University of Bucharest, Faculty of Political Science, English Department

Ciornea Sabin

Innovative Methods in Combating Environmental Abuses in Developing Countries

May 15

The case of Multinationals

This paper examines the role of third-party factors that form part of the complex web that works along with environmental regulation to generate innovations aimed at curbing industrial pollution. A case-study approach was used in analyzing the empirical data obtained from three Nigerian food-processing and textiles firms. It is the purpose of this paper to realize an introductory part, where to explain the key terms to be used during the research project, the international status-quo, the way in which things happen and the way in which things could happen according to the initiative engulfed in this writing of mine. Last but not least, I would like to point out the fact that I will be talking about multinationals coming in developing countries to take advantage of the very lax legislation existing there and to increase this way their profit at the expense of human and environmental rights. In addition, Nigerian environmental regulators were interviewed to complement the case-study findings. Particular attention was paid to how third-party factors affected the firms in their decision to adopt wastewater treatment technology.


Environmental policy is regarded by some economists as the main driver for industrial innovations that reduce external diseconomies of industrial production in both developed and developing countries1. However, recent research on the links between pollution regulation and environmental innovation suggests that environmental policy may not sufficiently explain the recently observed trends in environmentally beneficial technological innovation2. It is becoming apparent that a complex web of additional interacting factors determines pollution control innovations at the firm level. This paper examines the role of third-party factors that form part of the complex web that works along with environmental regulation to generate innovations aimed at curbing industrial pollution. A case-study approach was used in analyzing the empirical data obtained from three Nigerian food-processing and textiles firms. It is the purpose of this paper to realize an introductory part, where to explain the key terms to be used during the research project, the international status-quo, the way in which things happen and the way in which things could happen according to the initiative engulfed in this writing of mine. Last but not least, I would like to point out the fact that I will be talking about multinationals coming in developing countries to take advantage of the very lax legislation existing there and to increase this way their profit at the expense of human and environmental rights. In addition, Nigerian environmental regulators were interviewed to complement the case-study findings. Particular attention was paid to how third-party factors affected the firms in their decision to adopt wastewater treatment technology.

Transnational Corporations in the World Today
In an époque of increased globalization and international agreements, in an era of economic development and supranational organizations, transnational corporations (“TNC”) have become one of the most important actors on the world stage. This fact is attributed primarily to the quantitative criterion, showing that nowadays, TNCs are growing in number and


Baumol, William J. and W. E. Oates (1988) The Theory of Environmental Policy, New York: Cambridge University Press; Siebert, Horst (1987) Economics of the Environment: Theory and Policy, Berlin, Germany: Springer Verlag 2 See, for example, Porter and van der Linde (1995) and Hart and Ahuja (1996) on developed countries, and Adeoti (2002) on developing countries


In 2003. In 2008 the total number of TNCs in the world is estimated at around 82. it is estimated that there were 61. as a significant amount of modern economic development is directly related to the activity of TNCs. accounting for 55%. amounted to almost $ 612 billion . In other words. the developing countries’ share of inward FDI stock in such sectors has also risen significantly. while the manufacturing sector for 38% and last but not least the primary sector for 7%.000 TNCs in the world . which increases the chances of a degraded environment and related human rights violations.importance. TNCs are engaged in different activities that are part in their turn of pollution-intensive manufacturing industries. whose final products or the processes of production may jeopardize the environment in these host developing countries. developing countries attracted more than 30% of FDI in the primary sector.000. But TNCs are also engaged in several other sectors such as primary industries like agribusiness and mining.000 subsidiaries . During several years. which controlled almost 810. which have the potential to negatively affect environmentally sensitive areas. the foreign direct investment (FDI ) outflow. Unfortunately. especially in the manufacturing process. According to the World Investment Report 2004. Transnational corporations are enterprises which own or control value-added activities in at least two countries. This certainly justifies serious concerns in terms of environmental consequences of the commercial activities of TNC in developing countries. the services sector became the most important one. which is a measure according to which one could establish the productive capacity of TNCs. The importance of transnational corporations in the modern world economy deals not only with its theoretical foundations but with its economic side as well. In 2002 alone. In the period 1990-2002 the FDI stock rose almost threefold. This very fact does not mean that the risk of environmental degradation decreased automatically. 3|Page . a transnational corporation is an incorporated enterprise comprising a parent company and its foreign affiliates . more than 70% of parent companies are headquartered in developed countries. statistics show that the FDI stock in primary sector more than doubled during 1990-2002. While more than 60% of foreign affiliates are situated in developing countries. All to the contrary. The dynamic development of TNCs started in the beginning of the fifties. In 1969 there were almost 7000 transnational corporations worldwide .

