(Note: We use the term environmental policy as synonymous with environmental management. In our view, policy is a form of management. We avoid using such terms as "environmental administration" or "care for the environment", which mistakenly imply that corporate environmental policies care for or administer to the environment.)
If the initiative for sustainable development is
to be left to the transnationals, then their environmental management policies
will have to reflect their alleged good intentions. These policies should
be so strong that they transform company activities in the direction of
sustainable development.
Company environmental policy is changing fast. In
recent years, transnationals have become increasingly aware of the negative
environmental effects of their activities. There are two main reasons for
this:
"The business community, including transnational corporations, should recognize that environmental management is one of the highest priorities and a decisive factor in sustainable development."
Can and will the transnational corporations come through on this?
The United Nations
published a study in 1993 entitled "Environmental Management in Transnational
Corporations." <18> This report, better
known as the Benchmark Survey, brings to light the present state of environmental
management in 210 transnational corporations with an annual turnover of
more than 1 million dollars per year. The research was carried out in 1991.
Almost 800 corporations were approached. While this study is the most detailed
of its sort, the low response may indicate that it does not reflect the
average situation, but more likely the best that transnationals achieve
in the area of environmental management.
Analysis of the questionnaire responses identified
four levels of corporate environmental management based on compliance with
environmental interests:
The authors report an inseparable link between company activities and governmental policy and regulations. They assume that, in order to introduce more far-reaching forms of environmental management within the entire transnational corporation, matching governmental management must be established, and that a legal framework, tough monitoring and a stable government policy in the corporation's 'home' country are the most important inducements to voluntary initiatives for environmental management. (Benchmark Survey, page 169). Chapter 7 discusses international environmental laws and regulations
| The four levels of corporate environmental management | ||
|---|---|---|
| Management type | Corporate activities | Supporting government activities |
| 1. Compliance-oriented management (The reactive corporation) |
|
|
| 2. Preventive management (The lean and precautionary corporation) |
|
|
| 3. Strategic environmental management (The opportunityseeking corporation) |
|
|
| 4. Sustainable development management (The responsive corporation) |
|
|
In the seventies and eighties, large chemical
concerns were able to undermine the tighter emission permits by linking
them to new research into environmental and cleaner production technology
which progressed particularly slowly causing time limits to be constantly
extended and delaying the deadline for the application of standards.
A 1989 SOMO study of the environmental practices
of Royal Dutch Shell Chemicals in Pernis,
Holland, concluded:
"Using the delay tactic of conducting research
into improving hazardous waste discharges, Royal
Dutch Shell Chemicals was able to continue dumping unlimited quantities
of organic chloride substances and maximum amounts of drins and fine ash
into the surface water.
It was difficult for people in the neighbourhood
and environmental pressure groups to get a grasp on and have a say in the
procedures surrounding the issuance of a new discharge permit for extra
environmentally toxic substances into the surface water (these substances
were not included in the 1987 permit). Shell-Pernis
claimed all the time and space it needed to decide whether and when it
would convert to reducing or stopping emissions of environmentally toxic
substances into the surface water.
It has also given itself as much time as it needs
to determine the speed at which it will stops drins, organic chloride substances
and light ash emissions." <19>
In developing countries, it is usually difficult
to develop, introduce and enforce an entire set of standards and rules.
The relative scarcity of scientific personnel and financial resources often
leads to dependence on the expertise of the transnational corporations
themselves, certainly in the area of technical training. This makes it
quite difficult to independently enforce legislation.
Environmental rules and regulations in the industrialized
North have steadily improved over the past decades. In a previous chapter
we saw that companies have scored striking successes in reducing pollution,
at the local level. The above example, however, illustrates that environmental
management solely aimed at conforming to the rules and regulations has
little value. The company was able to undermine the emission permits for
new productions units. Its true purpose was to create as much room for
manoeuvre as it could.
It is, however, vitally important for transnational
corporations to explicitly develop company-wide policies to comply with
national and local environmental rules and regulations. All the more so
for their operations in developing countries, where governments don't always
have the resources to monitor and enforce their own national laws. Unfortunately,
few transnational corporations actually have such a company-wide policy.
The authors of the Benchmark Survey noted a
"disappointing number of examples of transnational corporations which explicitly referred to international conformity in their environmental aims, although more than half of the companies researched have activities in developing countries." <20>
The claim that transnational corporations will
voluntarily develop environmental initiatives, to adhere to international
environmental rules and regulations, can be treated, it would seem, with
a grain of salt.
