Non-state Actors in China and Global Environmental Governance

Late twentieth-century globalization was accompanied by the emergence of a global, often English-language, vernacular of governance. Terms or concepts like governance, corporate social responsibility, and civil society organization became common currency in classrooms and conference rooms in Beijing or Shanghai, no less than in London, Geneva, Canberra, Delhi, or Washington. Sustainable development and climate change along with other environmental challenges became central themes of discussions of governance both locally and globally. In the West, one response to these challenges has been the rapid rise of nonstate actors to work along with governments and markets. The category of nonstate actors includes civil society organizations, but also profit-making corporations, business associations, and a variety of multi-stakeholder organizations. In the late twentieth and early twenty-first century, as the world knows, China developed remarkably. In the early twenty-first century, with environmental challenges accompanying development, China’s leaders adopted ecological civilization as a core goal. In December 2016, a group of scholars and practitioners from China, the United States, the EU (including UK), Australia, and South America gathered for a two-day workshop at Fudan University in Shanghai to discuss whether and how the nonstate actor concept applies to developments in China, and what can be learned from China’s experience. The initial result was a journal article (revised as chapter “The State, Nonstate Actors, and China’s Environmental Performance:​ Setting the Stage” of this book) to provide a framework for continued research. The goal of articles collected in the book is to broaden and deepen comparative analysis of the roles of nonstate actors. This introduction provides an overview of the core sections of the book and an introduction to the individual chapters.

In the West, limited government capacity to solve environmental problems has led to the rise of a variety of nonstate actors to supplement government efforts or even provide alternative mechanisms for addressing environmental issues. How does this development—along with our efforts to understand it—map onto environmental governance processes in China? While environmental issues have been increasingly important, the treatment of these issues in China reflects deep-seated governance processes that differ from parallel western processes in ways that have major consequences both for China’s domestic environmental governance practices and for Chinese practices “going abroad.” In China, institutionalized governance processes blur the distinction between the state and other actors; the “shadow of the state” is a major factor in all efforts to address environmental issues. In this setting, the space occupied by the nonstate actor community in western systems is being occupied by shi ye danwei (public service units), she hui tuanti (social associations), and e-platforms, all of which have close links to the state. At the same time, international NGOs and multinational corporations have also become significant players in China. As a result, the mechanisms of influence that produce effects in China differ in important ways from mechanisms familiar from the western experience. This conclusion has far-reaching implications for those seeking to address global environmental concerns, given the importance of China’s growing economy and burgeoning network of trade relationships.

In this chapter, we examine the governance effect of environmental reporting in China and the potential for non-state actors to positively influence the quality and impact of reporting on company behavior. In western markets, companies issue environmental reports to lower information asymmetries and improve relations with non-state actors such as investors, buyers, and activists who directly reward or punish companies on the basis of environmental performance. In China, on the other hand, non-state actors have limited power to directly incentivize company behavior; hence, environmental reporting serves a largely symbolic function, to assure state actors of company compliance with environmental regulations and policies. Environmental reporting is one aspect of CSR Reporting that currently is required of some (but not all) publically listed companies by China’s stock market regulators. Our research shows that, currently, environmental CSR reporting and related company behaviors are narrowly aligned with Chinese government priorities to lower pollution and resource usage, neglecting other important environmental issues such as biodiversity. Nevertheless, efforts by third-party, non-state, standard-setting organizations are starting to widen the lens and improve both the quality and effectiveness of the reporting function. To a lesser extent, foreign buyers of Chinese stocks can also enhance the quality and impact of environmental CSR reporting, as can financial industry professionals who lobby stock market regulators to impose more stringent and effective rules.

In the late twentieth century, as China became the world's manufacturing hub, global nonstate actors focused on sustainability came to develop and apply voluntary sustainability standards (VSS). This chapter analyzes how this effort has played and is playing out in China. Initially, the driving force was global nonstate actors who sought to impose VSS on China supply chain components. Then, China nonstate actors, especially trade or industrial associations (shehui tuanti), came to develop their own standards, both for domestic application and application as China industry and investment goes abroad. The chapter identifies key factors that are emerging in the China VSS shehui tuanti standard development phase and then the standard implementation phase that will determine the results of these efforts. The chapter shows significant progress in relation to institutional development and outputs and outcomes, but the impact in sustainability improvement remains to be seen. The chapter explains that a core question in this regard is how well the factors in standard development and implementation can succeed in addressing the core problem of the “trust deficit” arising from the fact that the upstream actors (producers and manufacturers) are not substantially engaged across the entire supply chain.

