The Environmental Responsibility of
Multinational
Enterprises: Lessons from MIDROC Ethiopia
Desta,
Asayehgn, Sarlo Distinguished Professor of Sustainable Economic
Development, Dominican University of California
After the United
Nations Conference on the Human Environment held in Stockholm in 1972, and the Environment
and Development (UNCED) also known as the Earth Summit held in Rio de Janeiro, Brazil, in 1992, a
plan of action has been initiated to provide a framework for the consideration
of the environment and the depletion of natural resources. As a result, there has been a large push for the
creation and renovation of products and services of existing companies to be
environmentally-friendly.
More
specifically, the Earth Summit in Rio worked out a comprehensive blueprint known as Agenda 21 to chart future actions
needed for sustainable development that will be used throughout the world in
the twenty-first century. Given the
instructions in Agenda 21, a number of multinational enterprises have been embracing
higher environmental standards and are busy creating new designs to make their
products environmentally-sensitive in order to secure for themselves a
competitive advantage. As argued by
Porter, when companies become ecologically-sensitive, they can stimulate
greater innovation and can minimize their costs of operations by reducing
waste, conserving energy, recycling materials, and becoming efficient in the management
of transport fleets (Porter 1991. See also, Pearce and Barbier,
2006). Similarly, Demoss
and Nicholson argue that ethical investments are growing among businesses
because:
…the business
community has begun to recognize and make environmental issues a priority in
its strategic decisions. Leading organizations are shifting away from their
adversarial stance toward environmental concerns and are adopting more environ-mentally
sustainable practices, both as a hedge against future costs and as a means of
creating competitive advantage in the market place (2005, 338).
Given that
environmental and corporate social responsibility are about minimizing a
company’s adverse impact on social and natural capital, businesses have developed three possible scenarios to explore possible
responses to the challenges of sustainable development for the future. These include: 1) Long term environmentally
sustainable development; 2) Greenwashing or washing
green designs; and 3) No limits to economic growth and the innovations of
technology.
1) Environmentally-sustainable development. Since scientific evidence and a series of
environmental disasters led to radical industrial and economic change, a number
of multinational enterprises are attempting to shift their values and look more
intensively at their operations with an eye to using responsible corporate
initiatives to improve their global environmental and social track records, and
to make their businesses more environmentally-sustainable. The core objective
of sustainable development as a concept is multidimensional. It involves a decent standard of living, social cohesion, empowerment, full participation, a healthy environment, and more
importantly, it emphasizes ethics in relation to future generations (1987, 43).
Corporations
since the early 1970’s have increasingly begun to address environmental and social
responsibilities in their license to operate business, are becoming proactive by
working closely
in partnership with stakeholders. They
have taken the initiatives of Agenda 21 and moved the agenda ahead to handle
social and ecological concerns (Willums, 1998, p.
34). For instance, to satisfy
environmentally-sensitive consumers, who prefer to purchase socially and
environmentally sustainable products and services, many companies are openly promoting their operating
procedures and sharpening their marketing strategies to mirror their long term
environmentally ethical stance. In
addition, to improve their public image to sustain acceptance and appreciation
in most communities among socially conscious customers, investors, governments,
employees, and other stakeholder groups, a number of multinational enterprises
are also displaying on the front pages of their corporate websites their
underlying ethical values in the creation of jobs, transfer of appropriate technologies,
and their cooperation with civic groups of their communities to initiate
building projects. Moreover, to
demonstrate their commitment to environment corporate social
responsibility (ECSR) , many multinational enterprises are creating and developing their own
environmental standards or practices so that they can effectively internalize
the costs of environmental externalities to: a) participating in legally-binding
performance such as abiding by the Command and Control regulatory policies; b)
pushing for mandatory information disclosure such as increasing the amount of
information available to shareholders, consumers, and other stake-holders about
their products and services; and c)
encouraging business–government partnerships
(Pearce and Barbier,2006). On the other hand, to be a step ahead of the popularity
of the environmental movement which started in the 1970s’, many companies are
instead championing greenwashing, or washing green,
by infusing a new green image of
themselves as being friendly to the environment.
2) Greenwashing. The term “greenwashing”
originated from merging the concepts of ‘green’, (environmentally sound), and
“whitewashing” (to conceal or gloss over wrongdoing). By abusing the publicity
associated with sustainability, some businesses and multinational enterprises
use advertising gimmicks to give the impression that their products and
services are environmentally-sustainable.
To use the term coined by Jay Westerveldin,
the current wave of corporate environmentalism is called “greenwashing”
because it is rooted in deception. Stated
differently, greenwashing is the act of misleading
the public regarding their environmental operations and the environmental
component of their products and services.
In other words, as stated by Manteaw, much of
the idea of environment corporate social responsibility “… may sound good, and
might be appreciated in different communities, it is the manner in which they
are carried out, especially in voiceless communities, that call for a critical
evaluation and rethinking of what is now known as CSR. By voiceless communities, I am here referring
to communities all round the world where corporations and big businesses use
their social influence and economic power to dominate and exploit the resources
of local people for profit.” (2007,
p. , and United Nations 2000).
3)
No limits to Growth Approach. Based on the
neo-classical economic paradigm,
adherents of no
limits to growth argue that global environmental degradation has not yet
materialized and the challenges of sustainable development can be easily
handled because, “Rapid technological
innovation coupled with economic growth based on new clean industries service
and information technologies have generated the wealth to pay for a safe and
clean development. …The information technology revolution, a driver of what is
often called the “fifth wave” of technology, is only in its very beginnings,” (Willums, 1998, pp. 34-35). In short, in addressing the
reality of human conspicuous consumption of resources, the neo-classical school
is against government regulations to control resource degradation. They
optimistically argue that market-based economies will provide innovative ways
of achieving a sustainable future.
Given the three
scenarios, the purpose of this paper is to investigate whether multinational
enterprises in developing countries are practicing sustainable development or
are involved in greenwashing marketing gimmicks
in the interest of the bottom line, or are they in business as usual, hoping
that innovation in the market place will
improve their overall competitiveness improves the communities in which they
operate.
To explore these
scenarios and provide a critical analysis of the manner in which these
practices are carried out, the case of Mohammed International Development
Research and Organization Companies (MIDROC Ethiopia) will be used. As
illustrated in its website, MIDROC- Ethiopia Technology Group is a prime
investor and has more than 11 businesses under its management in Ethiopia.
Thus, MIDROC Ethiopia is an appropriate case study because MIDROC is a major
multinational enterprise in Ethiopia. In
addition, in its road map of corporate social responsibility it claims to
introduce a corporate Code of Ethics which is meant to bear much desired and long-lasting
socio-economic transformation and growth in Ethiopia (MIDROC Ethiopia, 2010).
Thus, MIDROC’s performance in Ethiopia will be investigated across two dimensions: its vision and mission
statement, and the structure of its environmentally sustainable development
strategies. The central question of the study focuses on: 1) is MIDROC
undertaking initiatives to promote environmental corporate responsibility with
its investment ventures in Ethiopia; and 2) how does MIDROC Ethiopia compare
with MIDROC Europe
with its practice of
environmentally-related investments; or is MIDROC using its social influence
and economic power to dominate and exploit the resources of local people in
Ethiopia to maximize its bottom line? To
be Continued
References
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