China pension funds should ask more on environment, group says

Better coordination is also needed between stock exchanges in Hong Kong, Shanghai, Shenzhen and the China Securities Regulatory Commission to ensure compliance by companies, according to the Association for Sustainable & Responsible Investment in Asia.

An acid leak at Zijin Mining Group Co.'s copper and gold mine this month poisoned enough fish in the Ting River to feed 72,000 people for a year, and Dalian's beaches and port were closed by an oil spill at the nation's largest crude terminal.

Environmental accidents jumped 98% in the first six months of the year, as rapid economic growth takes its toll, the environmental protection ministry said.

"The government must encourage investors, namely Chinese pension funds, to be world class investors which demand greater corporate and social disclosure," said Dave Dore, the research manager at the association. "Their role as universal owner means that requiring greater disclosure is in their own interests."

China's work safety administration last week ordered intensified measures at factories, mines and construction sites to prevent accidents. Adding to the accidents at Zijin and Dalian, a gas-pipeline blast in Nanjing city killed at least 13 people, and 3,000 barrels of hazardous chemicals were washed into a river in Jilin this week.

"There appears to be insufficient investor demand for routine corporate environmental disclosure until there is an environmental crisis," Dore said. "The Zijin Mining case illustrates a common complaint about weak enforcement. The national government can have quite sophisticated policies and regulations, but these are often not enforced at the local level."

The government doesn't need to introduce new legislation, Dore said. Instead, it could support training programs for asset owners and managers, he said.