Environmental performance of Chinese

listing manufacturing enterprise: from

investment perspective

Dan Hu, Chenpeng Feng, Liang Liang,

Peng Wu & Yuneng Du

Environmental Science and Pollution

Research

ISSN 0944-1344
Volume 26
Number 7

Environ Sci Pollut Res (2019)

26:6625-6635
DOI 10.1007/s11356-018-04112-y

1 23
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 Author's personal copy
Environmental Science and Pollution Research (2019) 26:6625–6635
https://doi.org/10.1007/s11356-018-04112-y

RESEARCH ARTICLE

Environmental performance of Chinese listing manufacturing enterprise:

from investment perspective
Dan Hu 1,2 & Chenpeng Feng 1,2 & Liang Liang 1 & Peng Wu 3 & Yuneng Du 4

Received: 13 August 2018 / Accepted: 27 December 2018 / Published online: 9 January 2019
# Springer-Verlag GmbH Germany, part of Springer Nature 2019

Abstract
With decades of high-speed economic miracle, China inevitably encountered with environmental pressure and sustainable
development problem. As the main carrier of the environmental responsibility, Chinese government set series of regulations
and standards to supervise and guide enterprise to fulfill this challenge emission reduction task. Based on data envelopment
analysis (DEA) approach, this paper focuses on air pollutant highly emission manufacturing tycoons to figure out Bwhether the
yearly billions environmental input really worth it?^ during 2014 to 2016. Unlike previous studies mainly from consumption
perspective and got macro-regional evidence, we choose micro-enterprise to analyze individual environmental performance and
draw general conclusions. Possible suggestions are also proposed for various industries and some salient enterprises.

Keywords Data envelopment analysis (DEA) . Sustainable development . Environmental performance . Corporate social
responsibility (CSR) . Manufacturing industry

