1

Chapter I

The degradation of the environment is one of the most discussed issues, in the contemporary

world. In a globalised world many would complain about the role of multinational corporations

in the developing countries which according to many are resulting in serious environment

damage in the host countries. In this paper we made an effort to clarify the conception and way

of works of the MNCs in the developing parts of the world. Analyzing the outcomes of the major

conferences by the United Nations we tried to discover the duties and responsibilities of MNCs

to bring sustainable development by keeping the environmental damage during the production

and disposal activities to minimum. Finally we recommended some about the protection of

environment and thus ensure a cleaner and better future for the world.

Abstract

2

Any casual observer of international relations could define the term “MNCs” or “Multinational

Corporation” a such type of business of organization which operate throughout the world having

home in one country and have in fact a positive impact in the economies of the host developing

countries and side outing the issues that MNCs activities would have its adverse impact on the

human environment of the host developing countries. Our paper is mainly based on the adverse

impact of MNC of the environment of the developing countries. So in this paper we will discuss

about conceptualization of MNCs, the factors by which MNCs are more attractive to developing

countries and finally why the developing countries are more eager for MNC investment.

There are several labels that could be used for defining the term that is here denoted as

“Multinational Corporation”. The vocabulary here preferred by the UN has been “Transnational”

where as “Multinational is widely used by the business community and academician.”1However

a simplified definition of MNC could be as follows”

“MNCs could be defined as such corporations which has its certain minimum size, which

controls production and service plants outside its home state and incorporates these plants in to a

unified corporation strategy.”2

The term multinational corporation was first used by “David Lilienthal” who in fact defined

MNC as follows:

“MNC‟s are such corporations which have their home in their one country but which operate and

lives under the laws of other countries as well”3

1 Vilijam Engatrom, “Who is responsible for Corporate Human Rights Violations” available at

www.abo.fi/media/report to.pdf. 2 ibid

3 Stephen J kobrin, “Sovereignty at Bay: Globalization, Multinational Enterprises and International Political

seytem.” available at www.management.wharton.upenn.edu.pdf.

Introduction

Conceptualizing MNC and Its Influence

3

MNC‟s could be identified as a new “Leviathan” in this age of globalization which is defined by

Global & Bruner as follows:

Multinational corporations are practically in every sphere of Modern life, form policy making in

regard to the environment and international security, from problems of identity and community

and from the future of works to the future of the nation state.” 4

For dunning -

“Any corporation that engages in FDI and owns and controls value adding activities in more than

one country is Multinational Corporation.”5

From the above definitions of it‟s indeed clear that some feature is associated with the term

MNCs which are as follows:

The activities of MNCs involved more than one nation.

MNCs are responsible for most foreign direct investment.

The term multinational corporation and transnational corporations as well as multinational

enterprises (MNEs) have been used interchangeably in different international instruments and

scholarly works. The terms are employed in a variety of contexts and there is no general

consensus how to utilize and define such corporations. No matter how TNCs, MNCs, and MNEs

are defined, the corporations tend in general to be large, politically influential and autonomous

entities that can move operations from separate countries.6 MNCs within the international system

are economically influential and larger than some national economies. MNCs can exert influence

that approaches the level of states or even surprising it.

4 Nazia Habib Mintz, “Multinational Corporations role in improving labor standards in developing countries.”

available at www.harvard.academia.edu. 5 Abdulai Abdul-Gafarul, “Are Multinational Corporations compatible with sustainable development ? the

experience of Developing Countries.” Available at www.ciber.gatch.edu/workingpaper.pdf. 6 Natalia Dimitrieva, “The Accountability of Multinational Corporations in Human Rights Violations” available at

www.gupea.gu.se.com.

4

The growth and international economic dominance of multinational corporations is drawing

increased inspection as their power becomes more significant. The period 1970-2000 saw an

enormous growth of activity by multinational enterprises. In 1970‟s only 7000 MNCs exited but

in the year 2000 there were 63000 parent firms.7 In the year 2003, more than 65000 multinational

corporations were doing business and controlling assets in more than one country.

