is on the verge of a far-reaching reform of its environmental law. With the draft of its first comprehensive Environmental Code, the People's Republic aims to consolidate its previously scattered regulations and close gaps. The new law has not yet been passed, but it is already clear that the requirements for companies and their managers will become more specific – and the consequences of non-compliance will be significantly harsher.

More clarity, more responsibility

The current draft comprises around 1,200 articles, divided into five books: fundamental principles, pollution control, ecosystem protection, promotion of sustainable development and clear liability rules. The latter in particular deserve the attention of management: senior executives may also be held personally accountable alongside the company itself.

Environmental protection is not an abstract obligation, but a concrete part of operational control and risk prevention. The focus is on typical risk areas such as emissions, waste disposal, handling of chemicals, noise and radiation. Violations will be consistently punished – from fines to shutdowns and, in serious cases, criminal proceedings.

Liability does not end at the factory gate

There is a more increased focus on personal responsibility. Anyone who, for example, as a managing director, plant manager or compliance officer, ignores protective measures, neglects monitoring obligations or obstructs the authorities must expect sanctions, even if the violation was delegated.

Specifically affected are, for example:

Violations of emission and discharge limits
False statements or manipulation of environmental measurements
Failure to take or delay in taking emergency measures in the event of accidents
Violations of requirements to reduce CO₂ emissions
Illegal or negligent waste disposal

Fines can amount to several times the damage caused. In extreme cases, criminal proceedings may be initiated, for example in the event of intentional data falsification or environ-mental damage that endangers public safety.

Focus on supply chains

Another focus of the code is the extension of obligations to the supply chain. For example, companies that outsource waste or cleaning services remain responsible for ensuring that external service providers comply with the applicable standards. This brings China closer to European due diligence requirements, even if the scope in detail still lags behind regulations such as the German Supply Chain Due Diligence Act.

Practical examples

Typical scenarios that managers should keep an eye on in future:

A production facility manipulates emissions data in order to pass inspections. Un-der the new law, this is considered a serious violation with personal consequences, e.g. for the responsible plant manager.
Following a chemical accident, the site management reacts too late and fails to activate an emergency plan. In addition to claims for damages, personal liability and inclusion in a public sanctions list are also possible.
Illegal channels are used to dispose of defective solar panels. Both the company and the manager responsible can be prosecuted for the illegal disposal of hazardous waste.

Recommended action: Prepare now

The draft sends a clear message to managers: don't wait and see, take precautions now. Those who wait for the final text of the law risk time pressure and higher follow-up costs. The following steps are advisable:

Update your risk analysis: Where do environmental risks arise in your organization?
Review your prevention and control systems: Are your emergency plans, monitoring and documentation adequate?
Expand training: Environmental obligations should be communicated at all levels of the company.
Monitor legal developments: Ongoing consultations in the National People's Congress should be closely followed.
Adapt early: Acting today will save expensive corrections tomorrow – and protect your reputation at the same time.

Conclusion

With its new environmental law, China is sending a clear signal: environmental protection is a top priority. Companies that adapt their compliance structures in good time will not only gain legal certainty, but also strengthen their competitiveness in an increasingly regulated market.

If you have any questions about practical implementation, our experts at Rödl & Partner China are available to assist you at any time.

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