Introduction meet their own needs. In essence, it is a process of change in

It is one classic economic pattern of Bgrowth at the cost of
resources, then remedy after developed.^ Among all the re-
sources, natural is considered to be most vital economic driv-
ing yet most vulnerable to be damaged. By the end of twenti-
eth century, serious environmental crisis arose such as global
warming, extreme weather, and irreversible ecological dam-
age. Until then, the whole world realized it is time to
Bpayback^ and proposed Bsustainable development^ concept,
which is development that meets the needs of the present
without compromising the ability of future generations to
Responsible editor: Nicholas Apergis
* Chenpeng Feng
cpfeng@hfut.edu.cn
1
School of Management, Hefei University of Technology,
Hefei 230009, China
2
Key Laboratory of Process Optimization and Intelligent
Decision-making (Ministry of Education), Hefei 230009, China
3
School of Economics and Management, Fuzhou University,
Fuzhou 350116, China
4
College of Economics and Management, Anhui Agricultural
University, Hefei 230036, China
which the exploitation of resources, the direction of invest-
ments, the orientation of technological development, and in-
stitutional change are all in harmony, meanwhile enhancing
both current and future potential to meet human needs and
aspirations. Thereby, its most important strategy is to promote
harmony among human beings and between humanity and
nature.
Likewise, China also repeated upper Bsacrifice then
remedy^ pattern. After four decades of Reform and Opening
up started at 1978, China had achieved high-speed economic
miracle, accomplished of transferring from agriculture-based
society to industry-dominated one and became world’s second
largest economy. Yet, this took the price of environmental
pollution and resource unsustainable. China already became
world’s largest carbon dioxide emitter in 2006; the external
dependence on net imports of oil had reached 64.4% in 2016;
irreversible pollutant incidents happened, and serious city
haze came up. Even at some stage, China took the wrong idea
of development based only on economic growth, or more
directly on gross domestic product (GDP) boosting.
Fortunately, China took positive action to make up by promot-
ing BLucid water and lush mountains are invaluable assets^
concept, proposed by President XI Jinping in 2005, as well as
Benergy-efficient and environment-friendly^ pattern, pro-
posed by Former-President HU Jintao in 2006. These
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6626
theoretically concepts were improving continuously by a se-
ries of rules and regulations. Of country and industry level,
specialized legal system was keeping perfecting by The
Environmental Protection Law (1979), Regulations on
Construction Project Environmental Protection Management
(1988), and Environmental Impact Assessment Law (2002).
Moreover, Bcut overcapacity,^ especially cut the excess and
backward capacity in heavy industries, was also helping re-
lieving resources and environmental pressures significantly
since 2017. Of enterprise level, corporate social responsibili-
ty1 (CSR) activities, which stemmed from environmental sus-
tainability protection, was getting heavily and voluntarily at-
tentions. At present stage, majority of highly polluting enter-
prises would spend considerable green governance2 funding
yearly, mainly on environmental technique transform and in-
novation and already made remarkable achievements. Taking
BThe Third Power Plant of Waigaoqiao^ as outstanding rep-
resentative, after constant efforts on technology innovation
and upgrading, it has been regarded as Bone of the world’s
cleanest coal electricity plant^ of 2015.
Ever since data envelopment analysis (DEA) was pro-
posed (Charnes et al. 1978; Banker et al. 1984), it has
been widely applied in environmental performance eval-
uating and assessing field. Thus, voluminous previous
studies focus on macro-regional evidences (Wu et al.
2014; Wang et al. 2018b; Long et al. 2018a, b; etc.),
with relatively scarce of micro-enterprise researches
(Long et al. 2015, 2017, 2018c; etc.). In this paper, we
focus on Chinese listing air pollutant highly emission
manufacturing tycoons to figure out Bwhether the heavy
environmental investment really worth it.^ We choose
this target group for two major reasons: data available
and sample representative. First, due to the disclosure
situation and policy, the relevance Bgreen^ data usually
incorporated in CSR report, which is still a voluntarily
disclosure decision made entirely by enterprise itself.
Actually, even not all the listing enterprises would make
this additive and informative disclosure, none to mention
the private enterprises which hardly disclose. Second, it
is an academic tradition and reasonable to focus on large
and influential company in the field of CSR issue re-
search. As we would discuss thoroughly at after, green
investment is tremendous. Only Btycoon,^ with big size,
steady profit level, and famous reputation, would able to
1
CSR refers to organizational actions and policies that consider several types
of stakeholders and the triple bottom line of economic, social, and environ-
mental performance (Aguinis and Glavas 2012). This means CSR focused on
many types of stakeholders, mostly outside the organization, and on outcomes
go beyond financial field. At present, CSR in China involves seven main
types: shareholder, customer, employee, supplier, community, environment
protection, and government.
2 formance so as to undertake CSR environmental responsi-
Consistent with a variety of related researches, this paper uses the terms
corporate social responsibility, environmental responsibility, sustainable, and
green interchangeably.
Environ Sci Pollut Res (2019) 26:6625–6635
and consider to making this investment. This group is
nature to be Blisting.^ Similarly, we apply DEA method
to follow the previous researches. Uniquely, we choose
enterprise Binvestment^ perspective rather than regional
Bconsumption^ one. Under the Polluter Pays and
Prevention Principle, we concentrate on industrial sector
since it is the larger economy contributor, energy con-
sumer, and environmental polluter. We define Bair
pollutant^ as both climate pollutants (mainly greenhouse
gases (GHGs)) and classic air pollutants (SO2, NOx,
smokes, and industrial dusts). Moreover, we narrow
down to five specific industries based on both regulatory
and academic focus: steel, cement, plate glass, electrolyt-
ic aluminum, and electricity generation (Carbon Dioxide
Information Analysis Center 2012; Ministry of
Environmental Protection of P.R. China 2014, 2017;
Long et al. 2015, 2017, 2018c). In general, we analyze
enterprises’ environmental performance thoroughly, draw
general conclusions, and provide possible guidance for
five industries and some salient companies.
Our study incrementally contributes to prior environmental
performance studies by adding enterprise-level evidences
from investment perspective. We also incrementally contrib-
ute to prior CSR studies by supporting evidence from enter-
prise’s active environmental activities. As far as we know, it is
the very first research to use micro-enterprise data (financial,
investment, and voluntarily disclosed emission reduction da-
ta) to evaluate environmental investment performance.
Empirical results may provide possible guidance for regula-
tors to set rule for different industries and for enterprises to
improve investment efficiency.
The paper is organized in six sections. The second section
reviews relevant practical background of Chinese enterprise’s
CSR activity in green issue, and proposes the essential re-
search question. The third section presents a literature
review. The fourth section describes the methodology design.
The firth section presents main results. Final section concludes
with a summary of key findings, and a discussion of
implications.
Practical background and research question
Background: CSR activities on sustainable
development
Of three levels contained in sustainable development, enter-
prise is the most fundamental and practical participated one.
It engages in concrete activities such as implementing eco-
logical operation concept and improving environmental per-
bility. Industrial, especially manufacturing enterprises, are
always being the large and front-end emitter since pollutants
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Environ Sci Pollut Res (2019) 26:6625–6635
are their inevitable by-products. Moreover, according to both
Polluter Pays and Prevention Principle, enterprises ought to
be the main body of environmental input. Hence, Chinese