In briefly we can look at the following table

Year Number of MNCs

1970 7000

2000 63000

2003 65000

MNCs increased their number of exports from 25 percent in the 1980 to one-third in the

1990s.8One of the significant information about Multinational Corporation is that it‟s indeed

very big. The most popular way to express this is that among 100 biggest “economies” in the

world 51 percent are corporations and only 49 are countries.9We can understand it by a pie chart.

7 Shauna J. Sadiwski, “Bringing Multination Corporations into the Environmental Treaty-makinh Process through

the UN Global Compact” Available at www.cari.com/articles.pdf. 8 Ibid

9. Paul De Grauwe, “How Big Are The Big Multinational Companies?” Available at www.econ.kuleuven.com/pdf

Current status of MNCs

5

It is giving the impression that large corporations are now larger than the average nation-state

MNCs participate in over 60 percent of world trade, playing a significant role in production,

distribution, and sale of products from developing and developed countries. Sales of the largest

100 multinational corporations increased from $ 3.2 trillion in 1990 to nearly $ 4.8 trillion in

2000. Furthermore, of the world‟s 15 largest budgets, six are governmental and nine are

corporations; each of the top 15 MNCs has budget greater than the GDPs of at least 120

countries.10

The increasing power of the MNCs is also represented through foreign direct

investment (FDI).Cross-border mergers and acquisitions, in which a foreign corporation acquires

more than 10 percent control of domestic enterprise, increased from $94 million to $86 billion

between 1996 and 2000. This has a particularly profound effect on developing countries in which

foreign direct investment (FDI) constitutes country‟s largest sources of external finance.11

The

sheer size and enormous influence and economic power of MNCs mean that it has the capacity to

influence domestic policy of the host countries. As some benefits associated with them political

and economic decision by the elected government are sometimes able to influence domestic

policy outcomes of host developing countries by threatening to move jobs elsewhere.12

So in

general MNC‟s have its tremendous influence in this age of globalization?

10

Paul De Grauwe, op.cit 11

Ibid 12

Abdulai Abdul-Gafaru, op.cit

6

Chapter II

Questions of the term paper

What are the reasons behind the Interest of MNCs toward Developing Countries?

What is the role of Multinational Corporations regarding the environmental protection?

What are roles and duties of MNCs in Maintaining the Sustainable Development in

Developing Countries?

Methodology

This Assignment is basically qualitative in nature and based on secondary data.

Sources of data

Secondary sources are books, reports, published research studies, case studies, newspaper articles,

seminar and conference papers, magazines, documents available in the internet.

Techniques of data collection

The secondary data was collected from different sources. These include Dhaka University Library Paper

Section, Seminar Library of International Relations Department of Dhaka University, British Council, and

Department of Public Library and Internet.

Objectives

On the basis of the rationale and significance of the study the research objectives are

To understand about link between MNCs and Developing country

To know about environmental degradation committed by MNCs.

To understand interest of MNCs.

Questions, Methodology and Objectives of the paper

7

Chapter III

Brian Roach (2007) discusses issues such as MNCs historical development, their expansion,

numbers, economic power, political influence, social and environmental responsibilities, and

changing pattern of MNCs roles. MNCs are spreading particularly to the developing countries,

including China, Brazil, India, Malaysia and Mexico. It argues that corporations should be

viewed in a broader economic, social, and environmental context. Although, nearly all large

MNCs voluntarily publish reports detailing their impacts on societies and the environment, a

problem with these publications is a lack of standardization and independent verification. This

paper also argues that pressures from a number of directions is pushing MNCs to become more

transparent and accountable regarding their social and environmental impacts, but much more

needs to be done. Given the transnational mobility of MNCs, effective international action is

required. But, the problem is that MNCs exert significant influence over international agreements

and meaningful change will occur only if the interests of all stakeholders are represented in these

agreements.13

Abdulai Abdul-Gafaru (2006) argued that MNCs are perceived both as the source

of, and the solution to, the problems of environmental degradation. He stressed the argument of

dependency theorists and environmentalists that MNCs are driven by their profit maximizing

nature, and low income countries are in urgent need of employment opportunities. Therefore,

developing countries set negligent environmental standards in order to attract foreign investors

and MNCs do not need to deal with the high costs of conforming to the more stringent

environmental standards in the advanced world. MNCs have thus, transferred many pollution-

intensive industries to the developing countries. This literature includes a brief history of the