flora and fauna from pollution. where TNCs are headquartered. water. Unfortunately. and the very same laws in developing countries. the protection of the environment falls by the wayside . transnational corporations. as long as TNCs officially comply with the almost inexistent environmental legislation present in the developing countries. But to be even more precise. has no chance in front of the political and economic power of the TNCs. these standards radically differ from one country to another. and this is not necessarily something to be academically tested. Over the past two decades. And this should be explained by the very fact that governments realize the importance of the economic investment by TNCs. the environmental norms in developed countries are much stricter than those in developing countries. being profit-oriented. 4|Page . where TNCs are engaged in pollution-intensive activities. However. are attracted to a great extent to those areas which permits them a higher profit.While almost all countries possess environmental laws designed to protect air. As a general rule. namely the developing country. namely in the developing countries . through lax environmental legislation. environmental damage is not only a problem directly linked to the host country. there is a tremendous difference between environmental laws in developed countries. In this scenario. The current international human rights law and environmental law do not provide a legal framework according to which TNCs could be held responsible for their environmental abuses in developing countries. but rather it is of global concern. especially in host countries. and conversely. there is a growing body of evidence saying there is no solution provided by the international law community in order to equip victims with an adequate legal remedy against transnational corporations. allows a higher degree of human rights violations. land. If we are to analyze why is this happening. one could argue that host countries do not have neither the means nor the will to enforce harsher standards on TNCs. it is obvious that the host country. is has been alleged by a growing body of evidence that TNCs are engaged in different operations in developing host countries with much lower environmental standards than those implemented in the developed country. they cannot be held responsible or even liable for their environmental abuses in these host countries. or host countries. In their turn. where the vast majority of TNCs are headquartered. At the same time. which in its turn.

1989 5|Page . p. However.. thus jeopardizing human rights. “Linking Globalization. H. No. “Globalization of the Economy. Structural Change. A significant percentage out of the total number of TNCs existing in the world is based in the developing world in order to take advantage of the lax environmental rights and poor legislative infrastructure. 2 edition. globalization could also cause serious harm to the environment. Schumpetrian Adjustment and New Policy Challenges”.W. p. Among the factors that contribute to the environmental destruction. Everything that aggravates the economic efficiency. domestic populations. and last but not least corporations. 1999. and it portrays the human as an economic being5. Given this pure economic architecture. The globalization of the economy refers to increasing economic interdependence of national economies across the entire world through a rapid increase in crossborder movement of economic goods. I would like to make a series of clarifications. which in its turn falls into two categories: natural and man-made. and the exploitation of developing countries by TNCs seeking to maximize their profit. the concept of economic globalization should be properly addressed as it is the core term in the current context. pp. technologies. one might name nation states. opponents of globalization also take into account the negative effects of the phenomenon. John. such as humans or the 3 WILSON. But before going into further details analyzing the impact of TNCs on the environment in developing countries. Economic Growth and Poverty: Impacts of Agribusiness Strategies on Sub-Saharan Africa: Discussion”. 2001). 83. that is why a growing body of evidence demonstrates how populations are victims of such degradation due to the process of irresponsible industrialization firstly. American Journal of Agricultural Economics. etc4. 7 5 nd JACKSON.The Problem Proponents of globalization argue that foreign direct investments (FDI) encourage to a great extent the emerging economy. L. In this sense. 3 (Aug. as well as negative effects upon the environment. Paul. the criterion of utmost importance in this equation is the efficiency. services. Oxford University Press. J. The environmental degradation and its subsequent effects on humans are of global concern. “The World Trading System: Law and Policy of International Economic Relations”. Unemployment and Innovation. Vol. Economic globalization is concentrated on the idea of economic efficiency. as there is a need to improve the standards of production in order to meet the needs of consumers3.J. On the other hand. I have opened earlier the discussion on globalization and its positive. 734 4 WELFENS. Springer. Norbert. 8-9.