government set specific environmental protection standards
and emission reduction tasks for enterprises every year, and
usually accompany with certain punishments if they fail to
fulfill. This indicated that at the very beginning, environ-
mental inputs were considered as Bcost^ because its original
intention was to force and supervise enterprises undertaken
their responsibility. However, with the improvement of cor-
responding market mechanisms, enterprises may also gain
directly and indirectly benefits, such as government subsi-
dies or incentives on environmental technology innovation,
tax preference, reduction of cost, enhancement of productiv-
ity, newly carbon-trading income, as well as building good
reputation of green. From this point, we believe that at cur-
rent stage, environmental input should be viewed as invest-
ment for enterprise to get long-term returns. Actually, al-
though the green activity is still a voluntarily choice for
most listed companies in China, more and more manufactur-
ing tycoons pay special attention and make great investment
in this issue, making environmental responsibility the major
part of CSR.
Our study concentrates on air pollutant only. We fully
incorporate both climate pollutants (mainly GHGs) and
classic pollutants (mainly as SO2, NOx, smokes, and in-
dustrial dusts). In particular, we consider only CO2 be-
cause it represents around 85% of GHGs. Meanwhile,
we consider the latter four types of pollutants due to the
industrial production characteristics and current disclosure
content. Furthermore, we choose five specific manufactur-
ing industries based on practical situation and regulatory
focus: steel, cement, plate glass, electrolytic aluminum,
and electricity generation. The first four are chosen be-
cause they had been criticized by Ministry of Ecology
and Environment of the People’s Republic of China as
Bkey^ air pollution regulation target, and the last one is
chosen because it is both the main force on carbon emis-
sion and the leading area in carbon trading.
Generally, environmental input incorporates expensed
items and capitalized items: The former include pollution
discharge fee, environmental monitoring fee, running and
depreciation expense of environment protection facility,
labor cost of environment protection, transport cost of
harmful material, green fee, disposable cost of solid
waste, and environmental R&D expenditure. The later
mainly refer to environmental technique transform and
innovation input. The cardinal principles of emission re-
duction include improving the sufficient of combustion,
desulphurization, and dust removal as well as change the
way of generating electricity, i.e., using low nitrogen clas-
sification combustion technology to reduce NOx emission
or using wind energy and photovoltaic power to reduce
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CO2 emission. Of our research, with the total input of
approximately 20.8 billion Yuan, sample enterprises
achieved the total emission reduction of approximately
200 million tons. This is the outstanding result on both
economic investment and environmental improvement.
Research question: efficiency of tremendous input
In general, under Polluter Pays and Prevention Principle, en-
vironmental input could be mandatorily cost under the regu-
latory request. Yet, under the agency theory, this input would
rather be regarded as investment due to self-interested eco-
nomic concern. We follow the first logical thinking to take
highly emission manufacturing tycoons as research objects.
Since their major by-products are emissions, it is their duty
to manager them. We also follow the second logical thinking
to attempt our research from investment perspective. As profit
organization, there is distinctive difference between Bdoing
necessary environmental governance^ and Bdoing sufficient
environmental investment.^ Combine these two consider-
ations, we apply DEA model to evaluate individual environ-
mental performance based on firm size, financial perfor-
mance, and governance characteristics. Our ultimate purpose
is to determine whether these yearly billions input really worth
it? Are there any improvement possibility?
Literature reviews
For the past four decades, voluminous researches focused on
evaluating and assessing environmental performance within
different branches, i.e., macro-area like country, province,
and city (Wolfe and Howes 2010; Tyteca 1996; F re et al.
2004; Song et al. 2014; Wu et al. 2014; Long et al. 2013,
2015, 2018a, b; Wang et al. 2018a, b; Song et al. 2018; etc.),
as well as micro-sector like firm and farm (F re et al. 1996;
Monlinos-Senante et al. 2015; Long et al. 2017, 2018c; Wei
et al. 2017). Among which, the efficiency evaluation method,
specifically DEA, has been widely applied in this field, pro-
posed by Tyteca (1996) and promoted by F re et al. (2004).
DEA is a non-parametric frontier method for measuring
relative efficiencies of peer decision making units (DMUs)
(Cook and Seiford 2009). The capability of dealing with
multi-input/multi-output settings without requiring any a
priori functional form and weight gives DEA an edge over
other analytical approaches, such as traditional econometric
regression or simple ratio analysis. Since the conventional
DEA model was proposed (Charnes et al. 1978; Banker
et al. 1984), series of modified models were promoted for
environmental area, i.e., F re et al. (1989), Chung et al.
(1997), Zhou et al. (2008), and Bretholt and Pan (2013).
Furthermore, the researches of corporate environmental
sustainability issue are of two major parts: performance and
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disclosure. From performance perspective, the mainstream
studies focus on energy consumption efficiency (F re et al.
1996; Long et al. 2017, 2018c) and economic-driving efficien-
cy (Jalil and Mahmud 2009; Jayanthakumaran et al. 2012).
From disclosure perspective, researches focus on CSR activ-
ities (Johnson and Greening 1999; Bansal and Roth 2000;
Crane 2000; Deckop et al. 2006; Basu and Palazzo 2008;
Trotman and Trotman 2015; Peters and Romi 2015;
Kanashiro and Rivera 2017). In these studies, various firm
factors, mainly governance mechanisms, were introduced to
investigate their influence on disclosure motivation, extent,
and quality, as well as the economic value and consequences
of disclosure activities.
Key literature on the subject has following characteristics
and weaknesses. First, DEA had been confirmed to be one of
the mainstream and scientific methodologies to evaluate envi-
ronmental efficiency or performance. Furthermore, majority
researches were from consumption perspective, treats input as
obligation or even Bburden.^ Additionally, majority evidences
were macro-regional findings, lack of micro-enterprise stud-
ies, especially on evaluating performance issue.
Methodology
DEA model
As mentioned before, we apply DEA as the tool for environ-
mental performance. DEA is a mathematical programming
technique, which is frequently used to evaluate the relative
efficiencies of a set of DMUs transforming multiple inputs
into multiple outputs. This choice is based on the following
reasons: (1) DEA is non-parametric which does not need one
certain production function form, avoiding the appearance of
the error of function form. (2) According to the Brule of
thumb^ principle, DEA does not need a large sample size to
pass the statistical test. The research sample of our study is
relatively insufficient for parametric analysis due to data ac-
cessibility (Cook and Seiford 2009).
As is known, there are two conventional DEA models:
CCR and BCC model (Charnes et al. 1978; Banker et al.
1984). CCR model measures the technical efficiency (TE)
by adopting constant return-to-scale (CRS) assumption, while
BCC model separates pure technical efficiency (PTE) and
scale efficiency (SE) by adopting variable return-to-scale
(VRS) assumption. In particular, TE is multiplied by PTE
and SE. Compared with CRS assumption, VRS is relatively
more suitable for practical setting. Therefore, our study also
adopts BCC model and analyses PTE.
Suppose there are n DMUs in a reference set. Each DMUj
(j = 1, ..., n) has m inputs, denoted as Xj = (x1j, x2j, ..., xmj)T, and
s outputs, denoted as Yj = (y1j, y2j, ..., ysj)T, where T in the su-
perscript indicates transpose. Without loss of generality, let us
Environ Sci Pollut Res (2019) 26:6625–6635
denote the DMU under evaluation as DMUo. The envelop-
ment form of output-oriented BCC model proposed by Banker
et al. (1984) can be given in (1).
max θo
n
s:t: ∑ λ j xij ≤ xio i ¼ 1; :::; m
j¼1
n
∑ λ j yrj ≥ θo yro r ¼ 1; :::; s ð1Þ
j¼1
n
∑ λj ¼ 1
j¼1
λj ≥0 j ¼ 1; :::; n
 
