Ronie Garcia-Johnson, Assistant Professor of Environmental Policy Nicholas School of the Environment Duke University
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1 Understanding Global Environmental Trade Associations as Environmental Institutions: The Implications for Sustainable Governance Sustainable Governance: The Institutional Side of Sustainable Development The 5 th Annual Colloquium on Environmental Law & Institutions April 27-28, 2000 Ronie Garcia-Johnson, Assistant Professor of Environmental Policy Nicholas School of the Environment Duke University Introduction Our efforts to achieve sustainable governance at the global level must overcome a fundamental limitation of multilateral environmental agreements and institutions: they are built by states, and require diverse governments around the world to similarly enforce change in the behavior of civil society actors. 1 As we know, not all governments have the capacity, let alone the willingness, to create environmental laws, to generate regulations, and to enforce them. Getting from international environmental law to civil society actor change involves a number of links in a chain; if one link in the chain is broken, the hard-won success of diplomats in the international arena is rendered hollow victory on the ground. Transnational actors--with the exception of networks of transgovernmental actors 2 --do not have to force change upon civil society actors. They are nongovernmental actors that bypass state authority and transcend borders to exchange ideas and values among and within civil societies. In recent years, international relations scholars have built from the work of Keohane and Nye 3 and others to demonstrate that transnational actors--from scientists and NGO activists to multinational corporations-- have transferred environmental ideas and values to policymakers at the national and international levels as well as to the general public, and even to business actors. 4 Certainly, efforts to achieve sustainable governance at the global level must incorporate the activities of transnational actors.
2 2 Among the types of transnational actors described by international relations scholars, multinational corporations stand out as profit-seekers, time-tested bureaucracies that transcend borders and operate in dozens of states at once. These institutions have enormous economic power; the 1999 net income of DuPont, for just one example, was some three times the size of the United Nations biennial budget. (See figure 1). DuPont s net income in 1999 was larger than the 1998 GNP of over 50 countries. 5 Figure 1: Comparing Institutions 6 Institution Income Global Operations DuPont Corporation (established 1802) $7.7 billion (1999 net income) Operations in 65 countries General Motors (Olds established in 1897) $6.002 billion (1999 net income) Operations in 88 countries Greenpeace International (established 1971) United Nations (established 1945) Global Environment Facility (established 1991) $.101 billion (1998 net income) $2.533 billion ( biennial budget) $2 billion (trust fund) Offices in 43 countries 188 member countries 160 members (1997) Sources: DuPont, General Motors, Global Environment Facility, Greenpeace, United Nations. While they are usually perceived as the targets of activist campaigns or government regulation, major multinational corporations (MNCs) disseminate environmental ideas and values to host-country societies through their subsidiaries in daily business operations, in conferences, through community groups, and through leadership in industry associations. 7 At the global level, multinational corporations have been at the forefront of a movement towards global, voluntary auto-regulation as
3 3 dozens of industry associations have published environmental charters, guidelines, and codes of conduct for their membership. 8 It is in their efforts in this latter endeavor that leading multinational corporations have created a problem for students of global environmental politics as well as an opportunity for stylists of sustainable governance. Through the development of global trade associations with environmental mandates (GETAs), multinational corporations have promulgated codes of environmental conduct. We may consider the organizations and codes as institutions that provide rules, shape policy, and generate shared expectations among members. Although the work of these institutions does not necessarily result in the creation of international or national law and policy, it does have the potential to change and coordinate the behavior of producers. It complements, parallels, and perhaps rivals the work of international environmental institutions. 9 In this brief paper, I categorize GETAs, provide two examples of GETAs, and outline some questions and considerations that we can take to future studies of GETAs. Conceptualizing and Categorizing GETAs Global trade associations are, technically, non-governmental organizations. Despite their different financial, technological, and ideological resources, they are treated in much the same fashion as environmental NGOs when they come to the table in MEA negotiations. 10 Like international non-governmental environmental groups, they disseminate information, advocate, and lobby. However, given their promulgation of codes of conduct, we might better think of some global trade associations as certification institutions. Certification institutions consist of rules, norms, and procedures voluntarily adopted by firms to regulate business and management practices, as well as the monitoring organizations that verify compliance with these standards. We can categorize certification institutions based on the degree of second- and third-party (nongovernmental) intervention in the activities of producers. The first type of certification institutions includes corporate codes of conduct specific to a firm (first-party verification); the second type includes codes and standards set by industry associations and transindustry groups (second-party verification); and the third type of certification institutions includes labeling schemes and external auditing programs associated with a wide range of domestic and transnational non-governmental organizations or non-governmental