Boston University International Law journal.C. p. Int'l & Comp. “created 6 SHELTON. TNCs are safe from liability for the environmental destruction they provoke and the subsequent human rights abuses. The effects of environmental destruction leave the affected populations with two basic options: on the one hand. and natural disaster”. one might observe that neither of the above-mentioned situations is ideal as both of them leave populations in altered environmental conditions than before the destruction occurred. Accountability in the Global Business Environment”. which subsequently harms human populations. 25 B. paradoxically. Environmental Regulation of Transnational Corporations. “Protecting Human Rights in a Globalized World” . Rather. p. “The Nigerian Tragedy. on the other hand. Although TNCs have an enormous influence and play a tremendously important role in the degradation and destruction of the environment. are not signatories of international binding treaties10. notably land loss and degradation. 75 10 Alice de Jonge. Glossary of Environmental Statistics. From an international point of view. or. becoming this way environmental refugees8 or environmentally displaced people. these companies. “Transnational Corporations and International Law. New York. and the Human Right To a Healthy Environment”. 273 (2002). Dinah. Series F. multilateral investment treaties (MITs) or bilateral investment treaties (BITs) do not directly impose requirements on TNCs. P. 1997. Rev. Edward Elgar Publishing Limited 2011. Accountability in the Global Business Environment”. these kind of treaties are more interested in regulating international actors such as states. Unrestrained by such international treaties. to leave the infested land and move to another place. and the existence of TNCs as a result of this specific process. to remain in the degraded environment and risk their lives by exposing themselves to contaminated food and of the environment is against the concept of economic globalization6. In this sense. http://lawdigitalcommons. 67. “Transnational Corporations and International Law. As a consequence. As a result. United Nations. Studies in Methods. 7 EATON. Jpshua. No. 75 6|Page . L. 297 8 An environmental refugee is a person who have been “displaced owing to environmental causes. TNCs are less present in the legislative process than the national sovereign state. thus hardening the process. Dinah Shelton in her book “Protecting Human Rights in a Globalized World” concluded by saying that globalization. limiting thus the ability of host governments to take action9. 1997 9 Alice de Jonge. the economic reality is that the cost of goods such as the cost of oil is reflected in the environmental degradation rather than in the final price that reaches the consumer7.bc. Edward Elgar Publishing Limited 2011.

Kano. However. In addition to the establishment of FEPA. Maiduguri. The Lagos office also serves as the headquarters of the industrial compliance monitoring and enforcement department of FEPA 15 As of 1999. L. 16 October 1998: 16).edu/iclr/vol25/iss2/7 12 DEAT (1996) "An Environmental Policy for South Africa". Kaduna. these zonal offices were located at Ibadan. Even South Africa with relatively advanced manufacturing had not established a comprehensive programme of industrial pollution control until the second half of the 1990s12. which had previously been carried out on a rather ad hoc basis. Pretoria. we have a lax legislation in the host countries. On the one hand. environmental regulation in Africa remains relatively weak while there is insufficient institutional capacity to deal with industrial pollution problems. 279 (2002). The use of FEPA is retained in this paper for clarity 14 As at the time of this research. each of the Nigerian state governments also established a State 11 SHELTON. http://lawdigitalcommons. Int'l & Comp. Lagos. “Protecting Human Rights in a Globalized World” . Rev. Industrial pollution control. came under the purview of FEPA – which has a network of zonal offices14 and pollution control laboratories15 for the purpose of pollution monitoring and control. Green Paper for public discussion. Other pollution control laboratories also exist in some state environmental protection agencies. In 1988. they were not adequately equipped until a World Bank-assisted programme on environmental management was implemented in 1998 (see Daily Monitor. South Africa: Department of Environmental Affairs and Tourism (DEAT) 13 FEPA was merged with some environment-related departments to form the Federal Ministry of Environment in January 2001. In the end. and on the other hand.bc. and two zonal FEPA laboratories located in Port Harcourt and Kano. the government of Nigeria established a Federal Environmental Protection Agency (FEPA)13 to oversee and manage environmental regulatory processes in Nigeria. we observe that we confront with a vague and ambiguous legislation on two different levels. While some of these laboratories have existed for almost as long as their parent institutions. It is nonetheless yet to be seen whether the Nigerian environmental regulatory authorities can maintain and further equip these laboratories for effective industrial pollution control 7|Page . Dinah. these laboratories included the National Reference Laboratory (NRL) located in Lagos.powerful non-state actors that may violate human rights in ways that were not contemplated during the development of the modern human rights movement”11. Owerri and Port Harcourt. An overview of the environmental regulatory regime in Nigeria Generally speaking. the international community is as weak as the developing country in establishing certain limits towards the environmental degradation of the TNCs. 25 B.C. Nigeria appears to be an exception to the general African situation.

