Pollution Standard Could Backfire

Middle-class professionals in New York, women in African villages … citizens all over the world have come to believe that their biggest crisis is the global environmental crisis and that it is caused principally by big business.

A 1992 worldwide Gallup survey showed widespread concern for the environment among most global citizens. They believed that business and industry were the major cause of environmental problems.

A more recent European poll showed that more than 70 percent of British, French, Spanish, Portuguese and Italians strongly believed that “companies do not pay enough attention to the environment.”

In their home countries, companies in the developed world accept a high degree of regulation that circumscribes their activities in labor, environment and financial management.

Industry may criticize restraints on the so-called free market, but nonetheless it accepts the principle that there is a role for government, civil society and industry in national socioeconomic development.

But internationally, these checks and balances do not exist. Many large international transactions - in both goods and finance - simply escape national regulation.

Fortunes are made without payment into a public purse, although there can be high public costs for the failure of this lack of regulation.

That’s shown by the recent financial and environmental crises caused by corporations such as BCCI (the Bank of Credit and Commerce International), Barings, Daiwa, Exxon and Sandoz.

But now, public pressure and catastrophes of corporate mismanagement have spurred a vigorous campaign by corporations to “selfregulate” their global environmental activities.

Many international trade associations - the International Chamber of Commerce, the International Public Relations Association, chemical associations, the World Tourism Organisation and others - have published environmental charters or guidelines. In many cases, implementation has begun.

In the absence of effective international institutions for public policy or environmental governance, these industry promises to self-regulate are particularly intriguing.

What do they say? What will they do? How far do they go in accepting global environmental responsibility? And for how much do companies feel liable? In principle, the often far-reaching guidelines of leading companies could have major impacts on global environmental health.

For example, Bayer, Ciba-Geigy, ICI (Imperial Chemical Industries), Monsanto and Showa Denko are large chemical producers based in five different countries: Germany, Switzerland, the U.K., the U.S. and Japan. All are leaders in corporate environmental self-regulation.

Bayer and Ciba are committed to raising international standards to the level of the home country.

Showa Denko asserts it will make “every effort to reduce loads on the global environment.”

Monsanto pledges “to reduce all toxic and hazardous releases and emissions, working toward the ultimate goal of zero environmental effect.”

ICI is committed to wide-ranging public disclosure of corporate environmental information. International corporate environmental self-regulation can have positive effects.

There is a significant degree of experimentation and innovation.

Also, there’s a new paradigm that integrates environmental thinking into global business policies and operations.

The leading corporate guidelines, meanwhile, contain commitments to the principles of sustainable development and continuous improvement.

On the other hand, industry has moved aggressively to define the issues and show that it can meet its targets for improvement without a regulatory or compliance framework. Most corporations insist:

On being measured against internal corporate or industry guidelines (rather than external or public ones).

On discretion about disclosure.

And on gradual reductions of hazardous processes (rather than phaseouts).

Further, there is scant discussion about incorporating environmental costs into accounting systems. In the absence of strong international public-policy alternatives, advocates of industry self-regulation have been able to pursue their case for self-created environmental targets, internal audits and discretionary reporting.

On the horizon is a significant development from the Geneva-based International Organisation for Standardization, to create an international standard in environmental management systems.

Called ISO 14001, it is promoting a “green seal” without requirements for: performance measurements against external public targets; independent audits; public reporting; or penalties for non-compliance.

The ISO standard has been endorsed by several major international companies: WMX, AT&T Microelectronics and Philips Components.

Government agencies in many developed countries, including Japan, Holland and the United States, are considering how to integrate it into a new state-corporate relationship in environmental management.

The standard makes no reference to concepts that have been integral to the last five years of debate.

There is no mention of: principles of sustainable development; raising international standards to those of the home country; technology transfer; the concept of “polluter pays”; and so on.

ISO 14001 (and related initiatives) could reverse the trend toward progressive - and increasing - corporate stewardship of the environment in line with the public’s needs.

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