Let λ*j ; θ*o denote the optimal solution of model (1). By
solving model (1), we can get a benchmarking point for
DMUo. λj represents the scale of a DMUj that is involved in
forming the benchmarking point for DMUo. Model (1) max-
imizes the equi-proportionate expansion of the outputs of
DMUo. The optimal value of model (1), denoted as θ*o , is
defined as the reciprocal of the radial PTE of DMUo.
With the optimal solution in position, θ*o Y ro indicates the
maximal potential output of DMUo given the input bundle Xo.
Constraint (1.1) assures that any input of a benchmarking
should not be greater than the observational input of DMUo,
i.e., xio (i = 1, ..., m). Constraint (1.2) requires that any output
of the benchmarking should be greater than or equal to the
potential output θoyro. Constraint (1.3) denotes the convex
constraint which is the only difference compared with CCR
model. θo and λj are decision variables.
A noteworthy characteristic of BCC model is translation
invariant due to the convex constraint. In other words, the new
DEA model (after data linear translation) must be equivalent
to the old one (Seiford and Zhu 2002). The translation invari-
ant assures that BCC model can tackle with negative data
which is crucial for the computation of our study.
Measure and data source
At the core of economics is the concept of Befficiency.^ For
our research, it is the definition and measurement of
Benvironmental efficiency.^ The model proposed in our re-
search suggests that, for enterprises with same environment
input and emission reduction level, the one with smallest size,
highest financial stress, and lowest governance level will be
more efficient. Alternatively, for enterprise with same size and
financial and governance situation, the highest input and re-
duction level would be more efficient. What is more remark-
able is that environmental efficiency would consider both the
economic and the environmental factors simultaneously
(Song et al. 2014). From this attribute, we consider two kinds
of perspectives: Beconomic perspective^ and Benvironmental
perspective.^ The former one is used to present whether a
firm’s annual green input is sufficient in terms of its current
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Environ Sci Pollut Res (2019) 26:6625–6635
size, profit, and governance level; meanwhile, the latter one is
used to present whether a firm’s annual emission reduction is
sufficient in terms of the same level. For this consideration and
followed the previous classic research, we choose firm size,
ROA, board independence, and media coverage as input indi-
ces and environmental input and pollutant emission reduction
as output indices. Similar index system can be found in
Gomes and Lins (2008).
Our input indices are of three major parts: firm size, finan-
cial performance, and governance extent. Following the re-
searches of Adams et al. (1998), Ho and Wong (2001), Li
et al. (2011), and Han and Hansen (2012), we believe that
larger company is more likely to implement broader and
better environmental activities. Therefore, we use total assets
to measure firm size. Following the researches of King and
Lenox (2001) and Connelly et al. (2010), we believe that
better profit status usually associates with better environmen-
tal initiative and performance. Therefore, we use classic ac-
counting measurement ROA (return on assets) to value finan-
cial performance. Lastly, take Galbreath (2010) as representa-
tive, we believe that better governance, internal and external,
would put pressure on or help building reputation of green
activities so as to guide enterprise realizing better environmen-
tal performance. We use board independence (percentage of
independent directors) to measure internal corporate gover-
nance and media coverage (natural log of reporting number
on professional financial media, then plus one) to measure
external public governance. We collect corresponding data
from CSMAR and China Economic News, both are public
database.
Our output indices include two: environmental input and
pollutant emission reduction. Uniquely, we consider the first
one to be the investment stage output, as the initial action of
green governance is to present economic perspective, and the
second one to be the Beffect^ stage output, as the eventual
effect of green governance is to present environmental per-
spective. We coded these private data from yearly CSR report,
which are mainly voluntarily disclosed by company.
The original sample of five industries from 2014 to 2016 is
224 companies. However, after deleting the companies which
made non-informative disclosure, we get final 39 DMUs of 21
companies (we deem one company in certain year as one
DMU). All non-informative disclosures concentrate on output
indices, which mean they are either lack of the exact amount
on environmental investment or lack of the specific amount on
emission reduction. In practical, the former situation is usually
because the company was paying for pollution penalty during
that year, and the latter one is usually due to non-ideal reduc-
tion results. In short, enterprises would voluntarily disclose
Bonly good news.^ From this point, we may preliminary con-
sider this Binformative disclosure^ as one simple signal of
Bquality green activity.^ Appendix Table 4 shows specific
companies in our study.
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Results
Sample description
Table 1 and Fig. 1 provide detailed description and the char-
acteristics of the raw data.
First, of sample distribution part, the yearly distribu-
tion is relatively uniform, 9 DMUs for 2014, 17 DMUs
for 2015, and 13 DMUs for 2016. The disclosure distri-
bution is also relatively balanced; five companies ful-
filled the 3-year continuous disclosure, and eight compa-
nies realized 2-year disclosure, leaving rest eight compa-
nies only disclose once in 3-year time window.
Meanwhile, the industrial distribution demonstrates that
steel and electricity generation took the major part, and
one interesting finding of no plate glass company.
Combined with previous statements, we may generally
draw the conclusion that whole plate glass industry had
relatively poor performance during the sample period.
Second, of input index part, with the summation assets
of 2.5 trillion Yuan, and average level of 64.28 billion
Yuan, our sample companies totally fit the standard of
tycoon. The average ROA is 0.016; even eight DMUs
that suffered loss (with ROA less than 0) demonstrate
that sample firms had relatively low profitability; this is
consistent with reality situation of generally small profits
of manufacturing industry over the years, and more im-
portantly, steel industry suffered enormously losses in
2015. The whole sample also shows reasonable gover-
nance independence level (BoardInd) around one third
and certain media attention (Media) around 23 times
per year. Last, of output index part, with the summation
investments of 20.8 billion Yuan, and average level of
534.5 million Yuan, our sample firms do make efforts in
green protection, and with the summation emission re-
ductions of nearly 200 million tons, and average level
of 5.1 million tons for each company, we may also con-
clude these emission tycoons also achieved significant
results. More specifically, these reductions majorly con-
centrated on CO2 account the total sample of 97.34%. In
general, our research sample meets the uppermost criteria
of Btycoon, tremendous investment, and significant emis-
sion reduction,^ which provides the scientific and proper
foundation for findings and conclusions.
Efficiency evaluation
Table 2 and Fig. 2 provide the detailed efficiency results from
the perspectives of year and industry.
We choose efficiency value of BCC model (i.e., PTE value)
as the main findings because the VRS assumption is more
practical. Combine with return-to-scale (RTS) results, we
may find following.
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6630 Environ Sci Pollut Res (2019) 26:6625–6635