The Institute of Public and Environmental Affairs (“IPE”), a domestic Chinese non-governmental organization, plays a unique role in China’s environmental governance by leveraging openly published information to improve environmental compliance and ultimately outcomes. The organization’s use of officially-published information as the basis for its interaction with stakeholders serves the dual purpose of lending credibility to IPE’s advocacy efforts while also mitigating operational sensitivities. While IPE’s work has generally been framed through the lens of transparency, this chapter illustrates how IPE’s mechanisms of influence extend well beyond just the provision and consolidation of information. By implementing systematic assessments to evaluate subjects and rank them, IPE serves as a civil society regulator that incentivizes stakeholders to engage and collaborate with IPE to improve their performance. Moreover, adopting separate ranking systems to target local governments’ disclosure performance and industrial environmental compliance, respectively, is self-reinforcing. On the one hand, the Pollution Information Transparency Index (“PITI”) motivates governments to implement existing laws and policies that mandate environmental disclosure. Wider implementation of these policies in turn expands the quantity of data underpinning the Corporate Information Transparency Index (“CITI”), enabling it to better strengthen corporate environmental governance. IPE’s role, therefore, adds value beyond just consolidating information by supplementing official environmental enforcement efforts where capacity may be lacking.

It is well documented that China faces massive water challenges relating to both scarcity and pollution following decades of industrial development. As the country embarks on a path of balancing economic growth and environmental management in building an ecological civilisation, where do non-state actors fit and how do they contribute to resolving these challenges? In this chapter, Michael Spencer and Zhen Zhen Xu discuss their experience building and engaging government, industry and civil society in a non-state water stewardship program. The Alliance for Water Stewardship (AWS) is itself only a relatively new global program that seeks to engage industry in good water stewardship. China has been one of its most successful areas of work. This chapter provides a context for the global development of AWS and the national context for water stewardship in China before drawing on new research to understand motivations and constraints for industry participation.

Nonstate actors play various roles in the processes of national policymaking and implementation in China and around the world. In this chapter, the authors present key strategic insights into how non-industry and nonstate actors, including foreign research institutions and subject matter experts, can maximize their contributions to China’s national standard drafting process. They do so through the “lens” of China’s recent development of national air conditioner (AC) energy efficiency standards. In Section I, the authors set the stage for discussion by describing the importance of cooling efficiency for the warming world and in particular for China. More specifically, the authors reflect on China’s leadership role in the development of the Montreal Protocol on Substances That Deplete the Layer (Montreal Protocol) and the associated Kigali Amendment. In doing so, they explain the significant climate mitigation potential from the duel strategy of phasing down HFCs and improving energy efficiency of ACs. The authors, both lawyers trained in Chinese, international and comparative law, provide readers with a primary understanding of China’s legislative and regulatory measures governing AC energy efficiency. To that end, the authors also describe fundamental aspects of China’s compulsory energy efficiency standards. In Section II, the authors provide strategic insights on how non-industry and nonstate actors can maximize their contributions in raising the climate and energy efficiency ambition of Chinese national standards, though their particular recommendations drawn from their recent experience with the drafting process associated with China’s most recent AC energy efficiency standards. In particular, their recommendations describe the importance of early and credentialed involvement in the standard drafting process, the importance of equipping oneself with insights into the industry stakeholders affected by the standard being drafted, partnering with appropriate research institutions; and linking ambition-related proposals to market incentive mechanisms.

Over the last two decades, voluntary certification has become a prominent form of transnational private governance designed to embed environmental norms in global value chains. However, existing research has paid insufficient attention to the operation and influence of this new governance mode in China. This chapter chooses seafood as a critical case to understand the rise of transnational certification schemes in China’s unique governance processes dominated by the state. Combining data from different sources including field interviews and policy documents, my analysis shows how the rise of transnational certification schemes in China's seafood sector is shaped by the interaction among relevant stakeholders. Rather than relying on activist campaigns as the case in other contexts, private governance organizations and their supporters have engaged state-sponsored industry associations actively in China to enhance the legitimacy of their rules and generate interest among downstream businesses in the Chinese market. While this strategy has raised the awareness of Chinese stakeholders about the concept of sustainability and made some incremental progress, private governance alone seems unlikely to move the whole seafood sector toward sustainability without supportive public policies. Therefore, better integration between public and private governance is needed to promote sustainability transitions in China’s seafood sector.

In this chapter, the authors present a novel angle to observe China’s nonstate actors in green supply chain initiatives. The chapter introduces four case cities that have established various institutional arrangements to improve its green supply chain performance. Each case reflects the dynamics of central signals and local exploration. The observation suggests that the nonstate actors at both central and local level have played critical roles in developing and managing green supply chain initiatives, which is counterintuitive when it comes to the multi-level governance process in China. We also think those experiments is a new and perhaps controversial approach for private companies to collaborate with the government on environmental affairs. We assume that such efforts could become a practical approach of bargaining and collaborating with nonstate actors globally, to better prepare the Chinese business for being involved in the rule-making process of global supply chains.