The Benchmark Survey observed that corporate environmental
management used six policy instruments in complying with regulations: end-of-the-pipe
solutions, reduction measures, the monitoring of emissions, issuing reports
on levels of conformity, training and the development of disaster plans.
Most corporations in the Survey applied at least one of these measures,
which are aimed solely at controlling and managing the releases of polluting
substances to conform to standards and regulations, within a given level
of pollution in the production technology and a given organization of the
labour process. They are all measures taken once the damage has been done
to confine the environmental damage to the legally prescribed proportions.
The disasters at Union Carbide in Bhopal,
at Seveso and at Sandoz in Basel have had an enormous influence on the
safety policy of corporations as well as corporate an governmental disaster
plans and projections in Europe. If they had not already done so, most
concerns appointed general safety coordinators to coordinate factory safety,
the flow of information to the local population and disaster planning.
These personnel coordinated safety activities world-wide, and their contact
with the corporate head was consolidated. Many companies improved and intensified
safety, health and environmental auditing, and responsibilities were defined
more carefully. More alarm and detection systems were installed. These
measures strengthened the involvement of the head office in the coordination
of safety problems, in particular in the higher risk branches of the company,
and heralded a shift in emphasis towards anticipation and prevention.
The 1985 Seveso Guideline, which prescribes
disaster planning and risk analyses for European companies, is a clear
example of mandatory environmental measures at the European level.
In recent years, modern electronic information
technology has provided many new opportunities for monitoring and quantifying
environmental effects. "Green accounting" became available to corporations.
This is the weighing of environmental effects against the costs of environmental
management. This link to financial accounting does, however, have its drawbacks.
When a company activity is contracted out to another firm, this activity
is no longer the responsibility of the first company and no longer part
of the process of weighing green priorities. If a company decides to contract
out transportation, it will need less energy (diesel fuel). If it contracts
an administration firm for salary administration, it will use less paper.
Green accounting does not show that this is simply a diversion of activities
from one company to another and that no gain has been made in terms of
the environment.
The Benchmark Survey found that one third of the
companies interviewed use some form of green accounting. United States
companies in particular tend to apply preventive environmental management,
using internal audits, risk analysis and related preventive activities,
since when they are found liable for damage, the penalties are high. The
Superfund legislation has been a particular impetus to change company policy
on environment, safety and health.
The Superfund was introduced in the United
States at the beginning of the seventies to finance surface clean-ups for
damage done where no culprit can be found or when the risks cannot be insured,
is the case with nuclear power plants. The fund is fed by levies, the yield
of environmental penalties and damage compensation.
In the spring of 1994 the Clinton administration
opened negotiations with representatives of employers and environmental
organizations to change the Superfund law. The intention is to alter the
following parts:
Another important impetus to the widespread application of preventive environmental management in the United States is legislation on the availability of information on corporate pollution, the so-called "Right to Know"-law.
In 1986, the US Congress passed the "Emergency
Planning and Community Right-to-Know"-Act, or EPCRA. An important aspect
of the EPCRA is prevention of chemical accidents and the promotion of disaster
plans. Part of the law - the Toxics Release Inventory, also known as TRI,
aims to inventize data on daily emissions of toxic chemicals into the air,
water and land and of the flow of wastes to waste reprocessing plants.
This national information bank has a uniform system of data input, and
its output is publicly available.
While it is a relatively new programme, it has greatly
influenced the way companies treat the environment, largely due to the
public availability of the pollution data. Environmental organizations
analyze the data and publish regular reports on companies and branches
of industry. Everyone now knows how much pollution is caused by which company.
Once a step in the direction of preventive environmental
management has been taken, the largest corporations don't hesitate to exploit
it in their PR, advertising and marketing policies. The public is flooded
with information on company environmental policy and products are promoted
as "green" or "natural".
In general, this information and marketing activity
aims to show how diligently the company is working to protect the environment,
and too claim that the consumer helps protect the environment by buying
its product. This is often a misleading sales tactic to improve the product's
sales, and it clearly demonstrates that we can't leave the onus for supplying
information on the environmental behaviour of transnational corporations
to their own free initiative. By contrast, the US Right-to-Know-legislation
illustrates the positive effect of binding legislation.
But it has two distinct disadvantages:
This is the same point at which other instruments of the total environmental management conflict with corporate thinking. Dialogue with the public is applied to stimulate "mutual understanding", and external auditing and data is made available to increase public control over the corporation, increasing public trust. In themselves these represent a step in the right direction, but as long as competing corporations are not forced to alter their environmental behaviour, these measures will not lead to fundamental changes. And as long as the "availability of information" is not instituted, information will be distorted and suppressed and we will continue to see a series of one-sided success stories and a lot of patting of one's own shoulder.