MNCs arguing that the modern MNC has its roots in the East and West Indies traders of the

mercantilist era. Particularly, since 1970s, MNCs have been expanding not only numerically but

also financially. The vast size and enormous economic power gives them the opportunity to

influence development and other policies both at national and international level. By promoting

13

Brian Roach, “Corporate Power in a Global Economy” (Global Development And Environment Institute, Tufts University,2007).”availableatwww.economicsnetwork.ac.uk/sites/default/files/Brian%20Roach/Corporate_Power_in_a_Global_Economy.pdf

Literature Review

8

the notion of industry self-regulation, MNCs have thus far succeeded in escaping calls for direct

regulation of their activities. However, multinational enterprises can positively contribute to

sustainable development through the transfer of environmental managerial skills such as safe

handling, transport, storage, use and disposal of toxic materials, and the development of

pollution abatement technologies that are not available to host developing countries. This

literature argues that to a large extent, the negative environmental impacts of MNCs stem from

the lack of a coherent regulatory regime to govern their activities, because, whereas voluntary

initiatives may be necessary to improve the environmental performance of MNCs, they are

clearly insufficient. 14

Joseph C. Ebegbulem, Dickson Ekpe and Theophilus Oyime Adejumo (2013) have

examined the link between oil exploration and environmental degradation in the Niger Delta

region; the relationship between social and economic underdevelopment in the region and

environmental degradation; and have examined to what extent oil exploration is responsible for

poverty in the region. They argue that several years of oil exploration and exploitation by MNCs,

and the hazards of spillage and gas flaring which accompany it, have degraded the environment

of the region and left the communities uninhabited. Ecological devastation caused by oil

exploration has rendered farming and fishing, which are the main occupations of the rural people

of that region, useless. It has also created health hazards. Occasional large oil spills kill fish;

destroy agricultural crops; pollute the waters which seriously affect families and communities.

They also argue that the oil money is neither invested in their localities nor in the cities around

them, rather such money is channeled to other major towns and cities outside the region or

invested in infrastructure which the region hardly benefits from.15

Rocca Salcedo Mesa (2007) focuses on refugees who are victims of the environmental

degradation caused by the industrialization of MNCs that exploit the natural resources and

destroy the environment. The author seeks a new interpretation of the Refugee Convention 1951

and its 1967 Protocol according to the context and problems of the new century. This article

argues that the systematic degradation of the environment by MNCs significantly affects the

14

Abdulai Abdul-Gafaru, op.cit 15

Joseph C. Ebegbulem, Dickson Ekpe &Theophilus Oyime Adejumo. (2013). “Oil Exploration and Poverty in the Niger Delta Region of Nigeria: A Critical Analysis”. International Journal of Business and Social Science, Vol. 4, No. 3, (2013), pp 279-287. Available at http://www.ijbssnet.com/journals/Vol_4_No_3_March_2013/30.pdf

9

ecosystem in irreversible manners contributing to a large extent, to the spread of infectious

diseases, which each year account for 20% and 25% of deaths all over the world; oil pollution

from gas flaring; oil spills; acid rain; unlined waste pits; hot and dangerous natural gas flares;

emission of thick smoke and greenhouse gases; and smell noxious causing air pollution which

accounts for 2.7 million to 3.0 million of deaths annually and of these, 90% are from developing

countries.16

Dennis A. Rondinelli (2004) writes that due to a complex set of forces many MNCs have shifted

from a strategy of avoidance or minimal compliance with regulations to a pro-active voluntary

environmental management.17

Francis O. Adeola (2001) has mainly focused on the issues of

global environmental injustice and human rights violations, and, the roles of the state and MNCs

in suppressing the rights of communal groups to a safe and sound environment. Using various

theoretical frameworks this paper argues that every year millions of tons of hazardous wastes are

channeled by MNCs based in core advanced industrial countries to underdeveloped nations of

Africa, Asia, Latin America, and Caribbean. The rising cost of hazardous waste disposal and

increased sensitivity to toxic waste Storage, Treatment, and Disposal Facilities (STDFs) have

encouraged MNCs to venture into the interiors of Third World countries where they can avoid

visibility, stringent regulations, liability, and environmental pollution accountability.18

