Description
The neighbouring Southeast Asian countries of Singapore and Malaysia have contrasting environmental reputations. The small city-state of Singapore, with a population of 4 million and a population density of around 6,150 per square kilometre, is often seen as a model green city.
Corporate Environmental Responsibility
in Singapore and Malaysia
The Potential and Limits
of Voluntary Initiatives
Martin Perry and Sanjeev Singh
Technology, Business and Society
Programme Paper Number 3
April 2001
United Nations
Research Institute
for Social Development
This United Nations Research Institute for Social Development (UNRISD) Programme Paper has been produced with the
support of the MacArthur Foundation. UNRISD also thanks the governments of Denmark, Finland, Mexico, the
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ISSN 1020–8216
Contents
Acronyms iii
Summary/Résumé/Resumen iv
Summary iv
Résumé v
Resumen vii
Corporate Greening 1
Strategic advantage 1
Avoiding disadvantage 2
Acting responsibly 2
Voluntary Environmental Initiatives and Self-Regulation 3
Third-party involvement 4
Regulation as a benchmark 5
Relationship to mandatory regulation 5
Corporate Voluntary Initiatives in Singapore and Malaysia 5
Environmental issues in Singapore 6
Environmental reporting 9
ISO14001 policy statements 10
”Responsible Care” 11
Environmental issues in Malaysia 12
Environmental performance of foreign TNCs in Singapore and Malaysia 15
Explaining environmental commitment 17
Motivation for voluntary action 18
Perceived benefits of voluntary action 18
ISO14001 and environmental commitment 20
Codes of conduct 21
Conclusion 21
Bibliography 37
UNRISD Programme Papers on Technology, Business and Society 41
Figures
Figure 1: Environmental Action among TNCs in Singapore and Malaysia 34
Figure 2: Main advantage from investment in voluntary environmental initiatives
in Singapore and Malaysia 35
Figure 3: Second main advantage from investment in voluntary environmental initiatives
in Singapore and Malaysia 35
Figure 4: Main advantage from investment in voluntary environmental initiatives
by high and low performers in Singapore 36
Tables
Table 1: Motives for, and constraints on, corporate greening 24
Table 2: ISO 14001 certifications in Southeast Asia 24
Table 3: Response profile and representation of the organizations 25
Table 4: Summary of respondent characteristics 28
Table 5: Reasons for environmental management expenditure among pollution-
intensive organizations according to their environmental commitment 29
Table 6: Percentage distribution of firms by ownership, pollution intensity,
location, size, type of product manufactured and sector 30
Table 7: Environmental commitment and employment size in Singapore 32
Table 8: Influences (other than regulation) motivating environmental action 32
Table 9: Motivation to implement an environmental management system (EMS) 33
Table 10: Distribution of the type of environmental code of conduct
followed by the respondents in Malaysia 33
ii
Acronyms
ASEAN Association of Southeast Asian Nations
BOD biochemical oxygen demand
CAP Consumers Association of Penang
DBS Development Bank of Singapore
EDB Economic Development Board
EIA environmental impact assessment
EMAS European Environmental Management and Audit Scheme
ENSEARCH Environmental Management and Research Association of Malaysia
ESCAP Economic and Social Commission for Asia and the Pacific
GATT General Agreement on Tariffs and Trade
GDP gross domestic product
IBM International Business Machines Corporation
ISO International Organization for Standardization
MICC Malaysian International Chamber of Commerce and Industry
MIDA Malaysia Industrial Development Authority
NGO non-governmental organization
NITC National Information Technology Council
OECD Organisation for Economic Co-operation and Development
PAP People’s Action Party
PROKASIH “Clean River” Programme of the Indonesian Ministry for Population and Environment
SAM Sahabat Alam Malaysia
SCIC Singapore Chemical Industry Council
TNC transnational corporation
UNCTAD United Nations Conference on Trade and Development
UNCTC United Nations Centre on Transnational Corporations
UNRISD United Nations Research Institute for Social Development
iii
Summary/Résumé/Resumen
Summary
The neighbouring Southeast Asian countries of Singapore and Malaysia have contrasting
environmental reputations. The small city-state of Singapore, with a population of 4 million and
a population density of around 6,150 per square kilometre, is often seen as a model green city.