The Norwegian company, Norsk
Hydro, provides an excellent example of how information is distorted
for the purposes of publicizing the environmental aspects of chemical fertilizers.
The largest manufacturer of such products in the world, Norsk
Hydro also produces aluminium, magnesium, oil, gas, industrial gas
and other products. It has production plants in virtually every part of
the world, but most are in Europe.
The European chemical fertilizer market is shrinking
rapidly. This is the result of EC cutbacks in agricultural subsidies, farmers'
decreasing use of chemical fertilizers, and the increase in other forms
of agriculture which use little or no chemical fertilizers. Norsk
Hydro endorses the environmental need for careful application of fertilizers
but contests the notion that alternative agricultural methods using animal
and natural fertilizers is preferable, and has campaigned intensively on
this theme for the past four years.
To avoid appearing biased, it commissioned an independent
research into the environmental effects of both the alternative and the
established methods of agriculture. The results have been published and
widely distributed in seven languages (including Russian) in a very readable
book. As could be expected, the established system of agriculture is portrayed
most positively. Properly dosed, they say, chemical fertilizer is environmentally
better than the manure used in alternative agriculture, since it is cleaner
and cheaper for the consumer. This argument seems reasonable, but is not.
Norsk Hydro limits
environmental considerations in its book to application, not mentioning
the preceding stages of production of chemical fertilizers. It does not
mention that phosphate fertilizers are the product of a number of stages
of manufacture in which
"dirty" phosphate ore is cleaned and changed
into chemical phosphate fertilizer. The significant environmental damage
caused by this production process (for example through dumping cadmium
and radioactive substances) are not visible after the product exists on
the market. The price of chemical fertilizers does not reflect the cost
of the environmental problems caused throughout the manufacturing process.
Neither of Norsk
Hydro's conclusions, that chemical fertilizer is preferable to natural
fertilizer for environmental reasons, and that the end product is less
expensive to the consumer, are really proven. Essential information is
ommitted in this distorted argument that is being spread through all sorts
of agricultural organizations in Europe and beyond.
In recent years, Norsk
Hydro has been awarded several prizes for its environmental PR. We
are left to wonder about the quality of the environmental PR of other transnational
corporations.
Corporations employing strategic environmental management anticipate future rules and regulations in their research and development: the green R&D. They are active in consultations with civil servants, politicians and branch organizations to formulate new legislation and industrial codes of behaviour. In Northern European countries with a well-developed industrial state policy, the participation has shifted away from delaying or postponing the introduction of new environmental measures on a local or national level, to adapting these measures to the technical and economic possibilities available to the companies.
Hydro Agri Rotterdam is situated on the
Nieuwe Waterweg in Vlaardingen (the Netherlands). It is a subsidiary of
Norsk Hydro, the largest artificial
fertilizer producer in the world. Directly opposite the plant, on the other
side of a broad stretch of water, is another phosphate fertilizer producer,
Kemira Pernis, subsidiary of the Finnish chemical giant, Kemira Oy. Both
companies have been dumping highly contaminated phospho-gypsum into the
Nieuwe Waterweg for years and environmental organizations have been at
loggerheads with the two companies. The Ministry
of Traffic and Water announced as early as 1988 that the amount of
cadmium in the phospho-gypsum would gradually have to be reduced to nil.
Both companies negotiated with the local authorities
for a delay. Hydro Agri Rotterdam announced it would rebuild two phosphoric
acid units, not only to save energy, but also to insert an experimental
cadmium purification technique into the production process. The company
then applied the same delaying strategy used by Shell
Pernis and described earlier. It was unclear at that point whether
the experimental purification, which was still being researched, would
work on a full-scale level. Research time was needed to find out. In 1992
the reconstruction work to achieve energy savings began.
On the other side of the water, Kemira Pernis embarked
on a different strategy, declaring itself willing to invest in a cleaner
installation. Time was needed. Not for research, but simply for the assurance
that the government would not tighten its discharge restrictions for the
next 20 years. Only under these circumstances would the company begin cleaning
up its production technology, as this would ensure a guaranteed period
of depreciation for the new installations, and not require new, far-reaching
investments. If the government did not offer this security, Kemira Pernis
threatened, it would close the phosphoric acid plant.
In 1991, it looked as though the environmental
movement had achieved a victory. At a court hearing, the Council of State
annulled the discharge permits of both concerns. The whole application
procedure for new permits began again. The authorities permitted the companies
to continue with their now "illegal discharges", granting a temporary
permit until 1994. After this, the discharge standards were to be tightened
even further.