B. S. Suresh (2003) writes about globalization and its impact on urban environment. He argues

that globalization is accomplished through MNCs which tend to set up production units with

cheaper labor, lighter health and safety requirements, lower environmental protection standards

and favorable tax laws in order to maximize profits. The author does not directly discuss about

MNCs impacts on global environment, but argues that globalization has led to unplanned

16

Rocca Salcedo Mesa, “Environmental Degradation and Human Rights Abuses: Does the Refugee Convention confer protection to environmental refugees?”, International Law Review, Colombia, (2007) P.75- 130. ISSN: 1692-8156. Available at http://www.javeriana.edu.co/Facultades/C_Juridicas/pub_rev/documents/03-RoccaSalcedo_001.pdf 17

Dennis A Rondinelli, “Creating a vision for Environmental Responsibility in Multinational Corporations: Executive Leadership and Organizational Change”. Journal of International Business Education, Available at http://www.neilsonjournals.com/JIBE/sRondinelli.pdf 18

Francis O Adeola, “Environmental Injustice and Human Rights Abuse: The States, MNCs, and Repression of Minority Groups in the World System”, Human Ecology Review, Vol. 8, No. 1,(2001), pp39-59. Available at http://www.nigerianlawguru.com/articles/environmental%20law/ENVIRONMENTAL%20INJUSTICE%20AND%20HUMAN%20RIGHTS%20ABUSE.pdf

10

urbanization, deteriorated urban environment by air and water pollution, ecological disruption

and resource depletion.19

Benjamin Maiangwa and Daniel E. Agbiboa (2013) particularly evaluate the success of the

2009 amnesty program that was initiated to stop the violence in the Niger Delta and to,

apparently, resolve the regions socio-economic needs. They argue that the ecosystem of the

Niger Delta is now at the edge of the abyss due to the irresponsible explorative practices of oil

MNCs in the region. The authors, therefore, call on the UN to take proactive measures and adopt

an international environmental law framework that will place great importance on the

environmental rights of indigenous and local people and bind the MNCs to internationally

accepted standards of behavior and provide them with appropriate rules of conduct in host

countries, especially in developing countries.20

Realist Theory

According to realist theory everyone wants to reach their goal at any cost and men by nature self-

interest. So every state and non state actor emphasize on their own interest. For this reason we

see that MNCs fulfill their goals or earn their profit without caring the environment of

developing countries.

Dependency Theory

Dependency theorists and environmentalists are generally doubtful about the contributions of

MNCs to the protection of the natural environment, particularly in host developing

19

Suresh B S, “Globalization And Urban Environmental Issues And Challenges” in Martin J. Bunch, V. Madha Suresh and T. VasanthaKumaran, eds., Proceedings of the Third International Conference on Environment and Health, Chennai,India,15-17December,2003.Availableat http://www.yorku.ca/bunchmj/ICEH/proceedings/Suresh_B_ICEH_papers_557to561.pdf 20

Benjamin Maiangwa &Daniel E Agbiboa, “Oil Multinational Corporations, Environmental Irresponsibility and Turbulent Peace in the Niger Delta” .Africa Spectrum, Vol. 48, No.2, (2013), pp71-83 Available at. http://mercury.ethz.ch/serviceengine/Files/ISN/168434/ichaptersection_singledocument/c555e65f-5560-4215-9a9a-a9df62576fd2/en/649-674-1-PB.pdf.

Theoretical Implication of role MNCs and Environmental degradation of

Developing country

11

countries21

.For these schools of thought, the profit maximizing nature of multinational

enterprises as well as their extensive marketing networks advocates that MNCs would try to

move their surplus products from one country to another until a market is established for such

products. Developing countries welcomed MNCs to invest and established industries in their

country without any obligation which can damage the environment.

Neo-liberal Theory

Neo-liberal economists oppose that MNCs are perhaps the most significant facilitators for

sustainable development, because multinational corporations usually hold newer and cleaner

technology and have better management practices which can be moved to their subsidiaries in

the developing world. Thus, rather than “pollution havens”, MNCs create “pollution halos” in

developing countries through the export of modern technologies. In support of the pollution halo

hypothesis, Eskeland and Harrison (1997) found that foreign ownership was associated with

cleaner and lower levels of energy use in Mexico, Venezuela and Cote d‟Ivoire. Similarly,

Blackman and Wu (1998) found significant support for the conclusion that foreign investment

in electricity generation in China increased energy.

