Do MNEs migrate to green policy only when forced by government regulations?

One of the persistent debates in recent years is whether business corporations should be tightly regulated to conform to environmental preservation standards. Also referred to as the green movement, some corporations have voluntarily proposed and adopted these standards as a way of showing their public responsibility. Critics argue that such moves are largely public relations exercises, with little true intent to preserve the planet. Even if such intent exists, it is incidental to the profitability of business. (Furniss, 2006, p.46) Hence, as of now, there is no consensus as to the nature and scope of governmental regulation. The rest of the essay will present views from both sides of the debate and argue that ultimately a strong regulatory framework is essential if Multinational Enterprises (MNEs) are to take green standards seriously.

In looking to answer the topic question, it is useful to peruse sociological scholarship and policy literature on the subject. Conventionally, analyses of the topic have tended to focus on corporate compliance within existing legislations. Here, it is tacitly assumed that complying with regulations by targeted groups is essential and sufficient for meeting goals of social regulation. (Dahl, 2010, p.248) Another assumption is that business enterprises go out of their way and improve their green standards only when they are faced with steep penalties for failing to do so. In this analytic framework, corporations are seen as ‘amoral calculators’ of risk and reward for themselves; and their primary motive is to maximize profits while minimizing losses in the form of penalties. This used to be the traditional view on corporate compliance. Yet, in recent years a refreshingly new pattern of corporate behaviour has started to emerge, giving government agencies and social activists renewed hope. (Kagan, et. Al., 2003, p.52)

“It is becoming apparent that an increasing number of companies now perform, to a greater or lesser extent, “beyond compliance” with existing regulatory requirements. This suggests that the degree of variation in, and the motivations for, corporate behaviour may be much broader than many researchers have imagined previously. This is of practical importance: some existing regulatory strategies, in focusing on compliance, have failed to facilitate, reward, or encourage beyond-compliance behaviour, or even inadvertently discourage it, while other regulatory reformers, in contrast, have argued that government-mandated self-regulation is the key to progress.” (Kagan, et. Al., 2003, p.51)

Hence, it could be argued, that MNE’s need not always be pushed by government regulations in order to make their activities clean and green. Scholars such as Samuel Loewenberg, on the other hand, are not quite enthused by the record of major corporations (especially those based in the United States), in upholding green standards. The chemical industry in the United States, which is a major contributor to environmental pollution, has been a culprit in this regard. While the industry got away with its slack quality and safety standards in its home country, it got into controversies upon entry into the European market. The EU, worried that it does not possess health and environmental data on most of the chemical compounds currently in use, is drawing up legislation that “by 2005 will require the industry to conduct extensive safety tests on 30,000 common chemicals. At least 1,500 are expected to be banned or severely restricted in their use as a result. The industry estimates that the testing alone will cost it more than $7.5 billion.” (Loewenberg, 2003, p.55)

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