That reputation rests partly on its efforts to control urban congestion and pollution, as well as
the retention of green landscapes within the built environment. Malaysia, on the other hand,
with a total population of around 20 million distributed between the comparatively urbanized
peninsula and the less developed states of Sabah and Sarawak, has a poor environmental
image. Deforestation, loss of biodiversity and the marginalization of indigenous populations in
resource management decisions account for much of that negative image.
The real comparative environmental performance is a good deal harder to judge than
immediate impressions suggest, not least because Malaysia’s GDP per capita is a third of
Singapore’s. On current income, Singapore ranks among the world’s top 10 richest countries. Its
elevation to this group has been rapid, but Singapore has yet officially to accept the status of a
developed country. That mantle would bring economic implications and international
obligations, potentially including responsibilities under the United Nations Framework
Convention on Climate Change. Government reticence aside, Singapore’s affluence arguably
makes Western expectations of environmental responsibility a relevant performance
benchmark, particularly as its economy is built on the investment of foreign transnational
corporations. Malaysia, on the other hand, is still managing the transition to an industrial
society. Around a quarter of the workforce is employed in agriculture, and nearly half the
population lives outside urban areas. Malaysian lawmakers have demonstrated a willingness to
strengthen environmental protection, and high-income status may yet be achieved with a
greater proportion of the country’s land area designated as protected natural environment than
in many older industrial nations. This may be a reasonable expectation, given the ecological
significance of tropical forests.
Advocacy of corporate voluntary environmental initiatives—understood as actions taken to
reduce environmental impacts, and promote awareness thereof, that have not been required by
government regulation—to strengthen environmental management can be justified in
Singapore and Malaysia, although for different reasons.
Singapore is the regional headquarters of many transnational corporations with branch
establishments across Southeast Asia. Demands to demonstrate a strong environmental
commitment in Singapore, especially where this extends to the ecological footprint of business
organizations, may accelerate the potential environmental leadership role that transnational
corporations can play. As a “developmental state”, the priority in Singapore has been to
maximize immediate economic opportunities while protecting business organizations from
scrutiny by NGOs or the wider community. Consequently, although per capita incomes now
iv
exceed those of many older industrial countries, interest in environmental responsibility lags
behind that which might be expected on the basis of Western experience.
Malaysia has experienced a greater growth of environmental concern than Singapore, judging
by the activity of environmental NGOs that seek to apply informal pressure on corporate and
regulator behaviour. Surveillance by international pressure groups is also significant for
resource-based industry, and this adds to pressure for voluntary environmental initiatives.
Rising incomes, a significant presence of transnational corporations and official acceptance of
local environmental pressure groups provide indications that voluntary initiatives are poised to
play an increasing role in Malaysia. The likelihood is further increased by the World Bank’s
efforts to promote “informal” regulation, involving community pressure on business to
improve environmental performance, and other new ways of making environmental policy.
The influences that encourage voluntary environmental initiatives, the types of action taken and
the extent to which these may substitute for other forms of environmental regulation form the
basis for the discussion in this paper. It begins with a review of the motivations thought to
encourage voluntary initiatives over other ways of promoting environmental improvement. The
extent to which voluntary action should be seen as an alternative to governmental regulation is
then discussed, noting, among other issues, that such action is often closely related to
regulatory enforcement. The discussion then turns to a review of corporate voluntary
environmental initiatives in Singapore and Malaysia, which is based on original survey results
from a sample of foreign-owned transnational corporations in both countries. The concluding
section comments on the significance of voluntary action observed in Singapore and Malaysia.
When this paper was written, Martin Perry was an Associate Professor in the Department of
Geography at the National University of Singapore. He is now a Senior Research Analyst for the
Department of Labour, New Zealand. Sanjeev Singh is a Ph.D. scholar in the Department of
Geography at the National University of Singapore.
