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




DeMoss, M., Nicholson, C.Y (July –Aug 2005). The Greening of Marketing: An Analysis of Introductory Textbooks, Journal of Education for Business, 80 (6), 338. 


Manteaw, B. (2007). “From Tokenism to Social Justice: Rethinking the Bottom Line for Sustainable Community Development.” Community Development Journal.  Retrieved May 7, 2010 from


“MIDROC Ethiopia  retrieved  April 19, 2010 from


Porter, M. (1991).American Green Strategy”, Scientific American, April, p. 168.

Pearce D. and Barbier, E. (2006). Blueprint for Sustainable Economy. London: Earthscan, 2006.


Willums, J.O. (1998).  The sustainable Business Challenge: A briefing for Tomorrow’s Business Leaders: A briefing for tomorrows business leaders. England, Sheffield:  Greenleaf Publishing, p. 34.

The World  Commission on Environment and Development (1987). Our Common Future.  London: Oxford University Press, p. 43.


United Nations (2000). Global Compact: Corporate Citizenship in the World Economy.