Financial regulators ask companies to enhance risk management

Top financial regulators on Tuesday called on enterprises engaged in overseas investment to step up efforts to improve environmental risk management.

A total of seven financial regulators jointly launched an initiative providing suggestions for enterprises with overseas business to improve environmental risks management.

Some efforts include understanding local environmental laws, regulations and standards for specific sectors of their projects.

Enterprises engaged in overseas investment should improve the use of quantitative analysis of the environmental costs and benefits as part of the decision making process, according to the initiative.

Green supply chain management should be adopted in project design and initiation, project bidding, and in the procurement of raw materials and equipment procurement for large overseas infrastructural projects, according to the initiative.

Zhang Qinglin, director general of China Investment Association Green Development Center, said such efforts are encouraged because many companies lack of awareness how their projects, mainly infrastructural construction projects, may impose risks to local environment.

"Encouragement is the first step," he said, "we will provide more detailed guidelines in the future to help companies make environmental friendly investment decisions."

While improving the environmental risk management might increase enterprises operational costs, they will bring long-term benefits to companies, according to Ma Jun, chief economist at the research bureau of the People's Bank of China.

He said enterprises actively engaged in environmental risk management tend to have fewer credit risks.

Companies' performance on environmental risk management can be part of references for banks on credit issuance.

Banks are able to provide some preferential policies to companies with low risk levels, according to Ma.