An Empirical Study On The Role Of Environmental Policy In Enterprise Environmental Cost Internalization

With booming economy, the excessive consumption of resources and excessive waste emissions deteriorate the ecological environment. With more and more emerging environmental accidents, environmental issues have seriously affected the safety of people’s lives. These increasingly serious environmental issue has caused the widespread attention of the society. "China corporate citizenship report (2009)" blue book points out that the main source of environmental pollution in China is industrial enterprises, which accounts for about 79%of the total pollution. Enterprises, as the main sources of industrial pollution, have unshrinkable responsibility for the environmental pollution and resource waste. Among them, the heavily polluted enterprises are the main source of polluted emissions of industrial enterprises. Therefore, strengthening environmental regulation to the heavily polluted enterprises, especially high polluted listed enterprises in order to strengthen enterprises the consciousness of environmental protection and enterprise environmental behavior is of great significance. The internalization of environmental cost is one effective means to promote environmental responsibility of enterprises, which makes them reduce pollution emissions and realize sustainable development. The government began to implement the eleventh five-year plan in 2011, and the party’s 18th congress brought the major ecological construction into the overall layout of socialist cause with Chinese characteristics in 2012. Since then, the government developed a series of laws and regulations in our country, promote the pollution reduction and deepen the pollution prevention in a strong way. After several years, we may wonder, whether the policy has great effect on reducing environmental pollutants in enterprises and how does that work. Have the enterprises bear the environmental responsibilities? At the same time, China is a large country, the economic and social development level differs not only from region to region but also from industry to industry, which leads to different policies. Whether these differences were the significant factors of enterprises’environmental cost internalization is also an issue worthy of study.Based on the background above, this article studied the relationship between enterprises environmental cost internalization and the environmental policy in China. In order to help prove the positive impact of environmental policy on enterprise environmental cost internalization, the author used the data disclosed in the social responsibility report, the environmental report and the sustainable development report. This might be the first time for these data and information being used in an empirical study. Meanwhile, the author designed a new indicator of enterprise environmental performance based on the data and information collected from the reports above manually. The results of empirical analysis proves that China’s environmental policy has positive relationship with the level of enterprises’environmental cost internalization. The article found that as a result of strict regulation and more incentive policy, the enterprises in east district has a significant better environmental performance than the enterprises in middle and west district.