Table 1 Description of the raw

data Classification Indices Unit Mean St. dev. Min Max Summation

Input Firm size 109 Yuan 64.26 71.73 2.27 267.98 2506.26
ROA % 0.02 0.04 − 0.10 0.08 0.59
Board independence % 0.38 0.05 0.33 0.50 14.90
Media coverage – 2.14 0.82 0.00 3.61 83.44
Output Environmental input 106 Yuan 534.46 841.38 2.52 3977.00 20,844.11
Emission reduction 104 tons 510.66 1761.57 0.03 8154.38 19,915.71

First, 15 out of 39 DMUs are efficient, with the mean PTE
value of 0.569. Additionally, the significant efficiency improves
within 3 years, rising from average level of 0.43 in 2014 to 0.74
in 2016. This is clearly good news. Meanwhile, the industry-
level efficiency demonstrates as slightly better of electricity
generation (with the average of 0.6638), and pretty much the
same of rest three industries. Furthermore, unlike other three
industries of highly differences among each DMUs, companies
of electricity generation industry show small dissimilarity as
majority reach efficient level. This can be reasonably explained
by electronic enterprises’ feature of state-owned, deep pockets,
and actively green revolution in recent years. In general, this is
the factual and relatively good result.
Additionally, five companies are particularly worth com-
mendation: Shanxi Taigang Stainless Steel (000825), Fujian
Mindong Electric Power (000993), Xining Special Steel
(600117), Zhongmin Energy (600163), and Fujian Cement
(600802). These companies implement efficient in all disclo-
sure year, contribute eight efficient DMUs, 19.38% to the total
investments and 2.01% to the total reductions. We may inter-
pret this as Bbittersweet^ outcome, for one thing, one fifth
investment does not waste, yet for another, it does not get
equal proportion of reward, and surely has large room for
improvement.
Second, we can classify the efficient DMUs set into
two major types: Btotally satisfy^ group and Bstill has
potential^ group. For Yunnan Aluminum (000807) of
2016, Shanxi Taigang Stainless Steel (000825) of
2014, Baoshan Iron & Steel (600019) of 2016,
Zhongmin Energy (600163) of 2015 and 2016,
Sichuan Xichang Electric Power (600505) of 2016, as
well as SDIC Power Holding (600886) of 2015 and
2016, results demonstrate CRS efficient (i.e., TE =
PTE = 1). We consider them as in perfect state.
Meanwhile, for the rest VRS efficient DMUs (i.e.,
PTE = 1), take Shanxi Taigang Stainless Steel (000825)
of 2015 and Xining Special Steel (600117) of 2016 as
examples, results demonstrate that they realized pure
technical efficient, only in IRS stage. We briefly advise
them to not be afraid to increase input size because the
additional inputs would bring more outputs.
Last, we present two sets of noteworthy DMUs based
on RTS results. The first one is Maanshan Iron & Steel
(600808) of 2014; result shows VRS inefficient (0.215)
yet in CRS stage. We provide simple suggestion of
making more effort on outputs rather than enlarging
additional inputs. Otherwise, it would suffer unnecessary
input losses. The second group is three companies of