Résumé
Singapour et la Malaisie, pays voisins d’Asie du Sud-Est, ont des réputations diamétralement
opposées pour ce qui est de l’environnement. Le petit Etat-cité de Singapour, avec ses quatre
millions d’habitants et une densité d’environ 6.150 habitants au kilomètre carré, apparaît
souvent comme un modèle de cité verte. Cette réputation tient en partie à ses efforts pour
limiter l’engorgement et la pollution en ville, ainsi qu’aux efforts réalisés pour que des paysages
de verdure subsistent au milieu des constructions. La Malaisie, en revanche, avec une
population totale d’environ 20 millions, répartis entre la péninsule relativement urbanisée et les
Etats moins développés de Sabah et de Sarawak, offre une piètre image environnementale. Le
déboisement, l’appauvrissement de la biodiversité et le fait que les populations autochtones
sont tenues à l’écart des décisions relatives à la gestion des ressources en sont en grande partie
responsables.
v
Au-delà de ces impressions immédiates, il est très difficile de juger de ce qu’il en est vraiment
de l’environnement dans les deux pays, ne serait-ce que parce que le PIB de la Malaisie par
habitant est le tiers de celui de Singapour. Les recettes ordinaires de Singapour la classent parmi
les dix pays les plus riches du monde. Elle s’est rapidement hissée à ce rang mais n’a pas encore
officiellement le statut de pays développé. Celui-ci entraînerait des répercussions économiques
et des obligations internationales, dont éventuellement des responsabilités en vertu de la
Convention-cadre des Nations Unies sur les changements climatiques. Les réticences
gouvernementales mises à part, la richesse de Singapour fait sans doute des attentes
occidentales en matière de responsabilité environnementale un critère de performance
parfaitement applicable, d’autant plus que son économie repose sur les investissements de
sociétés transnationales étrangères. La Malaisie, de son côté, négocie encore son passage à la
société industrielle. Environ un quart de la main-d’œuvre est employée dans l’agriculture et
près de la moitié de la population vit hors des agglomérations urbaines. Le législateur malaisien
a montré sa volonté de renforcer la protection de l’environnement et la Malaisie pourrait se
hisser au rang des pays à haut revenu en ayant proportionnellement une superficie plus vaste
de parc naturel protégé que beaucoup de pays industrialisés de longue date. On peut
raisonnablement le penser, vu l’importance écologique des forêts tropicales.
Les initiatives environnementales volontaires—définies comme des actes destinés à atténuer les
effets sur l’environnement et à les faire mieux connaître sans qu’il y ait obligation légale d’agir
dans ce sens—que peuvent prendre des entreprises pour renforcer la gestion de
l’environnement se défendent à Singapour et en Malaisie, mais pour des raisons différentes.
Singapour est le siège régional de nombreuses sociétés transnationales implantées, au travers de
filiales, dans toute l’Asie du Sud-Est. Si elles se sentent obligées de se montrer écologistes
convaincues à Singapour, surtout si leur image est en jeu, il y a de bonnes chances que les
sociétés transnationales jouent plus vite que prévu un rôle moteur dans la protection de
l’environnement. La priorité de Singapour en tant qu’“Etat développemental” a été de
maximiser les débouchés économiques tout en protégeant les établissements à but lucratif du
contrôle des ONG ou de la collectivité dans son ensemble. En conséquence, bien que les revenus
par habitant dépassent maintenant ceux de bon nombre de pays industrialisés depuis
longtemps, la responsabilité environnementale n’éveille pas l’intérêt que l’on pourrait attendre
si l’on s’en tient à des critères occidentaux.
L’écologie s’est plus développée en Malaisie qu’à Singapour, si l’on en juge par l’activité des
ONG écologiques qui cherchent à faire officieusement pression sur les entreprises et les
organismes de régulation pour obtenir qu’ils modifient leur comportement. Des groupes de
pression internationaux, de leur côté, exercent une surveillance importante sur les industries à
base de ressources naturelles, ce qui pousse encore les entreprises à prendre des initiatives
volontaires en matière d’environnement. Des revenus en hausse, une présence importante de
sociétés transnationales et la reconnaissance officielle dont jouissent des groupes écologistes
locaux sont autant d’indices portant à croire que les initiatives volontaires vont jouer un rôle de
vi
plus en plus important en Malaisie. Les efforts déployés par la Banque mondiale pour
encourager une régulation “sans caractère officiel” en comptant sur la collectivité pour faire
pression sur les entreprises pour qu’elles améliorent leurs résultats environnementaux, ainsi
que d’autres modes nouveaux d’élaboration de la politique environnementale, augmentent
encore les chances qu’il en soit ainsi.