4 4 organizations (third-party verification). 11 The institutions described below, which promulgate industry-wide codes of conduct, are second-party verification institutions. The ICCA and Responsible Care Leading multinational chemical corporations including Dow and DuPont--have created a private institution designed perhaps to parallel and even pre-empt the development of multilateral institutions. It began when Responsible Care, a program devised to establish community emergency preparedness plans by the Canadian Chemical Producers Association, was adopted and elaborated by the Chemical Manufacturers Association in the United States. US-based multinational chemical producers adopted the program, and wanted to employ it in their global operations; because they felt they needed a mechanism to encourage companies in host countries to adopt the program as well, they led the effort to create a coordinating body for Responsible Care, the International Council of Chemical Associations. 12 The ICCA, established in 1989, seems to exist more on the Internet than in that less defined space we refer to as the international level of governance. The organization provides representation at MEA negotiations, educates others about the chemical industry, and collects and provides information to its own members. The ICCA is also responsible for the coordination of the global Responsible Care initiative. Given this initiative, guidelines for environmental, health, and safety extend from MNC corporate headquarters to the GETA to industry associations and facilities around the world; they are further extended to suppliers, transporters, industry neighbors, and surrounding communities. As of 1998, the ICCA reports, chemical industry associations in 42 countries had adopted the Responsible Care initiative in some form. The ICCA asserts that Responsible Care members account for some 87% of global chemical production by volume. 13 International Council on Metals and the Environment The International Council on Metals and the Environment (ICME), was established in By 2000, ICME members included 29 companies in 15 countries. Some ICME members, like Phelps Dodge, are multinationals based in advanced industrialized countries, but others are domestic corporations in industrializing countries. Like the ICCA, ICME has been active in MEA negotiations, including the Basel Convention and the Convention on Prior Informed Consent. It provides technical advice
5 Bank. 14 ICME consists of a board of directors (usually the senior executives of members) 5 to intergovernmental institutions, and has worked with UNEP, UNCTAD, and the World and a secretariat (which oversees the work of four standing committees and project directors). The standing committees, which meet twice a year, include the Committee on Health and Environmental Sciences, the Environmental Stewardship Committee, the Metals Stewardship Committee, and the Committee on Public Policy. 15 Like the ICCA, ICME also coordinates the promulgation of an industry code of conduct. 16 The code includes product stewardship, environmental stewardship, and community responsibility principles. As an analysis of codes of conduct for the United Nations 17 suggests, ICME s guidelines are superior in comparison with those of the Chemical Manufacturers Association (CMA) in the United States. The CMA is a leading member of the ICCA. (See figure 2). Figure 2: Comparing CMA and ICME Corporate Environmental Management Guidelines Provisions of Agenda 21 CMA ICME Making commitments to Not mentioned Partial conformity adopt equivalent or not less stringent standards of operation in host countries Making environmental Partial conformity Partial conformity management a priority Encouraging establishment Not mentioned Full commitment of global corporate SD policies ensure responsible and Partial conformity Full commitment ethical EHS management of processes establish environmental Partial conformity Full commitment management systems, including environmental auditing of production or distribution sites promote cooperation in Partial conformity Full commitment technology transfer and human resource training in host countries share experiences with the local authorities, governments, and IGOs Partial conformity Full commitment
6 6 Source: Selected and adapted from Krut (1996, 24). Sorting out the stories of various certification institutions is a difficult task. They have developed in interdependent fashion: extant codes serve as models for new ones, and new and old compete with one another. Yet the first codes of conduct developed by GETAs have survived for a decade. Furthermore, we may expect that, just as codes of conduct were replicated at the domestic level in the United States in the 1980s and 1990s, their establishment at the global level, through global trade associations, will be replicated. The American Petroleum Institute and American Forest and Paper Association have each established codes of conduct in the US, and these associations may take their codes to the global level as well. Studying GETAs and their Contribution to Sustainable Governance International relations scholars have yet to seriously consider the potential of GETAs (among other first, second, and third-party certification institutions). Given the brief discussion of their structure and function above, we may compare them to international environmental institutions rather than to NGOs, and ask some interesting questions. Can the development of GETAs with environmental codes of conduct shape the development and effectiveness of MEAs? Can GETAs preempt, or in some cases, replace, multilateral environmental agreements and institutions? Can such GETAs, alone or in conjunction with MEAs, effectively change the behavior of producers in countries around the world? To address these questions, we can build upon studies that have explored the development and effectiveness of codes of conduct from sociological, 18 legal, 19 business, 20 and other 21 perspectives. We can also draw from the international relations literature that has evaluated the effectiveness of international environmental institutions. 22 Evaluating the ways institutions affect the three Cs (concern, contractual environment, and capacity), as Haas, Keohane, and Levy did in Institutions for the Earth, may be particularly appropriate. Yet, instead of asking how state concern and capacity is affected, we may ask how GETAs affect producer concern and capacity.