Fig. 1 Sample distribution

2014 Steel
Cement
2015
Electrolytic Aluminum
2016 Electricity Generation

by year by industry

All dislosure
Dislosure in 2 years
Only disclosure once

by disclosure frequency
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Environ Sci Pollut Res (2019) 26:6625–6635 6631

Table 2 Efficiencies and RTS results

Stock no. 2014 2015 2016

TE PTE SE RTS TE PTE SE RTS TE PTE SE RTS

Steel
600019 0.9340 1.0000 0.9340 IRS 0.4760 0.5910 0.8060 IRS 1.0000 1.0000 1.0000 –
600022 0.1350 0.1360 0.9950 IRS
000825 1.0000 1.0000 1.0000 – 0.9260 1.0000 0.9260 IRS
000898 0.0570 0.0570 0.9990 – 0.0180 0.0210 0.8670 IRS
600808 0.2150 0.2150 1.0000 – 0.2350 0.4090 0.5750 IRS
601003 0.1790 0.2410 0.7440 IRS
600117 0.4070 1.0000 0.4070 IRS
600282 0.1710 0.3070 0.5580 IRS 0.1070 0.1640 0.6540 IRS
Cement
600802 0.0880 1.0000 0.0880 IRS 0.0220 1.0000 0.0220 IRS
600585 0.1540 0.1550 0.9910 DRS
000672 0.1480 0.1700 0.8720 IRS
002233 0.0560 0.0580 0.9540 DRS
Electrolytic aluminum
000807 0.0660 0.0770 0.8560 IRS 0.2980 0.3140 0.9480 IRS 1.0000 1.0000 1.0000 –
Electricity generation
600886 0.0870 0.1570 0.5570 IRS 1.0000 1.0000 1.0000 – 1.0000 1.0000 1.0000 –
000993 0.9750 1.0000 0.9750 IRS
600163 1.0000 1.0000 1.0000 – 1.0000 1.0000 1.0000 –
000027 0.1480 0.2270 0.6540 IRS
600098 0.4380 0.4760 0.9200 IRS 0.6280 0.8590 0.7310 IRS 0.5960 0.6490 0.9180 IRS
600483 0.2340 0.2370 0.9870 IRS 0.3400 0.3780 0.9000 IRS
600505 0.8220 1.0000 0.8220 IRS 1.0000 1.0000 1.0000 –
600021 0.5820 0.5920 0.9840 DRS 0.3940 0.3990 0.9870 DRS 0.3080 0.3110 0.9910 DRS

VRS inefficient but in DRS stage: Guangdong Tapai
(002233) of 2015, Anhui Couch Cement (600585) of
2016, and Shanghai Electric Power (600021) of
2014~2016. Unfortunately, this group is inefficient in
all disclosure year. The results demonstrate that they
wasted on environmental inputs and should have per-
formed better on emission reductions. More importantly,
one company continued this situation for 3 years. We
believe that this is a significant problem that needs to
be solving urgently.
Benchmarks
After evaluating the efficiencies of 39 DMUs, we additionally
present the benchmarks for each DMU to be efficient. Table 3
presents DMUs’ expected outputs, its corresponding incre-
ments, and multiples of target-actual gaps. We italicized some
results in BTimes^ section if the figure is larger than 10.
These benchmarks provide targets for sampled com-
panies to perfect their environmental investments and
emission reductions. Since our model is output-oriented,
the evaluated DMU would realize efficient if its output
could be increased at the current input level. Major
findings bellowed.
First, we focus on the 15 VRS efficient DMUs (i.e., PTE =
1) mentioned in BDEA model^ section, and find that there
exist no slacks between benchmark and actual. This shows
strong efficiency and clearly good performance.
Second, of environmental investment part, the total invest-
ments amount should be 36.65 billion Yuan, with average
level of 939.7 million Yuan; the target value/figure is almost
twice as much as actual one. Additionally, we find the target-
actual gap continuously narrow down over 3 years; this is
consistent with previous efficiency findings. In terms of in-
dustry comparison, we find that the best performance is ce-
ment with average gap of 301.96 million Yuan, and poorest
performance is steel with average gap of 557.92 million Yuan.
Finally, we propose four DMUs worth particular attention:
Angang Steel (000898) of 2014 and 2015, Guangdong Tapai
(002233) of 2015, and Yunnan Aluminum (000807) of 2014.
 Author's personal copy
6632 Environ Sci Pollut Res (2019) 26:6625–6635

Fig. 2 Industrial distribution of 1.2 1.2

PTE
2014

PTE
2014
PTE value 1 2015 1 2015
0.8 2016 0.8 2016

0.6 0.6
0.4 0.4
0.2 0.2
0 0
Stock no. 000807 Stock no.