For example. training programmes for state environmental regulators and officers in charge of environmental issues in industry.I. though states are allowed to enact stricter emission limits. especially among local stakeholders in industry. At this juncture. it is necessary to point out that the level of environmental awareness and efforts to protect the environment appear to be on the increase in Nigeria.8/S.9 regulation.9) (FEPA 1991a). Before the advent of SEPAs. This was further demonstrated by the upgrading of FEPA into a full-fledged government department with a cabinet minister in January 2000. and effluent and emission limits. These effluent limits are binding in every Nigerian state.I.I. Market-related policy instruments such as effluent taxes and tradable permits are still alien concepts and little understood.I. A composite law was enacted in August 1991.9 law specifies the maximum permissible limits for various industrial emission parameters in Nigeria. Lagos State. coming into full application in January 1995. see FEPA (1991b) and Adeoti (2002) 8|Page .8) and "Pollution Abatement and Facilities Generating Wastes Regulation" (S. which has the largest concentration of industry in Nigeria. Since SEPAs were established. FEPA and SEPAs have worked together to monitor and control industrial effluents. Policy approach in dealing with industrial pollution in Nigeria has been mainly "command and control" in nature. Each state (and the FCT) has a SEPA or an environmental protection board 17 Lagos State has at least 10% of the Nigerian population and some estimates indicated that the state has 60 to 70% of industry in Nigeria (see Lubeck 1992: 17 and LASEPA 1999) 18 For further details on the environmental regulatory regime in Nigeria with respect to industrial pollution control. 16 Nigeria has 36 states and a Federal Capital Territory (FCT). while FEPA is expected to provide institutional support and a regulatory framework for pollution control. FEPA was solely responsible for industrial pollution control in Nigeria. The institutional support provided by FEPA has included the development of standards and guidelines for pollution control in Nigeria.I. has recently enacted stricter effluents limits17. The S. With this institutional reform FEPA became the Federal Ministry of Environment (FME)18.Environmental Protection Agency (SEPA)16 in the mid-1990s.8/S. It should however be pointed out that SEPAs are statutorily directly responsible for industrial pollution monitoring and control in their respective states. The full implementation of this law was delayed till January 1995 to allow for a three-year moratorium during which firms were expected to have made necessary technological changes to comply with the S.I. The industrial pollution control law is termed "National Effluent Limitation Regulation" (S.

Michael Porter's hypothesis that environmental regulation can create technological offsets. Such models adopt the neo-classical view of environmental policy as being the stimulus for environmentally benign technical change. Moreover. is of particular importance. Some have even suggested a triple dividend that includes increased employment. The focus in these theoretical viewpoints is not on the kind of technical change induced by policy.g. the last few years have witnessed the development of theoretical and empirically tested propositions that emphasize that environmental policy does not provide sufficient impetus for green innovation in many instances. these theoretical ideas that focus on environmental policy may appear more of a luxury. These propositions have been extended to suggest "win-win" solutions yielding double dividends that benefit both private and social parties. Most developing countries are thus forced to adopt command and control strategies and resort to regulatory means that may not go beyond specifying emission limits and technology standards to be adopted to ensure compliance.Limits to environmental policy as the stimulus for green innovation in developing countries While environmental policy is necessary to make firms appreciate and perhaps accept responsibility for the external diseconomies of their production activities. Thus. the factors determining the implementation of environmentally benign technical change largely transcend the traditional notion of environmental policy as the stimulus for innovation in pollution control. Milliman and Prince 1989) are limited in their empirical applications. the notions of double-triple-dividend suggest that the incentive to adopt green innovation may 9|Page . Among such propositions. Theoretical models linking environmental policy and environmentally benign technological innovation (e. but rather the kind of policy or optimal mix of policies that could achieve a predetermined level of environmental quality or pollution reduction. For developing countries still in search of relevant paths and appropriate strategy for industrialization.. Downing and White 1986. and in the process assume off other pertinent factors that have been demonstrated from empirical studies as playing important roles in stimulating environment-friendly innovations. Many developing countries lack the appropriate institutional context for developing and managing elaborate environmental policy instruments such as pollution taxes and tradeable emission permits. based largely on studies of industrial economies. yielding economic benefits that write off the cost of compliance with environmental policy.

