Legal responsibilities of multinational corporations

in arresting environmental pollution

- ENVIRONMENTAL LAW SEMINAR

By
M. Suchitra,
Submitted to
II year, 3ydc llb, Dr N.B. Chandrakala Ma’am
2019llb32024.
Contents:
1) Introduction
2) Dual standards of MNCs
3) Types of Pollution emitted from industries
4) Corporate social responsibility
5) Corporate accountability
6) Environmental management system
7) Conclusion .
Introduction:
What is a multinational corporation or a company ?
The multinational corporation is a business organization whose activities are located
in more than two countries and is the organizational form that defines foreign direct investment.

-> This firm consists of a country location where the firm is incorporated and of the
establishment of branches or subsidiaries in foreign countries. Multinational companies can,
obviously, vary in the extent of their multinational activities in terms of the number of countries in
which they operate.

-> A large multinational corporation can operate in 100 countries, with hundreds of thousands of
employees located outside its home country.
Dual standards of MNCS:

-> Regulations of industrialized countries are usually stricter compared to rules and
regulations of the developing countries.

-> It has been strongly emphasized that multinational companies that operate in
developing countries, are governed by less strict environmental standards compared
to standards in the source country.

->Damages to the environment do not just affect the host country; it causes a global
problem. The rate of increasing pollution and the hazards it causes show the
necessity to implement higher environmental standards is developing countries.
Pollutions caused by industries:
There is no deny that industrialization of developing countries results in the
globalization, development of economy, by reducing unemployment, overall
growth in the nation. This doesn’t mean that mncs only have advantages but
have many disadvantages mainly environmental pollution

->industries not only affect environment directly but also indirect impact is present
industrial activities are a major source of air, water and land pollution, leading to
illness and loss of life all over the world.

-> they are: 1) Air pollution, 2)Water pollution, 3)global warming, 4)soil pollution,
5)destruction of wildlife etc.
Environmental pollution caused by industries:
Industrial pollution is the pollution which can be directly linked with industry. This form of
pollution is one of the leading causes of pollution worldwide. There are a number of forms of
industrial pollution. Industrial pollution can also impact air quality, and it can enter the soil,
causing widespread environmental problems.

->Industrial activities are a major source of air, water and land pollution, leading to illness
and loss of life all over the world. The World Health Organisation estimates that outdoor air
pollution alone accounts for around 2% of all heart and lung diseases, about 5% of all lung
cancers, and about 1% of all chest infections.
Steps taken by the industries:
Industries on the other hand working hard to reduce their carbon footprint and
emission of pollution in many ways,

1) By maintaining international standards

2) Corporate accountability
3) Corporate social responsibility
4) Environmental management system
5) etc.
Corporate social responsibility:
one of the important aspect of CSR is environmental issues.

-> And in the cases of environmental damages which parts of a company should be
responsive and compensate damages. Perhaps it might be easy to figure out the damages
because the losses are external and objective.

->India has had a rapid and remarkable economic growth in last several years. Where this
economic growth has taken out millions out of poverty, it has also caused immense
degradation in the environment quality.

-> On April 1, 2014, India became the first country to legally mandate corporate social
responsibility. The new rules in sec 135 of India’s Companies Act make it mandatory for
companies of a certain turnover and profitability to spend two percent of their average net
profit for the past three years on CSR.
Environmental management system EMS:

-> Environmental Management System (EMS) is a set of policy measures, management

actions, operating procedures, documentation and record keeping with defined
responsibilities and accountability of personnel within an organisation.

->It is a system that aims at the integration of environmental management issues with the
overall management functions of an organisation. It is a problem identification and problem
solving tool, which can be implemented in an organisation in different ways, depending on
the needs and objectives of an organisation
 -> keywords for EMS are : "Plan, Act, Check and Improve". ISO – 14001 is a certification for
adoption of Environmental Management System developed by the International Standards
Organisation (ISO). ISO – 14001 certification helps to build a " green image " and serves the
business interests. It has already become a de facto pre-requisite for export market. Driven
by the trade considerations and benefits of green image, ISO – 14001 certification has
gained coinage throughout the world. In India, 140 companies mostly in the large industrial
sector have obtained ISO – 14001 certification. However , the small and medium enterprises
(SMEs) are not coming forward.

-> ISO – 14001 helps to set the standards for multinational corporations not only mncs but to
any industries which makes the industries to submit their environmental impact and their
pollution control standards and meeting their legal environmental requirements.
Corporate accountability:
Objective here is not to deintegrate corporations rather to focus on the importance of
corporate accountability to society. Proper corporate accountability is fundamental in
ensuring the right balance between development on the one hand and protection of well
being of people and environment on the other hand.

-> consider some industrial disasters such as thor chemicals, cape plc, the explosion at
union carbide chemical plant in bhopal, the environmental damage caused by the operations
of rio tinto in bougainville, the dumping of obsolete drugs in asia, the intensive promotion by
nestle, of powdered baby milk as a substitute for breast milk in regions where water pollution
is high, genetically modified food such as basmati rice, herbal medicines etc.
Landmark cases:

1) Bhopal gas tragedy 1990 AIR 273 1989 SCC (2) 540 1989 SCALE (1)932 ACT
2) Posco
3) Vedanta case
4) Seveso case. etc
Conclusion:
Rising environmental consciousness has generated the need to account for the various
interactions between all sectors of the economy and the environment. Many multinational
companies that are setting up in India are creating a sort of precedent by taking environmental
issues seriously. There is an uptick in the activism of Non-Governmental Organizations (NGOs).
In some cases, NGOs have taken up major causes on behalf of poorer stakeholders, putting
some large infrastructure and manufacturing projects on hold. Furthermore, environmental
regulations are being enforced more stringently than earlier, and an overall “environmental
awareness” has begun. These factors combined with increasing globalization have caused Indian
companies to take both environmental requirements and best practices seriously.