7 7 Conclusion During a time when many individuals are questioning the activities of international institutions and suggesting that such institutions are managed in the interests of multinational corporations, it seems odd to argue that we must seriously consider institutions that are managed by multinational corporations as mechanisms to help us achieve sustainable governance. Clearly, the democratic deficit 23 that limits international environmental institutions more seriously flaws GETAs. However, GETAs, like MNCs, IGOs, and globalization in general, do not seem to be going away any time soon. The growing number and scope of GETAs, coupled with this lack of accountability, provides reason enough to understand the roles they can and cannot play in sustainable governance. Works Cited Baram, Michael S. "Multinational Corporations, Private Codes, and Technology Transfer for Sustainable Development." Environmental Law (1994) 24: Brown Weiss, Edith, and Harold K. Jacobson, eds. Engaging Countries: Stengthening Compliance with International Environmental Accords. Cambridge, MA: The MIT Press, Chatterjee, Pratap, and Mattias Finger. The Earth Brokers: Power, Politics and World Development. New York: Routledge, DuPont. About DuPont: DuPont at a Glance Apr Garcia-Johnson, Ronie. Exporting Environmentalism: U.S. Multinational Chemical Corporations in Brazil and Mexico. Cambridge: The MIT Press, Gereffi, Gary, Ronie Garcia-Johnson, and Erica Sasser. The Development of Social and Environmental Certification Institutions: Corporate Accountability in Global Industries. Unpublished paper. March, Global Environment Facility. The Global Environment Facility Mar Greenpeace. 98 Reports and Accounts Apr Haas, Peter M., ed. International Organization - Special Issue on Epistemic Communities 46 (1992). Haas, Peter M., Robert O. Keohane, and Marc A. Levy, eds. Institutions for the Earth: Sources of Effective International Environmental Protection. Cambridge, MA: The MIT Press, Hodges, Carroll Ann. Mineral Resources, Environmental Issues, and Land Use. Science 268 (1995): ICCA. Responsible Care Status Report ICME. About ICME Feb
8 Keck, Margaret E. and Kathryn Sikkink. Activists Beyond Borders: Advocacy Networks in International Politics. Ithaca: Cornell University Press, Keohane, Robert O. International Institutions: Can Interdependence Work? Foreign Policy Spring (1998): Keohane, Robert O. and Joseph S. Nye, eds. Transnational Relations and World Politics. Cambridge: Harvard University Press, Kolk, Ans, Rob van Tulder, and Carljin Welters. International Codes of Conduct and Corporate Social Responsibility: Can Transnational Corporations Regulate Themselves? Transnational Corporations 8 (1999): Krut, Riva. Self-Regulation of Environmental Management: An Analysis of Guidelines Set by World Industry Associations for their Member Firms. New York: United Nations, Krut, Riva, and Harris Gleckman. ISO 14001: A Missed Opportunity for Sustainable Global Industrial Development. London: Earthscan, Nash, Jennifer. The Emergence of Trade Associations as Agents of Environmental Performance Improvement. Greening of Industry Network Conference, Best Paper Proceedings. (1999). Nash, Jennifer, and John Ehrenfeld. "Codes of Environmental Management Practice," Annual Review of Energy and the Environment 22 (1997): Princen, Thomas. Ivory, Conservation, and Environmental Transnational Coalitions," Bringing Transnational Relations Back In. Ed. Thomas Risse-Kappen. New York: Cambridge, Slaughter, Anne-Marie Burley. "The Real New World Order." Foreign Affairs, Sept./Oct. (1997). Spar, Deborah L. The Spotlight and the Bottom Line, Foreign Affairs. Mar./Apr. (1998) United Nations. Press Release GA/AB/ Dec Victor, David G., Kal Raustiala, and Eugene B. Skolnikoff, eds. The Implementation and Effectiveness of International Environmental Commitments: Theory and Practice. Cambridge, MA: The MIT Press, and International Institute for Applied Systems Analysis, Wapner, Paul. Environmental Activism and World Civic Politics. New York: State of New York Press, World Bank Group. World Development Report 1999/2000. Entering the 21st Century: The Changing Development Landscape