we may gain a more comprehensive perspective on the interplay of factors that interact with technology to generate the emission reduction effects. it has been questioned the effectiveness of environmental policy alone as the stimulus to green innovation. While there may be striking similarities between innovation behaviour of developed and developing-country firms with respect to pollution control. in addition to environmental policy. Additionally. When the searchlight is focused on this medium. it is pertinent to note that the divergence of the north-south percep-tion of the challenges of environmentally sustainable development would affect the level of stringency in environmental policy and its enforcement process. and worker demands and pressures arising from industrial relation concerns. the focus is usually on the impact of policy on emission reduction or pollution abatement expenditures. Though emission reduction would be impossible without technological application or change in production practices aimed at pollution abatement. More recently. and underlined the importance of other factors needed to generate firm-level technological change. are needed to provide the full range of benefits from emission reduction effects. Rather. public demand for a less polluting and safer industry. studies on environmental regulation and industrial pollution control in developing countries rarely focus on the impact of environmental policy on technology responses of firms19. Technology is the medium through which emission reduction effects are accomplished.arise from a desire to attend to socioeconomic benefits rather than the compelling force of the environmental policy. He lists among these factors regulatory requirements (including environmental policy). 19 Adeoti (2002) presents a major deviation from this trend by analysing the technological impact of the Nigerian industrial pollution control policies 10 | P a g e . possible cost savings or additions to profits. the neglect of direct analysis of the technological or innovation impact of policy limits our understanding of all the factors that determine the actual emission reduction achieved. we need to ask what other factors. Having argued that environmental policy alone cannot explain green innovation among industrial firms in developing countries.

Decoupling these factors from environmental policy is. First. and its pollution effects are the subject of much concern. when environmental technologies are observed among firms in the countries of the South. advocacy by environmental nongovernmental organizations.1% and 13. Third party factors include. In 1994. The two sectors employ 38.4% of the total manufacturing output and 32. Pollution problems of the food-processing and textile industries As typical of countries in the early stages of industrial development. the Kano-Kaduna axis and Port Harcourt-Aba industrial zone 11 | P a g e . Data on the structure of Nigerian manufacturing indicates that the food-processing and textile sectors contribute 29.4% of the manufacturing value-added in 1994. the food-processing and textiles sectors respectively contributed 16.7% of the Nigerian manufacturing workforce (UNIDO 2001)20. influences of parent companies on affiliates of multinational corporations. influence of public corporations that may be affected by polluting activities. resource-based manufacturing activities are an important feature of the Nigerian economy.3% of total manufacturing value added. as stringent as in the industrial countries of the North. however.1% and 10. these statistics are not expected to be significantly different from what could have been obtained at the time of this research. and may not in the near future be expected to be. and 14. difficult since environmental policy provides the basic guidelines for the firms' technological responses. community pressure on firms to reduce emission.Environmental policy in the South has never been. Since there has been no ex-traordinary development that would have a drastic impact on Nigerian manufacturing. Hence. The data are based on the available information for 1994. Manufacturing activity in Nigeria is concentrated in a few large cities21. the remainder of this paper will discuss the relationship of third-party factors with firms' technological responses.3% of total manufacturing output. 20 These data are computed from UNIDO industrial statistics database 2001 CD-ROM.0% of total manufacturing employment 21 Manufacturing in Nigeria is concentrated in the Lagos-Otta-Agbara industrial cluster. particularly to the city dwellers. a concise description of the two sectors in Nigeria and their respective pollution problems. and the influence of environmental technology suppliers. but are not limited to. it is plausible to suggest that there may be other "third party" factors (apart from environmental policy) that drive firms' green innovation behaviour. Based on empirical case studies from the Nigerian food-processing and textile sectors. however. 22.7% and 14.

Similar practices were noted among the textile plants visited. Food processing Food processing in Nigeria may be broadly classified into seven subsectors or divisions. For example. Perhaps not surprisingly. which is essentially a dry process. Public health concerns are high with respect to the pollution effects of industrial wastewater since the majority of Nigerians still lack access to safe drinking water22. and thus limit additional pollution of the wastewater. while others sold it on the open market and mainly to the informal sector where the oil is often used as fuel. The organic pollutants are mainly present in process wastewater. dairy products. container/vessels wash water. the two sectors accounted for nearly half (47. from the data provided by the World Bank (2001) on industry's share of organic emissions. some burned oil in boilers to generate energy. a practice that could lead to air pollution. all other sub-sectors are water-pollution intensive. Among the firms visited. discharging wastewater largely laden with organic wastes. and confectionery and sugar products. protected springs and rainwater collection. which includes household connections.The food-processing and textile sectors both consume high volumes of water and have significant water-pollution potential associated with their activities. soft drink and fruit juices. This recycling of waste oil is not peculiar to the food processing industry. Many of these improved sources may not guarantee the provision of safe drinking water because of the high risk of contamination during transportation from fetching point to point of use 23 "Clean in place" operation for periodic washing of process lines and equipment 12 | P a g e . 22 According to UNDP (2001). These subsectors are grain milling. boreholes with hand pumps. protected dug wells. Virtually all firms in this sector have oil traps to capture the fugitive oil as much as possible. only 57% of Nigerians have access to improved water sources. fugitive oil emission or the dripping of other organic pollutants due to old equipment further compounded the wastewater problem.9%) of total polluted wastewater discharges from the Nigerian industry in 1994. Nigeria has relatively well-articulated pollution-control regulation with respect to industrial wastewater. Apart from grain milling. The more specific pollution problems of the two sectors are briefly described below. distilleries and wine. clean in place (CIP)23 rinse water and floor-wash water. brewing. In many factories visited for this research. vegetable oil and fat products. public standpipes.