21

Abdulai Abdul-Gafaru ,op.cit

12

Chapter IV

Although the MNCs proliferated almost 200 years ago, they are working as foreign investor with

the increase of the globalization. And as a result MNCs have now become one of the dominant

players of global economy. As soon as the trade barrier removed in the end of the cold war and

liberalization of market began, privatization and opening of the state economic enterprise etc.

increase the investment of MNCs in the developing countries mostly. Now the question arise that

why the MNCs are interested to invest in developing countries? What is the reason behind this

interest?

Firstly, MNCs searching for resources and larger markets found it profitable to look towards less

developed countries for the materials they desired.22

As MNCs are always looking for a means to

increase profits, they are frequently looking for cheaper and more efficient resources.

Secondly, the growth, cheap labor and efficiency of developing countries have also attracted the

MNCs. Advantage of the low wage levels of the labor, large domestic markets, rich natural

resources, and relatively growing economies; all these are very significant to understand the

motivation of expanded MNCs to developing countries.

Thirdly, MNCs make excessive or higher profits per dollar invested than their local

counterparts.23

Further many Third World governments tax the profits of their local firms at a

higher rate than they do those of foreign firms24

which also catch the attention of MNCs to settle

at developing countries.

Fourthly, it is very easy to manipulate the market and the people of third countries to buy the

products of different MNCs. As already mentioned that there are large markets but less

22

Available at http://voices.yahoo.com/multinational-corporations-their-effects-developing-385313.html 23

Available at http://www.acton.org/pub/religion-liberty/volume-2-number-5/multinational-corporations-third-world-predators-o 24

ibid

Findings of the term paper

Reason behind the Interest of MNCs toward Developing Countries

13

competition in third world countries, MNCs find it as a significant benefit to invest in the third

world countries. For example: Unilever has a monopoly market in Bangladesh and there are no

major competitors of Unilever products in Bangladesh.

Fifthly, the developing countries do not possess and also not capable to afford modern

technology to utilize their natural resources. Regarding this the MNCs invest in these countries

to utilize those natural resources with their modern technology.

Sixthly, MNCs are belonging to developed countries and the developed countries seek to

promote their products into the developing country‟s markets. As there are a lot of consumers

who are attracted by foreign goods, it is easier for MNCs to gain more profit investing in the

developing or third world countries.

Moreover, MNCs to pay such dividends that their managers seek out the most efficient workers

for the wages they pay, buy materials at the cheapest costs possible, seek to produce in countries

levying the lowest profit taxes, and sell in markets where they can earn the highest revenues after

costs.25

In fact globalization is a process in which the rich are gaining more way to become richer

as globalization itself is a pro rich concept. So MNCs are just following the concept of

globalization using the resources of developing countries for their own benefit but in the name of

helping the developing countries.

It is also need to mention that developing countries are mainly attracted to MNCs because of

FDI. Following table will project on the MNCs investment in the developing countries of the

world from 1914-2007

25

Available at http://www.acton.org/pub/religion-liberty/volume-2-number-5/multinational-corporations-third-world-predators-o

14

Table 01: Multinational contribution towards Developing countries.26

The Multi-national Corporations established on the basis of agenda of improving the efficiency

of capital flows, reducing world poverty levels and providing a positive externality. Its main

motivation was to increase their own profits; they mainly do what they demanded of them and

what they consider to do their own interest. But after the Conference of Environment and

Development (Rio de janeiro 1992) the Multi-national Corporations changed their paradigm and

are more aware about environmental degradation.27

The Multinational Corporations have been

the driving force in the spread of “green” technologies and in creating markets for “green

products.”28

The Multinational Corporations now take “eco-efficiency” incentive in their own

interest. It would become economically rational to utilize all available possibilities, i.e.:

Introduce environment-friendly technologies,

Cut down on consumption of energy and non-renewable raw materials,

26

Geoffrey Jones, “Multinational strategies and Developing countries in Historical Perspective” available at www.hswk.hbs.edu.html. 27

Klaus M. Leisinger, Global responsibility for Sustainable Development: The Role of Multinational Corporations, www.andrew.cmu.edu/course/73-371/UN_article 28

World Investment Report 1999: Foreign Direct Investment and the Challenge of Development, United Nations,

New York and Geneva, 1999, pp. xxvi–xxvii and Chapter X.

