Some types of companies will need to pass an environmental assessment to go public or raise new capital, an official of China's environmental supervisor said on Monday.

Pan Yue, the vice director of the State Environmental Protection Administration (SEPA), said that the agency has issued a regulation stipulating that highly polluting companies must pass environmental inspections when applying for an initial public offering (IPO) or re-financing.

The regulation targeted companies engaged in power generation, steel, cement and aluminum production, and provincial companies classified as energy-intensive or highly polluting. That latter category covers 13 industries, including metallurgy, coal, textiles and paper.

The stipulation follows a circular from the China Securities Regulatory Commission (CSRC), which said that companies planning IPOs should include a SEPA assessment with their application.

Listed companies should disclose environmental protection information to investors, under the SEPA regulation. Pan said that the agency would inform the CSRC about those failing to reveal relevant information.

Pan said the rules were necessary because some enterprises might use publicly raised funds to expand production at heavily polluting plants and might fail to fulfill commitments to invest in environmental protection. Such actions would expose investors to risk if the government continued tightening pollution and energy conservation policies.

(Xinhua News Agency February 25, 2008)