Land pollution may occur from the uncontrolled dumping of chemical residues and treatment plant sludges.Textiles The pollution problems of the textile industry in developing countries have long been a concern24. 89% of the textile firms in our survey sample indicated wastewater as the most serious pollution problem they have confronted (see table 1). there will generally remain some effluent. The extensive use of synthetic chemicals in particular can lead to serious environmental and occupational impacts if proper precautions are not taken. the handling of the wastewater effluents constitutes the most important problem. For example. and in the form of oil mists from machinery. with only colour removal sometimes presenting any real difficulty 13 | P a g e . the case studies are designated FP1. and some waste residues. For reasons of confidentiality. As one could notice. pollutants arise from the dirt and grease that is removed from raw natural fibres. Table 2 presents the summary of the background and basic characteristics of the case-study firms. 24 According to UNEP (1993: 17–18). two confectionery plants and two textile plants. Air pollution can arise from dyeing and finishing agents. The equivalent figure of 78% for the food-processing industry suggests a relatively less difficult view of the perception of the problem of industrial wastewater by plant managers. the firms affiliated to a multinational are the most hazardous in terms of polluting the environment. as well as from process chemicals and dyestuffs that are lost during operations.…Even with more-efficient processes and better handling. and TT1 and TT2 for the textile plants. FP2. FP3 and FP4 for the food processing plants. Table 1 Third-party factors and innovation in pollution control processes The cases discussed in this section include two breweries. Adequate treatment processes exist for the most common pollutants. For textile plants in Nigeria.

and process-integrated techniques that reduce wastewater.. materials substitution.g. Table 3 14 | P a g e . according to the time of adoption. Table 3 shows the sectoral distribution of the adoption of these pollution prevention innovations.g. Pollution prevention technical change was classified under four groups: wastewater reduction/recycling. or preventive. A firm could adopt one or more of these wastewater pollution prevention innovations. e. raw material reuse/recycling. among our survey sample.. innovative measures or technologies that reduce the generation of industrial wastewater at the source. firms with industrial wastewater treatment plants.Table 2 Environmentally benign technology implemented by the case-study firms can be classified as end-of-pipe. e.

and in 1997 a community association was founded with a mandate to address industrial pollution. Case Study FP1 An affiliate of a multinational company based in a west European country. Over the years. This non-governmental organization has instigated a court action (against FP1). and palm and other trees of economic value are severely threatened. According to the Nigerian environmental regulators and FP1's environmental consultants interviewed as part of this research. It is accordingly plausible to expect that the factors driving the adoption of wastewater treatment technology also play significant roles as rationales for the adoption of wastewater prevention measures. especially fish. signalling the possibility that farmland productivity may also be threatened. When it was established in the early 1980s it was only equipped with a primary wastewater treatment plant. In spite of the fact that the claims of the communal association were not accepted by FP1. cross-tabulation of the adoption of wastewater treatment by the adoption of wastewater prevention innovations reveals that 39 (85%) of the 46 adopters of wastewater treatment technology are also adopters of one or more forms of wastewater prevention innovation.It is not clear from the above analysis what role third parties played in influencing the adoption of wastewater prevention innovations. the environmental damage reported by the community included the poisoning of ground-water. The adoption of wastewater prevention innovations thus appear to be closely associated with the adoption of wastewater treatment technology. FP1 is a largescale brewing plant employing about 800 people and located in an industrial estate on the outskirts of a large city in Nigeria. which is presently one of the few highprofile environmental lawsuits in Nigeria. However. thereby rendering well water undrinkable. the firm appears not to have appropriately responded to the environmental regulatory demand of 15 | P a g e . the nearby stream into which the discharge from the primary wastewater treatment plant flows has lost all aquatic life. the community where the plant is located began to complain of environmental damage attributable to wastewater discharges from FP1. Actions by the host community intensified. This paper nonetheless pays more attention to the adoption of industrial wastewater treatment technology because the case-study firms give clear and vivid illustrations of the role of third parties in the implementation of the adoption of wastewater treatment plants in the Nigerian food and beverages and textiles sectors.