MNCs investment in the developing countries of the world from (1914-2007)

year World FDI stock (In Billion) Developing Countries

1914 14 63%

1960 54 32%

1980 551 22%

1990 1941 27%

2007 15,602 29%

Role of Multinational Corporations regarding the environmental protection

15

Pare waste to the minimum,

Replace problematic materials with other more sparing of the environment, and

Use materials that can be re-used or recycled.29

The Multinational Corporations currently operate within a heterogeneous world of environmental

problems and policies. These are

Environmental surveillance and information system

Most Multinational Corporations have created environmental advisors or technical specialist

positions in units of the firms below. The Headquarters level is fully committed to environmental

affairs. They also have environmental advisors in local and regional level. The result of national

and regional monitoring are periodically sent in the headquarters environmental staff unite and

are analyzed and collected into a broad-based global trend report that is then redistribute back

out to the field. Although few MNCs engage in direct of face-to-face contract with citizen

environmental organizations, most maintain some form of indirect liaison. For example, US

based metals firm has an “environmental information specialist” which role is to keep track of

the activities, viewpoints and legal maneuvers of all environmental groups active in United

States.

Environmental Research

Most MNCs have formally created research studies sections in their Research and Development

units. Many MNCs also participate in joint industry environmental research programme. One

example of a joint industry research programme is CONCAVE (the Oil Companies Internal

Study Group for Conservation of Clean Air and Water in Western Europe) which basic function

is to examine and to promote the use of means for preventing air, water, ground and noise

pollution attributable to the oil refining industry and to the use of oil products.30

29

Klaus M. Leisinger, “Global responsibility for Sustainable Development: The Role of Multinational Corporations,”

Available at www.andrew.cmu.edu/course/73-371/UN_article. 30

Thomas N. Gladwin and John G. Welles, MULTINATIONAL CORPORATIONS AND ENVIRONMENTAL PROTECTION: PATTERNS OF ORGANIZATIONAL ADAPTATION, International Studies of Management & Organization Vol. 6, No. 1/2, INTERNATIONAL MANAGEMENT (SPRING-SUMMER 1976), pp. 160-184, Available at http://www.jstor.org/stable/411038

16

Environmental inter organizational relations

Many MNCs participate in national and international intra industry; inter industry and

governmental industry groups on environmental matters. Because of their economic powerful

position, MNCs have historically put strong political pressure on governments against

environmental regulation. They have supported national lobby groups such as the Coalition for

Vehicle Choice in the US, and international lobby groups such as the Global Climate Coalition

and the Climate Council. These have consistently lobbied governments against emission controls

to reduce greenhouse gases on the basis that this would lead to severe economic impacts.31

Due to economic power and worldwide scale of activities, multinational corporations have been

recognized as having significant impacts on the global protection of the environment. As

economic liberalization poses growing demands on transboundary environmental management,

the role of the private sector increases in shaping environmental decisions, controlling the

environmental impacts of economic instability and redefining the dependence on ecosystems on

the basis of integration and interdependence of national economies.

In terms of their potential adversely to affect globally relevant environmental resources, MNCs

play a significant role in the utilization of the global commons. It has been documented, for

example, that more than 50% of global greenhouse gases emissions are generated by

multinational corporations. Biodiversity represents the prime resources for the development by

MNCs of new technologies and materials related to crops, medicines, fibers and food. Marine

pollution by wastes disposal at sea and harvesting of fish stocks are other activities undertaken

by corporations on a large scale.

With regard to the different use of environmental resources, MNCs are also extensively involved

in the exploitations of renewable and non-renewable, in the oil drilling, mining and forestry. In

addition, multinational corporations, particularly in the chemical and manufacturing sectors, are

31

John Mikler, the International Car Industry and Environmental Sustainability: Moving Beyond ‘Green-Washing, www.minerals.csiro.au/sd/pubs/Mikler.