Steel Electrolytic Aluminum

(Mean PTE=0.5101) (Mean PTE=0.4637)
1.2 1.2 2014
PTE

PTE
2014
1 1 2015
2015
0.8 2016 2016
0.8
0.6 0.6
0.4 0.4
0.2 0.2
0 0
Stock no. Stock no.

Electricity Generation Cement

(Mean PTE=0.6638) (Mean PTE=0.4766)

Their gaps are all above 10 times. We would suggest these
companies to spend more on environmental issue.
Third, of emission reduction part, the total reductions
amount should be 397.44 million tons, and average level of
10.19 million tons; the target value is also twice as much as
actual level. The best performance year is 2015, with the av-
erage slacks of only 2.8 million tons, and poorest performance
year is 2014, with the average slacks of 10.17 million tons. In
terms of industry dimension, the best performance industry is
electrolytic aluminum, with the average slacks of 0.2 million
tons, and the poorest performance is cement, with the average
slacks of 8.49 million tons. Similarly, we pay attention to 15
DMUs with gap of above 10 times. Especially, Nanjing Iron &
Steel (600282) in 2014 and 2016 had reached up to 7380 and
1423 times; Shenzhen Energy (000027) even reached over
10,000 times in 2015. This demonstrates huge improvement
in reduction area; in another word, great wasted occurred and
needed to remedy.
Conclusions and implications
After decades of high-speed economic developing, China be-
gan to realize the importance of sustainable development and
take series of actions to promote. In this paper, we measured
the environmental performance efficiencies of 39 DMUs in
China during 2014 to 2016 based on manufacturing tycoons
by applying DEA approach. More specifically, we consider
environmental input as investment, focus on enterprise’s en-
vironmental responsibility, choose the highly emission and
state-owned manufacturing tycoons as research objects, and
focus on air pollutant issue. The ultimate target is trying to
figure out Bwhether the company’s tremendous environmental
investment year after year really worth it?^
Through empirical analysis, we find the following con-
clusions. First, during three sampled years, with total invest-
ment amount of 20.8 billion Yuan, total air pollutant emis-
sion reduction of 200 million tons (mainly as CO2 reduc-
tion) was achieved. This shows that our tycoons do make
effort on environmental sustainability, and gain certain
achievement. Second, of five certain industries we chose
based on practical situation and regulatory focus, no compa-
ny of Bplate glass^ makes informative disclosure and dem-
onstrates the whole industry lack of Bquality^ work. Third,
of efficiency part, 15 out of 39 DMUs are Bstrong^ efficient,
with the sample average efficiency value of 0.569, improv-
ing progressively year by year. This clearly is good result
and consistent with factual. Last, of benchmark part, the
cement industry shows relatively reasonable investment size,
yet the steel industry shows significant shortage; meanwhile,
the electrolytic aluminum industry shows relatively best per-
formance on emission reduction, yet the cement industry
exits largest actual-target gap.
Based on upper findings, we attempt to propose possible
implications. First, it is critical to raise emission reduction
target, at least in total quantity. Currently, there is enormous
 Author's personal copy
Environ Sci Pollut Res (2019) 26:6625–6635 6633

Table 3 Benchmark results

Stock no. Year Target Increment Times

Environmental input Emission reduction Environmental input Emission reduction Environmental input Emission reduction

Steel
600019 2014 320,100.00 41.37 0.00 0.00 1.00 1.00
600019 2015 270,895.00 694.17 110,894.50 284.17 1.69 1.69
600019 2016 397,700.00 96.00 0.00 0.00 1.00 1.00
600022 2015 117,360.00 28.41 101,451.70 26.08 7.38 12.20
000825 2014 150,551.00 13.03 0.00 0.00 1.00 1.00
000825 2015 132,094.00 0.71 0.00 0.00 1.00 1.00
000898 2014 158,716.00 624.14 149,627.00 588.39 17.46 17.46
000898 2015 141,699.00 19.49 138,698.60 19.34 47.23 129.95
600808 2014 139,504.00 18.45 109,504.20 17.25 4.65 15.38
600808 2015 73,351.80 16.96 43,351.80 16.40 2.45 30.14
601003 2015 53,986.00 23.02 40,985.96 22.62 4.15 57.54
600117 2016 21,000.00 6.37 0.00 0.00 1.00 1.00
600282 2014 54,096.60 1505.04 37,496.55 1504.84 3.26 7380.33
600282 2016 58,683.60 1313.36 49,083.59 1312.44 6.11 1423.09
Cement
600802 2015 4000.00 0.22 0.00 0.00 1.00 1.00
600802 2016 1066.00 0.28 0.00 0.00 1.00 1.00
600585 2016 82,491.70 4769.05 69,691.70 4029.05 6.44 6.44
000672 2015 39,261.10 161.95 32,594.41 134.45 5.89 5.89
002233 2015 51,715.30 80.58 48,696.25 80.55 17.13 2599.32
Electrolytic aluminum
000807 2014 65,033.10 33.51 60,019.07 31.86 12.97 20.28
000807 2015 79,072.00 40.08 54,230.03 28.36 3.18 3.42
000807 2016 19,000.00 1923.00 0.00 0.00 1.00 1.00
Electricity generation
600886 2014 146,901.00 6927.76 123,900.90 6924.49 6.39 2115.86
600886 2015 26,600.00 7552.77 0.00 0.00 1.00 1.00
600886 2016 164,700.00 8154.38 0.00 0.00 1.00 1.00
000993 2016 252.00 232.40 0.00 0.00 1.00 1.00
600163 2015 47,374.60 64.91 0.00 0.00 1.00 1.00
600163 2016 47,595.00 84.14 0.00 0.00 1.00 1.00
000027 2015 79,794.00 2303.12 61,694.97 2302.90 4.41 10,286.37
600098 2014 75,641.40 55.40 39,641.45 53.29 2.10 26.23
600098 2015 66,199.10 1366.23 9309.02 1365.39 1.16 1624.73
600098 2016 77,052.80 54.92 27,052.77 43.56 1.54 4.83
600483 2015 54,459.30 557.19 41,559.26 436.27 4.22 4.61
600483 2016 53,451.90 601.53 33,251.89 477.27 2.65 4.84
600505 2015 27,400.00 56.62 0.00 0.00 1.00 1.00
600505 2016 19,600.00 152.44 0.00 0.00 1.00 1.00
600021 2014 109,816.00 41.17 44,816.33 38.37 1.69 14.72
600021 2015 115,170.00 96.23 69,169.70 57.80 2.50 2.50
600021 2016 121,362.00 33.19 83,611.98 32.75 3.21 74.64