In the meantime, one of the two phosphoric acid
units at Hydro Agri Rotterdam has been closed down, as have the chemical
fertilizer (pellet) plants at both Hydro Agri Rotterdam and Kemira. Hydro
Agri has still not begun constructing its cadmium purification installation.
Most of the employees have been sacked. Kemira had to reduce its workforce
considerably, but the business is still in operation. Both companies now
have new permits for the period up to 2000. Because part of the phosphoric
acid production has closed down, Hydro Agri has no difficulties meeting
the lower discharge standards for cadmium. Without large-scale investments,
Kemira will have considerable difficulties with the new permit.
According to UNCED,
"environmental management directed toward sustainable development"
should, in the
first place, not only be globally applicable, but
also make allowances for the specific circumstances of developing countries.
This could be the development of specific policies and procedures for developing
countries in the area of: training programmes, internal emissions/discharge
standards (in the absence of government standards, or where existing standards
are too weak), technological cooperation, interest in the local community
and culture.
The Benchmark Survey found that only one or two
corporations had referred to developing countries in their declared environmental
aims. Moreover, only a few corporations stated that they applied the same
environmental auditing standards throughout the world.
A second aspect of "environmental
management directed toward sustainability" is the special attention
given the role of the corporation in world-wide environmental problems
such as the pollution of the oceans and atmosphere, loss of biodiversity
and destruction of tropical rainforests. These are naturally coupled to
international auditing and the public availability of data.
Once again, the Survey found that only a few corporations
scored points for this, except in the gradual cessation of the production
and use of CFC's which many corporations had undertaken. International
agreements on banning CFC's (The Montreal-protocol) seem to have
had their impact on corporate policy. The authors concluded:
"This suggests that when given a tangible and simple course of action the business community can respond with impressive positive environmental contributions, even in the case of rather diffuse and global environmental problems." <24>
A third aspect of "environmental management directed toward sustainability" logically follows on the preceding two: international cooperation on issues which fall into the area of contact between the business community and the environment. The Survey highlights the contribution of transnational corporations to the definition of international minimum environmental standards through active participation in their local business organizations.
If we look at the figures only, we can observe
tremendous progress in international cooperation. The period leading up
to the UNCED
conference gave birth to the Business Council for Sustainable Development
which represented member companies in the discussions on sustainable development.
The International Chamber of Commerce also devotes a lot of attention
to the discussion of the international environment. Thus, some 1,000 transnational
corporations were involved in one way or another in the preparations for
UNCED.
The BCSD, which was originally established as a
one-off coalition, is now a permanent entity. The international environment
conference for industrial corporations, WICEM, is now a regular occurrence.
Unfortunately, none of this has ever been aimed at developing minimum environmental
standards or other forms of binding international regulations. As we saw
in the second chapter, the aim of the corporations
and their organizations was to prevent the development of such regulations.
In chapter 8 we will discuss
the advantages and disadvantages of establishing international minimum
environmental standards in relation to GATT.
Once the step has been taken to introduce preventive
environmental management most, and particularly the larger concerns, exploit
these in their PR, marketing and advertising campaigns. A stream of industrial
"environmental information" reaches the public, promoting the product
as "green", "natural" etc. The often misleading and sometimes
absurd nature of this sort of "environmental information" clearly
illustrates that we cannot leave the supply of information on the environmental
behaviour of transnational corporations to the voluntary initiatives of
the companies themselves. Legislation concerning the availability of pollution
statistics in the United States illustrates the positive effect of binding
legislation in this area.
Strategic environmental management requires an all-round
re-orientation in company planning, research and development and investment,
and the support of the corporate head. Life Cycle Analysis is a
useful aid, as it estimates the environmental consequences of all stages
of the production chain, including the waste stage, but it does not force
even the most polluting companies to retire from business. At best, it
leads to improving environmental management within the chain of production.
This is also reflected in the PR policy of these corporations.
Even the most far-reaching environmental policy
"aimed at sustainable development", which only a handful of companies
claim to practice, does not guarantee optimal results: world-wide application
of the same environmental standards or auditing is only a step towards
the application of the toughest standards. Paying attention to world-wide
environmental problems is only useful if this leads to absolute reductions
in particular emissions at company level.
All these limitations lead to the conclusion that
more than voluntary initiative is needed to stimulate the evolution of
corporate environmental management in the best direction from the (world)
environmental perspective.
Comments and questions are welcome:
CONTRAST Advies - Milieu
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