The Link between MNCs and the international protection for the environment

17

responsible for the most of the production and management of toxic Chemicals and hazardous

waste.

From a different perspective, the international financial flows linked with MNCs foreign

investments have significant implications for the environmental sustainability, „in terms of both

ecological footprints of specific investment and the dev development trends they reinforce‟

In this regard, it has been observed that increasing acceleration in international financial flows

has outpaced the capacity or retarded the efforts of status to regulate or control multinationals for

the protection of the environment.

Furthermore, privatization of services related to the management of natural resource (such as

water utilities) may raise particular concerns in that governments may not be able to regulate

appropriately MNCs so as to ensure faire praises for basic services and the proper consideration

of environmental impacts.

Concerns over the negative impacts of multinational corporations on the global environment are

usually justified with reference to MNCs institutional functioning, guided by preoccupations for

short-term performance, competition and a piecemeal approach in environmental management.

On the other hand, the international scale of MNCs activities offers the opportunity for

improvement of environmental conditions worldwide.

18

Chapter V

Environmental injustice and human rights transgressions are inextricably interviewed. Seizure of

communal lands, displacement of indigenous communities, natural resource exploration, and

toxic waste dumping connate environmental injustice. In recent years, assaults on the

environment have escalated to an unprecedented level in human history. Over the past two

decades, the world has witness a large number of cases involving ecological and human rights

problems ranging from the military government extermination of indigenous population in Irian

Jahan, Indonesia, to ecological assaults and human rights violations in Africa, the Balkan, Latin

America, Malaysia, and the Philippines, which all suggested the need to frame environmental

rights as a significant component of human rights issues.

In recent years, MNCs have increasingly been accused of engaging in polluting or

environmentally degrading activities through their subsidies their subsidiaries, particularly in

developing countries. Human rights groups and local communities have done much to highlight

instances of pollution or illegal resource depletion, and often allege that activities are linked to

MNC collaboration in violating human rights.

In 1984 a leak of methyl isocyanides gas from a pesticide plants owned Union Carbide in

Bhopal, India, resulted in the loss of over 3500 lives and exposure of an estimated

521,000 individual to the gas that can result in chronic effects, including depression of

immune response. Plaintiffs failed in their attempt to sue in the U.S. and following much-

delayed litigation in India the case was settled for $470 million.

From 1982 to 1994, the village of Bukit in Malaysia was exposed to radioactive tailings

from the activities of the Asian Rare Earth Corporation-a Japanese/Malaysian joint.

Venture owned in part by Mitsubishi.

In 1998 a suit was brought against the Canadian company Cambior following a leak of

3.2 billion liters of cyanide-polluted water at Omai mine in Guyana.

Relevant case studies

19

Netherlands-based Royal Dutch Shell “Shell” apparently made no serious effort to keep

Nigeria‟s military regime from executing author Ken Saro-Wiwa and eight other

environmental activists in November 1995.Royal Dutch/Shell was alleged with the

Nigerian Government in imprisonment, torture, and killing of environmental activist

opposed to Shell‟s oil exploration activities.

Over the past few decades, the role of multinational corporations (MNCs) in sustainable

development has perhaps been one of the most controversial debates among scholars. The

environment has been at the center of the controversy. Whether MNCs is a force for good in the

promotion of environmental sustainability in developing countries or not become a burning

question. Briefly, the right answer is that MNCs are perceived both as the source of, and the

solution to, the problems of environmental degradation.

Due to their urgent need for employment opportunities, low-income countries are often

compelled to set careless environmental standards in order to draw foreign investors. This

problem, joined with the high costs of compatible to the more stringent environmental standards

in the advanced world, means that developing countries are likely to remain the “havens” of the

pollution-intensive industries of the multinational firms of the developed world32

.

32

Ibid.