Taking advantage of an expansion programme financed by the parent company. FP1 extended the primary wastewater treatment plant to include more oil schemers from where oil and grease are collected regularly. The public water corporation discovered that 16 | P a g e . One expected result of democratic governance in Nigeria was the positive impact of the transfer of ownership to some Asians.installing effective industrial wastewater treatment technology until after the community pressure became intense. an aquatic weed (water hyacinth) was introduced as macrophytes to enhance the purification of wastewater in the plant's lagoon. FP2 employs 300 people and was established in the early 1980s. the adoption of these pollution control measures was due to regulatory pressure and the desire to improve their environmental image. The technology adopted incorporates an "upflow anaerobic sludge blanket reactor" (UABR) and a "sequence batch reactor" (SBR). compliance monitoring was not carried out regularly until there was an environmental incident. According to FP2. The environmental incident arose due to a complaint from a public water corporation: FP2 was releasing its untreated wastewater into a perennial stream. which led to the shutdown of the plant in 1996. The plant had been built with no facility for wastewater treatment. According to FP1. Case Study FP2 A medium-sized local brewing plant. FP1 has decided to adopt modern industrial wastewater treatment technology. prior to community complaints becoming an issue. regulatory-compliance monitoring had not been of much effect on the company until the establishment of SEPA in 1995 and the more stringent monitoring programme that ensued. The company's new wastewater management system is termed "cost-effective wastewater treatment". According to FP1. These measures were. At the time of the fieldwork for this research the plant had significant undercapacity (capacity utilization was only 30% in 2000) which it hoped to eliminate with improved. however. In the mid-1990s. which is dammed downstream and purified for public consumption. In addition. and other manufacturing plants producing wastewater (though on a much smaller scale) are also located in the same industrial layout. However. the plant was built before the community settled in its current location. and more stable. FP2 interviewees stated that even after the establishment of SEPA. considered unsatisfactory by both the community association and environmental regulators. political conditions.

17 | P a g e . However. Any subsidiary that does not obtain eight-point rating out of 10 points for five consecutive years is liable to being closed down. The wastewater treatment method adopted was a locally built secondary wastewater treatment technology. It is ISO 9001 certified. the cause was traced to the wastewater discharged by FP2. The parent company of FP3 appears to have ignored this aspect until regulatory pressure became more intense in recent years. the plant regularly transfers its wastewater effluent to a distant stream for dilution by means of a tanker service. The firm boasts that its environmental management standard is better than that of many local plants. The parent company also engages in annual environmental performance ratings of its subsidiaries. employs about 200 people and operates 85% of its full capacity at the time of this research. this challenge has largely encouraged the plant's commitment to environmental management. Since the water corporation had no statutory power to compel FP2 to stop the release of contaminated discharges. According to sources at FP3. The firm's environmental management is directed from the parent company's environmental department headquarters located in western Europe. On examination of the raw water.the cost of water purification was excessively higher than expected. under a contract with a local environmental management consultant. the problem was reported to SEPA. it was however observed that the effluent quality did not meet the statutory requirement of the effluent limitation regulation. The firm was established in the early 1990s and produces candies. who acted promptly by sealing off the plant until appropriate industrial wastewater treatment was installed by FP2. Although the wastewater treatment succeeded in improving the effluent quality to an acceptable level for the third party (public water corporation). Case Study FP3 A large-scale manufacturing plant. It was also observed that though regulators have been visiting this plant. FP3 ascribes non-adoption of industrial wastewater treatment to the high cost of the technology. It is also likely that prior relatively weak environmental policy enforcement provided little incentive for FP3 to install wastewater treatment. Rather. The State Environmental Protection Agency insisted on improvement of the wastewater treatment technology while allowing more time for the firm to meet this requirement. they have not succeeded in making the plant adopt wastewater treatment technology. FP3 is an affiliate of an American multinational company.