gap between target and actual. However, as we discussed in quite good in the green area due to the only disclose good
the previous part, most of our sample enterprises actually did news pattern. This may embody reality problem as setting
 Author's personal copy
6634 Environ Sci Pollut Res (2019) 26:6625–6635

the target too Blow,^ since it is reasonable to inference that
most enterprises would Bstop just after they pass the target
line.^ We suggest policymaker to raise target adequately to
simulate the potential of the enterprise. Second, it is important
to set different regulations for different industries. For steel
industry, we suggest it to continue enlarging the investment
scale. For cement industry, we suggest it to focus on reduction
area. For plate glass industry, we suggest that it should Bbreak
the ice^ and make special effort on informative disclosure. For
electrolytic aluminum, we simply praise its current perfor-
mance. For electricity generation industry, we affirm its lead-
ing role on tremendous input, yet remind it to pay more atten-
tion on the huge improvement space in emission reduction,
especially in GHG reduction. Last, it is necessary to treat each
enterprise individually, even within the same industry. The
key criterion is at which stage of return to scale this enterprise
is, and use it to decide whether to continue enlarging the green
input or not. This is the most direct way to not waste.
Our study can be further expanded in the following direc-
tions. We may enlarge sample size to broaden the application
scope of conclusion. Also, we may open the Bblack-box^ and
adopt the network DEA technique to measure the environ-
mental performance more accurately, meanwhile to discover
more inefficiency sources.
Acknowledgements This research is supported by the MOE (Ministry of
Education in China) Project of Humanities and Social Science (No.
JS2016JYRW0076), National Natural Science Foundation of China
(Nos. 71601062, 71701049), and China Postdoctoral Science
Foundation (No. 2017M620257).
Publisher’s note Springer Nature remains neutral with regard to jurisdic-
tional claims in published maps and institutional affiliations.

Appendix
Table 4 Companies sampled in this study

Stock no. Companies Industry Websites of companies

600019 Baoshan Iron & Steel Co. Ltd. Steel http://bg.baosteel.com/indexwww.html

600022 Shandong Iron & Steel Co. Ltd. Steel http://www.sdsteel.cc/
000825 Shanxi Taigang Stainless Steel Co. Ltd. Steel http://www.tisco.com.cn/
000898 Angang Steel Co. Ltd. Steel http://www.ansteel.com.cn/
600808 Maanshan Iron & Steel Co. Ltd. Steel http://www.magang.com.cn/index.xhtml
601003 Liuzhou Iron & Steel Co. Ltd. Steel http://www.liuzhousteel.com/
600117 Xining Special Steel Co. Ltd. Steel http://www.xntg.com/
600282 Nanjing Iron & Steel Co. Ltd. Steel http://www.600282.net/
600802 Fujian Cement Inc. Cement http://fjcement.shuini.biz/
600585 Anhui Couch Cement Co. Ltd. Cement http://www.conch.cn/
000672 Gansu Shangfeng Cement Co. Ltd. Cement http://www.sfsn.cn/
002233 Guangdong Tapai Group Co. Ltd. Cement http://www.tapai.com/
000807 Yunnan Aluminum Co. Ltd. Electrolytic aluminum http://www.ylgf.com/
600886 SDIC Power Holding Co. Ltd. Electricity generation http://www.sdicpower.com/
000993 Fujian Mindong Electric Power Ltd. Electricity generation http://www.mdep.com.cn/
600163 Zhongmin Energy Co. Ltd. Electricity generation http://www.zhongminenergy.com/
000027 Shenzhen Energy Group Co. Ltd. Electricity generation http://www.sec.com.cn/
600098 Guangzhou Development Group Inc. Electricity generation http://www.gdg.com.cn/
600483 Fujian Funeng Co. Ltd. Electricity generation http://www.fjec.com.cn/
600505 Sichuna Xichang Electric Power Co. Ltd. Electricity generation http://www.scxcdl.com/
600021 Shanghai Electric Power Co. Ltd. Electricity generation http://www.shanghaipower.com/

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