Role and Duty of MNCs in Maintaining the Sustainable Development in

Developing Countries

20

The figure of transferring USA’s pollutants in developing countries33

From the 1980s, however, a series of environmental catastrophes associated with the activities of

MNCs such as the 1984 Bhopal disaster and the 1989 Exxon Valdez oil spill in the US34

are the

most remarkable, coupled with the recognition that humanity‟s survival is largely dependent on

the continued functioning of the natural environment, resulted in a considerable shift in thinking

regarding the role of MNCs in society. Given that MNCs are the most important players involved

in environmentally damaging activities many scholars now question the traditional model of

“business as usual” and call upon business enterprises to place the long-term sustainability of the

environment alongside their narrow commercial interests. This idea of balancing corporate

interest with environmental protection has given rise to what has become known as sustainable

development. From an international perspective, although issues concerning environmental

sustainability were first raised by the 1972 Stockholm Declaration35

the term was first used by

the WECD (World Commission for Environment and Development)to refer to any form of

development that „meets the needs of the present without compromising the ability of future

generations to meet their own needs‟. From the business perspective, sustainable development

means the adoption of „business strategies and activities that meet the needs of the enterprise and

its stakeholders today while protecting, sustaining and enhancing the human and natural

33

Availableathttp://www.google.com.bd/imgres?imgurl=http://www.ism.ws/files/images/Newsletters/Chemical/Chart3 34

Abdulai Abdul-Gafaru Op.cit, 35

Available at http://www.unep.org/Documents/Default.asp?DocumentID=97&Article

21

resources that will be needed in the future‟36

Thus, MNCs are attached with the duties of

maintaining sustainable development.

It is widely accepted that technological progress is an important factor in protecting the natural

environment. Technological advancement may contribute to reducing environmental

externalities in two major ways: first, high level of technology can help in the manufacture of

products which are less environmentally damaging to use or dispose of (e.g. fuel-efficient

vehicles); second, through sophisticated technology, pollutants may be emitted less intensively37

.

Warhust and Bridge (1997) also suggest that technological innovations such as energy-efficient

“flash” smelters, biotechnology-based leaching alternatives to smelting are substantially reducing

the overall use of resources and the damage to water, land, air and ecosystems.38

If it is accepted that increased technology can contribute to improved environmental

management capacity, then it might as well be that MNCs are the key to achieving sustainable

development, because they are the main transmission mechanisms of technology to developing

countries. In 1995 alone, over 80% of global royalty payments and license fees were by MNC

subsidiaries to their parent companies39

. Indeed, MNCs are not only the major technology

innovators, but they also possess skills in the safe handling, transport, storage, use and disposal

of toxic materials, and in the development of pollution abatement technologies. Moreover,

multinational enterprises can positively contribute to sustainable development through the

transfer of environmental managerial skills that are not available to host developing countries for

example environmental activities in China, from Novo Nordisk, (a Danish pharmaceutical MNC)

which developed a joint venture with the Suzhou Hongda Group in the production of starch-

degrading enzymes for the alcohol industry. As a result, untreated water is no longer discharged,

but processed through biological wastewater treatment plants which reduced the organic material

by 90 per cent40

.

36

Business Strategy for Sustainable Development: Leadership and Accountability for the 90s,the International Institute for Sustainable Development in conjunction with Deloitte &Touche and the World Business Council for Sustainable Development, 1992. 37

Abdulai Abdul-Gafaru Op.cit, 38

Ibid. 39

Ibid. 40

Ibid.

22

But the major problem is that the private sector is obliged under international law to promote

environmental sustainability, while there is no effective enforcement mechanism exists to ensure

compliance. In the response of such an absence of comprehensive regulatory body, many

corporations adopt voluntary initiatives often under the label of “corporate social responsibility”

or “corporate citizenship”. In a survey of 169 MNCs in North America, Europe, and Japan, the

United Nations found that more than 43% had published policy statements on the environment

that committed their companies to a significant degree of social responsibility in managing their

environmental impacts by 199341

. Environmental sustainability is a win-win scenario, for which

reason private profit seeking enterprises will voluntarily solve environmental problems even in

the absence of regulatory measures.

The MNCs is distinguished from national company by its capacity to place production across

national borders, trade across frontiers, make use of foreign markets, and organize managerial

structures in a way that affects the international allocation of resources. It is linked with

Environment in many ways. So we need to see the issue of environmental protection and role of

MNCs from a holistic approach where the role of the governments, MNCs and other people

concerned are very important to take a real difference. It is only through a joint and conscious

effort from all the parties concerned which could make the option of sustainable development

through environment protection into a reality.

41

Ibid.

Conclusion