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1、The Political Economy of the Firm in Global Environmental GovernancePeter Newell and David LevyEnvironmental issues provide a valuable lens through which to examine the question of global corporate power. Broader debates within IPE about private authority, the privatization of the U.N. and corporate
2、 social responsibility, to name a few, can be usefully informed by insights from environmental politics. Not only are corporations significantly responsible for generating global environmental degradation, but they are increasingly performing multiple roles associated with the management of environm
3、ental change. As experts, technology providers and investors, firms are in the frontline of day-to-day decision-making on environmental issues. Through lobbying and coalition-building they are also centrally located in regimes at the national and international level charged with establishing policie
4、s to contain and eventually reverse environmental degradation. It is unfortunate then that in looking at the role of corporations in the global political economy of the environment, we have a classic case of what Susan Strange would call mutual neglect. While theories of the firm continue to evolve
5、and generate interesting insights into inter- and intra-firm behavior on environmental issues, with a few exceptions, students of IPE have paid little attention to the global politics of the environment. Likewise, students of global environmental politics increasingly recognize the key role of corpo
6、rations as shapers, negotiators and implementers of environmental rules, but lack a sophisticated understanding of the firm in terms of its corporate strategy or role within the broader structures of political and economic power that occupy students of IPE.This chapter seeks to develop a political e
7、conomy framework to bridge this divide and to construct a more appropriate basis for conceptualizing the role of corporations in the organization of global environmental governance. This chapter draws on and develops previous work by the two authors, most notably Levy and Newell (2004). Combining wo
8、rk on the political economy of the firm with literatures on corporate strategy and environmental management, we challenge conventional writing on international environmental governance which neglects the role of corporations as shapers and negotiators of environmental rules as well as their central
9、position in informal governance of the environment that derives from their daily operations. The chapter explores the multiple and potentially conflicting roles that corporations perform as lobbyists, experts, (self) regulators and providers of the capital and technologies necessary to realize envir
10、onmental policy goals. Moving beyond debates about the extent to which they are greenwashing their activities as opposed to engaging in a serious attempt to achieve sustainable development, we assess the political significance of the corporation as an actor in global environmental governance. Firms
11、play diverse roles depending on, whether they are a multinational corporation (MNC) as opposed to a small/medium sized enterprise (SME), the region in which they are based, the sector in which they operate, their positioning with respect to particular markets and technologies, and the political stra
12、tegies they adopt. To illustrate this diversity, we draw on a range of empirical examples, from climate change and ozone depletion to biosafety and biodiversity; each issue arena is characterized by different sets of political relations and unique corporate strategies. These patterns of influence an
13、d representation have important implications for explaining the nature of current international environmental policy and its limitations, as well as important theoretical implications for how we are to understand the complex and competing roles that corporations play in the global political economy.
14、 By looking at the reciprocal relationship between corporate strategy and regimes of global governance, we develop a political economy of global environmental governance in which the corporations assumes a central role. The rise of the corporation in global environmental politicsBusiness plays a key
15、 role in international environmental politics. Corporations are engaged, directly or indirectly, in the environmental degradation which global regimes seek to manage, contain and eventually reverse. According to the Business Council for Sustainable Developments (BCSD) own figures, Industry accounts
16、for more than one third of energy consumed worldwide and uses more energy than any other enduser in industrialized and newly industrializing economies (Schmidheiny 1992: 43). At the same time, corporations can also serve as powerful engines of change, with the potential to redirect their substantial
17、 financial, technological, and organizational resources toward addressing environmental concerns.Regulators cannot afford to ignore corporations in the design of environmental governance. Corporate activity has substantial environmental consequences at every stage of the value chain, from research i
18、nto genetically engineered seeds, to the disposal of household and industrial waste. In many ways, managers of large firms are the street-level bureaucrats of environmental policy, Lipskys (1980) term to describe the role of frontline employees in shaping policy through its implementation on the gro
19、und. The active cooperation of large MNCs is therefore key to the implementation of environmental regulations and the amelioration of environmental problems. Industry appears to be increasingly aware of its role. The International Chamber of Commerce, an influential umbrella industry association, ha
20、s forcefully asserted industrys significance in the case of climate change, though these words would apply equally well to many other environmental issues:Industrys involvement is a critical factor in the policy deliberations relating to climate change. It is industry that will meet the growing dema
21、nds of consumers for goods and services. It is industry that develops and disseminates most of the worlds technology. It is industry and the private financial community that marshal most of the financial resources that fund the worlds economic growth. It is industry that develops, finances and manag
22、es most of the investments that enhance and protect the environment. It is industry, therefore, that will be called upon to implement and finance a substantial part of governments climate change policies (International Chamber of Commerce 1995).There has been a notable evolution in the nature of cor
23、porations engagement with environmental issues. From denials of culpability in environmental degradation and rejection of the need for regulation, most major corporations have come to both acknowledge increasing evidence of environmental degradation and accept the need for societal action to contain
24、 the process (Fischer and Schot 1993). Hoffman, for example, documents the changing attitudes of the chemical and petroleum industries in particular, towards environmental problems traced through the corporate media (Hoffman 1996). As a result of rising popular consciousness about environmental issu
25、es, catalyzed and consolidated by vocal and well-resourced environmental NGOs that have focussed the popular imagination on the consequences of industrial development, corporations have been thrust into the fray of environmental policy debate. Many industry-wide initiatives on environmental issues h
26、ave also emerged as a direct result of the need to pacify public anxiety in the wake of disasters such as Bhopal and Exxon Valdez. The Valdez principles and the Responsible Care program of the chemical industry can be seen in this light (Garcia-Johnson 2000). External pressures have combined with th
27、e reform agendas of environmental advocates within corporations to sustain pressure for environmental reform within their operations. There has also been a notable shift in the relationship between business and civil society around environmental issues. From a position of clearly defined antagonism,
28、 there is increasing emphasis on partnerships and more institutionalized forms of collaboration that seek to mobilize the respective skills and expertise of corporations and NGOs towards the management of specific environmental problems (Bendell 2000; Newell 2001). The pervasiveness of discourses ab
29、out corporate social responsibility has also forced the spotlight on corporations environmental performance, prompting a spate of critical reports about greenwash, the attempt by firms to use public relations to disguise business-as-usual polluting practices. (Rowell 1996; Utting 2001). To protect t
30、hemselves from such criticism corporations have sought to build alliances with groups within civil society, and in some cases to fund the creation of astro-turf organizations, industry-orchestrated NGOs that are used as a front to present business positions in public debates on environmental issues.
