China to Assign Some Credit Ratings on Environmental Protection

China, the world’s biggest emitter of greenhouse gases, will assign credit ratings to companies in industries with heavy pollution or overcapacity based on their efforts to protect the environment.

The rating will provide a reference to banks for reviewing credit for the companies and to authorities for arranging subsidies, the Ministry of Environmental Protection said yesterday in a statement on its website. Companies will be ranked on a four-level color-coded scale, with green representing the best and red the worst.

China is stepping up its efforts to appease public anger associated with environmental concerns, a main cause of civil unrest. The government has pledged to cut carbon emissions per unit of economic output by as much as 45 percent from 2005 levels before 2020.

Under rules on the new ratings, which come into effect starting March 1, banks are advised not to offer new loans to companies with red ratings until they have them upgraded. Provincial environmental protection authorities can assign the ratings or allow some social organizations to start the evaluation, according to the statement.

To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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