it has to be recognized that third-party factors are incapable of acting on their own without the backing of an environmental regulatory regime. regulators recommended an aerated activated sludge system because it would be more effective in bringing the effluent quality to the statutorily required level. 18 | P a g e . Conclusion: Third-party factors as complements to environmental regulation The above case studies illustrate the impact of third party factors in advancement of environmentally benign technical change in two sectors.When the firm finally agreed to implement wastewater treatment. In developing countries where environmental regulation is weak. However. Even where third parties are parent companies of multinational corporations with high environmental performance norms. there was a sharp disagreement between the regulators and FP3. and because methane and other gaseous products of the anaerobic system could create new sources of pollutants emission. in each of the case studies. These case studies demonstrate that environmental policy. a decision to adopt wastewater treatment plants was not taken until regulatory demands were enforced. Table 6. who had formal authority and supporting legislation. regulators had to allow FP3 to make its free choice since the effluent limitation regulation is silent on the specific technology to be employed for waste treatment. third parties were not able to influence companies to implement environmentally benign technologies without the intervention of environmental regulators.16 FP3 later consented to installing the aerated activated sludge system after a visit by the head of the environmental management of the parent company who advised FP3 on the preference of the aerated activated sludge technology for efficiency reasons. though necessary. third party factors can and do provide additional influence on how firms manage environmental impacts. However. While FP3 wanted to adopt an anaerobic digester. For example. is not sufficient in effecting environmentally responsible behaviour by firms.4 presents the summary of the third-party factors that seem to have played important roles in the adoption of industrial wastewater treatment technologies in the two sectors.

Information based on third-party factors could increase the returns on investments in compliance-monitoring resources. Information asymmetries between regulators and industrial firms may thus be reduced. which may stimulate the parent company to intervene and make the necessary operational adjustments to bring the affiliate firm into compliance. In the case of parent companies as a third party. information received by regulators from third parties could form the basis for sanctions that may force firms to embark on environmental innovation. affiliates of multinational corporations appear to be generally more committed to environmental management when compared to local firms. 25 The research sample of 122 firms had 91 local firms and 31 affiliates of multinational corporations 19 | P a g e . Such information can also be used to prioritize the severity of problems and reduce the potential for environmental incidents. Sixty-eight per cent of the affiliates of multinational corporations in the research sample had adopted wastewater treatment. whereas only 27% of the locally owned plants had adopted wastewater treatment25. given the existing local conditions under which they operate. There may be a case of regulatory standard being higher than the majority of firms in Nigeria could comply with. however. it is plausible to expect a poor environmental performer to cover up non-compliance where compliance monitoring is weak. As the case studies demonstrate. It is also important to note that only one out of the wastewater treatment technologies adopted by the case study firms performed satisfactorily in meeting the regulatory requirement for effluent quality. Third parties may serve as important sources of information on the actual environmental performance of firms. and this is reflected in the adoption of the wastewater treatment technology. It is possible for regulators to isolate such cases for more regular inspection visits.It appears from the Nigerian experience that it is possible for third-party factors to catalyse processes that result in superior environmental performance by firms that lack commitment to environmental protection in the first instance. From the Nigerian experience.

edu/iclr/vol25/iss2/7 EATON. Pretoria. 3 (Aug. E. Schumpetrian Adjustment and New Policy Challenges”. 1997 Alice de Jonge. 83. “Transnational Corporations and International Law.. Accountability in the Global Business Environment”.J. and W. L. Dinah. L. 279 (2002). William J. South Africa: Department of Environmental Affairs and Tourism (DEAT) FEPA was merged with some environment-related departments to form the Federal Ministry of Environment in January 2001.Bibliography Baumol. SHELTON. “Protecting Human Rights in a Globalized World” . 25 B. L.W. Economic Growth and Poverty: Impacts of Agribusiness Strategies on Sub-Saharan Africa: Discussion”.bc. Horst (1987) Economics of the Environment: Theory and Policy. 2001) WELFENS. Edward Elgar Publishing Limited 2011 SHELTON. Germany: Springer Verlag WILSON. http://lawdigitalcommons. Paul. J. Structural Change. Berlin. 1999 JACKSON. Springer. Boston University International Law journal. Int'l & Comp. Oates (1988) The Theory of Environmental Policy. 25 DEAT (1996) "An Environmental Policy for South Africa". “The Nigerian Tragedy.C. Oxford University Press. “Globalization of the Economy. Norbert. Environmental Regulation of Transnational Corporations. Int'l & Comp. Vol. Rev. Jpshua. “Protecting Human Rights in a Globalized World”. http://lawdigitalcommons. The use of FEPA is retained in this paper for clarity Adeoti (2002) 20 | P a g e . Dinah. New York: Cambridge University Press Siebert. “The World Trading System: Law and Policy of International Economic Relations”. H. John. No. 273 (2002). P. Unemployment and Innovation. Green Paper for public discussion. Rev. “Linking Globalization. and the Human Right To a Healthy Environment”.C.bc. American Journal of Agricultural Economics.

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