31、 The corporate accountability movement has taken up the challenge of exposing instances of double-standards and gaps between corporate rhetoric and practice as well as pressuring and cajoling companies to improve their environmental performance through more confrontational strategies of boycott and
32、shareholder activism (Newell 2004b). As dynamic entities, corporations both respond to broader structural shifts in the global political economy, as well as contribute to them. Many have responded to the Europeanization of environmental policy, for example, by setting up offices in Brussels to influ
33、ence policy, reflecting the shift from state-centered to regional decision-making structures (Grant, Matthews and Newell 2000). Likewise global coalitions have been formed to shape UN negotiations on global environmental problems or to respond to calls for partnership with business from the UN (Zamm
34、it 2003). More broadly, patterns of trade liberalization, brought about through agreement or World Bank/IMF led neo-liberal reforms, have created market opportunities for corporations to expand their export base. For corporations wanting to export to Europe and North America and parts of East Asia,
35、this has required improvements in production processes through the trading up of environmental standards to meet regulatory requirements in overseas markets (Vogel 1997).At the same time, however, the transnationalization of production and capital and the removal of trade barriers have themselves cr
36、eated the need for orchestrated institutional responses from states. For example, it is the global and transboundary nature of the trade in genetically modified seeds (GMOs) that gave rise to the need for a protocol on biosafety to ensure adequate attention to the environmental effects of transferri
37、ng the technology across borders and releasing it in diverse ecological settings. The need for environmental safeguards often follows the creation of market enabling trade regimes. The hard-fought side agreement to the NAFTA free trade accord was a concession to concerns about the creation of pollut
38、ion havens in parties with lower levels of environmental regulation, such as Mexico (Hogenboom 1998). Political coalitions are also often an expression of changing patterns of investment. For example, efforts to harmonize government and industry positions in Europe and North America on the question
39、of biotechnology are driven by the increasingly transatlantic nature of capital integration (Levy and Newell 2000).From being key actors at the national level in debates about appropriate forms of environmental regulation, corporations have come to occupy important roles in regional and increasingly
40、 international policy. How they seek to shape policy developments as this level and the implications of this are the subject of the next section. States, corporations and triangular diplomacyIt is only relatively recently that small and medium sized enterprises, particularly those oriented towards e
41、xport markets, have become increasingly involved in environmental policy debates. Resonating with the history of their larger multinational counter-parts, their involvement has come after a belated realization of the potential impact of environmental regulations on their activities. As actors in the
42、 supply chains of MNCs, and as global traders in their own right, SMEs find themselves subject to a bewildering array of regulations that they have to comprehend, or product specifications that they have to meet. Compliance costs can impose a significant burden on SMEs, which lack economies of scale
43、 and expertise, and can therefore act as a barrier to market entry. Indeed, supporting environmental regulation can constitute a strategic motive for larger corporations to undermine the competitiveness of their market rivals (Reinhardt 2000). One of the commercial drivers of private forms of (self)
44、 regulation, such as ISO 14001 standards, is the desire to keep smaller firms out of profitable markets by raising the barrier to entry and increasing the costs of compliance with standards (Clapp 1998). Regulatory regimes carry significant implications for competitiveness as costs are imposed uneve
45、nly and new market opportunities are created. Regulated industries such as hazardous waste frequently have complex procedures for certifying new processes, thus stabilizing existing technologies and protecting market incumbents.Financial limitations also prevent SMEs from securing a higher political
46、 profile for themselves by, for example, hiring lobbyists and tracking legislative activity related to their sector, in the way many larger multinationals do (Dannreuther 2002). While in their role as street level bureaucrats SMEs operate as informal regulators and policy-makers, resource constraint
47、s and the scale of their operations mean that they are not involved as intensively or influentially as their multinational counterparts in international fora addressing environmental problems. Although key decisions about government positions on issues that are the subject of international negotiati
48、on are formulated at the national level in the first instance, again it is often larger confederations that are the first point of contact for governments, given the breadth of their membership and the proportion of the countrys GNP which they often represent. Given this opportunity structure, it is
49、 unsurprising that the majority of corporations prefer to fight their battles against regulatory regimes through national interest group representation and within decision-making channels familiar to them (Newell 2000). Levy and Egan (1998), in a study of the climate change negotiations, showed how US energy-related businesses attempted to keep any regulation at the national level due to their powerful domestic influence. US industry considered itself relatively weak in t
