Corporations and the Environment

Author and Page information

  • by Anup Shah
  • This Page Last Updated Saturday, May 25, 2002

Corporate interests and actions can harm the environment

In the developing world, many development projects have come under criticism for damaging the environment, even when they are presented as helping it. Concerns have increased in line with the rising investment in the developing world.

In the late 1990s attention was drawn to a United Nations (U.N.) project to get corporate collaboration/sponsorship in development projects, supporting human rights and the environment, and being generally more responsible and accountable. However it fell under a lot of criticism for involving corporations that are known to have contributed or caused some of the more severe human rights and environment problems, allowing these companies to attempt to repair their tarnished image, while not actually tackling the problems.

In May 2002, the United Nations Environment Program (UNEP) released an extensive report saying that, “there was a growing gap between the efforts to reduce the impact of business and industry on nature and the worsening state of the planet” and that “this gap is due to the fact that only a small number of companies in each industry are actively integrating social and environmental factors into business decisions.” (The actual quote is from a U.N. News Centre article, 15 May 2002 that introduces the report.)

One sharp example of environmental problems caused by multinational corporations, is the drive to extract oil from Nigeria. As the previous link, from this site’s section on Africa shows, corporations have even backed the military to harass, even kill, local people who continue to protest at the environmental and other problems the activities of the various oil companies have caused. Some local groups have become extreme themselves, kidnapping foreigners for example.

The interests of the various big polluters, such as the auto, mining, oil and chemical corporations influenced the Kyoto Global Climate Change Conference outcome.

And with biotechnology and genetically engineered food production, companies are accused of following a profit motive even as they promote the technology as a means to address world hunger. Environmental concerns also feature quite strongly on this issue.

With increased consumerism, there has been a rise in the number of environmental groups campaigning on various issues such as environmentally friendly products. To varying extents then, environmental concerns are issues that sometimes make the mainstream news. However, a cover story, of Down To Earth magazine from Delhi-based Centre for Science and Environment as an example, warns that the latest craze in green and ethical consumerism may just be another way for corporations to exploit people and make money by misrepresenting the facts. As another example of this, EarthDay Resources’ annual Don’t Be Fooled Awards highlight some of what they call the corporate “greenwashing” that goes on through advertising and lobbying campaigns.

There are countless examples where corporate involvement in various issues could contribute to environmental problems as a result. Corporations are major entities in the world and thus have an enormous impact (negative and positive) on all our lives. And concerns of overly corporate-led globalization contributing to environmental problems are increasing, as reported and documented by countless environmental and social justice groups around the world.

Back to top

But corporations are also locked into a destructive mode that is hard to break out of

It is not that managers of corporations are necessarily “evil” and want to degrade the environment (especially their own, where they live). One might argue that when they operate in countries or regions that they don’t live, they might not care, but the other aspect which may be more fundamental is that it is perhaps a result of the nature of today’s businesses and how they feel compelled to operate, compete and stay alive, which might have an enormous impact here. This is summarized well by the opening paragraphs of an on-line book:

I was driving through Maine one late summer day when I stopped to admire a river running through a pretty wooded area. I noticed big, slick bubbles of industrial discharge corroding the vegetation along the riverbank, and I wondered: Who wants this to happen? Not the owners of the company, the shareholders. Not the managers or employees, who want to live in a healthy environment. Not the board of directors, not the community, not the government. I could not think of anyone connected with the company emitting the effluent who wanted the result I saw. This was an unintended consequence of the corporate structure. The very aspects of the company’s design that made it so robust, so able to survive changes in leadership, in the economy, in technology, were the aspects that led to this result pollution that no one wanted, and everyone would pay for.

I realized I was part of the problem some time later, while in my office at the Boston Safe Deposit and Trust Company, where I was Chairman of the Board. I was looking over the proxies that it was our responsibility, as trustee for $7 billion in assets, to vote, and I was preparing to do what we had always done—vote with management on all of them. I picked up the proxy for the company that produced the industrial sludge I had seen, and I realized that if I voted for management, I was endorsing this activity. Those of us who managed money on behalf of others had the opportunity, and the responsibility, to tell management that this activity was unacceptable. But none of us was doing it.

Robert A.G. Monks and Nell Minow, Power and Accountability, (an on-line book, originally written 1991)

In some respects, many corporations are also victims of the ideologies that are prevalent in current mainstream economics that treat the environment in certain regards. Some corporations might wish to be more environmentally friendly but are unable to do so due to fears that their competitors will get away with it (sort of seen in the fiasco of the politics behind global warming issues).