9 9 1 This is not true in the case of every state and every industry, but as neo-liberalism demands privatization in some countries, and as the transition to market-based economies takes place in others, it is increasingly true. 2 These are the functional parts of governments working with counterparts in other countries described in detail by Anne-Marie Burley Slaughter, "The Real New World Order," Foreign Affairs Sept./Oct. (1997). 3 Robert O. Keohane and Joseph S. Nye, eds., Transnational Relations and World Politics (Cambridge: Harvard University Press, 1971). 4 See Peter M. Haas, ed., International Organization (Special Issue on Epistemic Communities) 46 (1992); Thomas Princen, Ivory, Conservation, and Environmental Transnational Coalitions," Bringing Transnational Relations Back In, ed. Thomas Risse- Kappen (New York: Cambridge, 1992); Paul Wapner, Environmental Activism and World Civic Politics (New York: State of New York Press, 1996); Margaret E. Keck and Kathryn Sikkink, Activists Beyond Borders: Advocacy Networks in International Politics (Ithaca: Cornell University Press, 1998); Ronie Garcia-Johnson, Exporting Environmentalism: U.S. Multinational Chemical Corporations in Brazil and Mexico (Cambridge: The MIT Press, 2000). 5 See World Bank, Table 1, Size of the economy, World Development Report 1999/2000, Comparing MNCs to IGOs and NGOs is much like comparing apples to oranges; this chart is an attempt to illustrate the size and scope of these institutions. 7 Garcia-Johnson. 8 Riva Krut, Self-Regulation of Environmental Management: An Analysis of Guidelines Set by World Industry Associations for their Member Firms (New York: United Nations, 1996) 2. 9 Here, I will follow the definition of institutions provided by Keohane, Haas, and Levy: persistent and interconnected sets of rules and practices that prescribe behavioral roles, constrain activity, and shape expectations. Peter M. Haas, Robert O. Keohane, and Marc A. Levy, eds., Institutions for the Earth: Sources of Effective International Environmental Protection (Cambridge, MA: The MIT Press, 1993) See Pratap Chatterjee and Mattias Finger, The Earth Brokers: Power, Politics and World Development (New York: Routledge, 1994). They argue that MNCs had too much access to discussions and negotiations in preparation for the UNCED. 11 Gary Gereffi, Ronie Garcia-Johnson, and Erica Sasser. The Development of Social and Environmental Certification Institutions: Corporate Accountability in Global Industries. Unpublished paper. Mar Garcia-Johnson. 13 ICCA, Responsible Care Status Report, ICME, About ICME, 15 Feb ICME. 16 See also Carroll Ann Hodges, Mineral Resources, Environmental Issues, and Land Use, Science 268 (1995): Krut 1996.
10 18 Ans Kolk, Rob van Tulder, and Carljin Welters, International Codes of Conduct and Corporate Social Responsibility: Can Transnational Corporations Regulate Themselves? Transnational Corporations 8 (1999): Michael S. Baram, "Multinational Corporations, Private Codes, and Technology Transfer for Sustainable Development," Environmental Law 24 (1994): Jennifer Nash and John Ehrenfeld, "Codes of Environmental Management Practice," Annual Review of Energy and the Environment 22 (1997): ; Jennifer Nash, The Emergence of Trade Associations as Agents of Environmental Performance Improvement, Greening of Industry Network Conference, Best Paper Proceedings (1999); Deborah L. Spar, The Spotlight and the Bottom Line, Foreign Affairs Mar./Apr. (1998) Nash suggests that codes are more likely to emerge in heavily regulated and commodity industries (in which collective identity is stronger than the name recognition of individual firms ), and in those industries dominated by large firms, with existent trade associations (33-34). Spar considers the importance of codes of conduct for the protection of human rights. 21 Riva Krut and Harris Gleckman, ISO 14001: A Missed Opportunity for Sustainable Global Industrial Development (London: Earthscan, 1998); Krut,1996; 22 Haas, Keohane, and Levy; Edith Brown Weiss and Harold K. Jacobson, eds., Engaging Countries: Stengthening Compliance with International Environmental Accords (Cambridge, MA: The MIT Press, 1998); David G. Victor, Kal Raustiala, and Eugene B. Skolnikoff, eds., The Implementation and Effectiveness of International Environmental Commitments: Theory and Practice (Cambridge, MA: The MIT Press, and International Institute for Applied Systems Analysis, 1998). 23 For a brief discussion of the democratic deficit, see Robert O. Keohane, International Institutions: Can Interdependence Work? Foreign Policy Spring (1998):
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