As the Simultaneous Policy highlights, “Over” competition (or the drive by larger players to reduce the threat of competition and head towards unaccountable monopolies and oligopolies) may be detrimental in this regards too. It is hard for an individual corporation or even group of corporations to effectively break out of this cycle due to fear of competitors being able to take the advantage. Hence this becomes a political as well as economic and environmental issues.

Back to top

Politics and corporate interests often intertwined

On the political side of things, there have been countless measures pushed and lobbied for that favors corporations directly or indirectly getting out of some of their responsibilities on environmental issues by passing on the costs to others. Various environmental groups constantly campaign on such issues, so this comes as no surprise to state this.

But political frameworks can often cause enormous problems from the onset.

In 1991, then Chief Economist for the World Bank Lawrence Summers, (and US Treasury Secretary, in the Clinton Administration, until George Bush and the Republican party came into power), had been a strong backer of the controversial structural adjustment policies. He wrote in an internal memo:

Just between you and me, shouldn’t the World Bank be encouraging more migration of dirty industries to the LDCs [less developed countries]?… The economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable, and we should face up to that… Under-populated countries in Africa are vastly under-polluted; their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City… The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under-five mortality is 200 per thousand.

1991, Chief Economist for the World Bank, Lawrence Summers, Quoted from Vandana Shiva, Stolen Harvest, (South End Press, 2000) p.65; See also Richard Robbins, Global Problems and the Culture of Capitalism (Allyn and Bacon, 1999), pp. 233-236 for a detailed look at this; This quote also appeared in the Economist in an article titled “Let them eat pollution”

Even what appeared in an Economist article, by a foremost pusher of Structural Adjustment, we see that politics can affect markets to help or worsen environmental issues.

Furthermore, corporations are afforded excuses to avoid refitting factories in the first world with their costly environmentally oriented measures and protections, and move elsewhere where regulations have been reduced or removed thanks to economic “agreements”. As a result, we may see a relatively cleaner environment in the industrialized world, but it is not all explainable by using newer technologies (which is certainly one of the explanations).

For more on this aspect, see also the Behind Consumption section and Free Trade section on this web site.

Back to top

Ideologies and politics can drive how corporations treat the environment

Due to the centrality of corporations in many issues as important players, they can greatly influence the impact on the environment (positive or negative, directly or indirectly).

For example, in many cases corporate lobbies have pushed for policies that will benefit them and let them get away with harming the environment. Yet other political processes or even misguided development projects may in some way employ corporations to perform the actual tasks which are damaging to the environment and corporations. This may not be the corporation’s fault, per se, however, though in some cases companies do push for such projects, as it is in their interest to gain those lucrative accounts.

Many corporate lobbies and think tanks that they fund push for policies which favor such actions in order to make more money. For example, see this site’s sections on

  • some of the causes of hunger and the dams section in particular.
  • Behind consumption and consumerism that looks at many examples
  • (Many issues presented throughout this site that have corporate involvement could be looked at with this perspective in mind. I leave it to the reader to explore the rest of this site, than attempt to list all those pages here!)

Corporations therefore can also be positive engines for the environment as well.

  • That is, if the environment and related factors were central concerns in politics, media, and so forth, then public pressure and other factors would of course require corporations to be more accountable.
  • Furthermore corporations typically have a lot of capital, knowledge, and resources to research, pursue, develop, and market environmentally friendly/sustainable products, but only if that is the political driver.
  • If the current economic and political systems allow corporations to socialize such costs while they benefit, then there is no real or effective interest in being environmentally friendly as it hurts rather than improves profits and public opinion.

Back to top

Related Issues

This issue of environmental problems by actions, directly, or indirectly, of various corporations is enormous! This site can’t expect to document many examples here, although some links above and throughout this site and section on trade related issues provide more information.

For other related issues, see also the various sections in the Environmental Issues section on this web site, which includes a look at biodiversity, conservation, global warming, genetically engineered food and so on. With many of these issues, corporate interests/actions are also discussed.

In fact, due to the centrality of corporations in many issues, because they are no doubt important players, many parts of this web site discusses their impact, either directly or indirectly. See the sitemap on this web site to explore other issues to see direct or indirect impacts on the environment due to corporate interests, actions, and so on.

Back to top

Where next?

Other options

Author and Page Information

  • by Anup Shah
  • Created: Monday, July 20, 1998
  • Last Updated: Saturday, May 25, 2002

Back to top

Document Revision History

DateReason
July 7, 2007Added a section on corporate social responsibility (remain is untouched since May 25, 2002 — for now)