Les influences favorables aux initiatives volontaires, la nature de ces initiatives et la mesure
dans laquelle elles peuvent se substituer à d’autres formes de régulation environnementale sont
les principales questions traitées ici. Le document commence par un examen des motivations
susceptibles de faire préférer les initiatives volontaires à d’autres façons d’encourager un plus
grand respect de l’environnement. Les auteurs, qui font observer notamment que l’action
volontaire est souvent étroitement liée à l’application de la loi, se demandent ensuite dans
quelle mesure on peut voir dans cette action une solution de rechange à la réglementation
publique. Ils étudient aussi les initiatives écologiques volontaires prises à Singapour et en
Malaisie en se fondant sur les résultats d’une étude originale effectuée auprès d’un échantillon
de sociétés transnationales étrangères implantées dans les deux pays. Le document se conclut
par des commentaires sur l’importance de l’action volontaire observée à Singapour et en
Malaisie.
Au moment de la rédaction du document, Martin Perry était professeur associé au Département
de géographie de l’Université nationale de Singapour. Il est maintenant analyste en chef de
recherches pour le Ministère du Travail en Nouvelle-Zélande. Sanjeev Singh est doctorant au
Département de géographie de l’Université nationale de Singapour.
Resumen
Singapur y Malasia, países vecinos de Asia sudoriental, tienen una reputación ambiental
contrastante. La pequeña ciudad-Estado de Singapur, con una población de cuatro millones y
una densidad de población de aproximadamente 6.150 personas por kilómetro cuadrado, a
menudo se considera una ciudad ecológica modelo. La reputación reside parcialmente en sus
esfuerzos por controlar la congestión y polución urbanas, así como el mantenimiento de las
zonas verdes en las zonas edificadas. Malasia, por otra parte, con una población de
aproximadamente 20 millones de personas distribuidas entre la península comparativamente
urbanizada y los Estados menos desarrollados de Sabah y Sarawak, ofrece una imagen
ambiental muy pobre. La deforestación, la pérdida de biodiversidad y la marginación de las
poblaciones indígenas en las decisiones relativas a la gestión de recursos, contribuyen
considerablemente a esta imagen negativa.
El comportamiento ambiental comparativo real es mucho más difícil de juzgar de lo que pueda
parecer a primera vista, y menos aún porque el PIB per cápita de Malasia es un tercio del de
Singapur. En cuanto a los ingresos actuales, Singapur se encuentra entre los diez países más
ricos del mundo, pero aún debe aceptar oficialmente la condición de país desarrollado, lo que
vii
traería consecuencias económicas y obligaciones internacionales, incluyendo posiblemente
responsabilidades con arreglo a la Convención Marco de las Naciones Unidas sobre el Cambio
Climático. Dejando a un lado las reservas del gobierno, la prosperidad de Singapur
posiblemente convierte las expectativas de Occidente con respecto a la responsabilidad
ambiental, en un indicador importante de resultados, en particular porque su economía se basa
en la inversión de empresas transnacionales extranjeras. Por otra parte, Malasia lucha aún por
llegar a ser una sociedad industrial. Aproximadamente una cuarta parte de la fuerza de trabajo
labora en el sector de la agricultura, y casi la mitad de la población vive alejada de las zonas
urbanas. Los legisladores de Malasia han demostrado voluntad para reforzar la protección
ambiental, y aún puede llegar a ser un país de altos ingresos, al tener zonas rurales en el país
reconocidas como áreas protegidas, en mayor proporción que en muchos países industriales
más viejos. Esta expectativa puede ser razonable, dada la importancia ecológica de los bosques
tropicales.
En Singapur y Malasia puede estar justificada, aunque por razones diferentes, la defensa de
iniciativas ambientales voluntarias empresariales—entendidas como medidas adoptadas para
minimizar los efectos ambientales y fomentar la conciencia sobre los mismos, que no hayan sido
exigidas por reglamentación gubernamental.
Singapur es la sede regional de muchas empresas transnacionales con filiales en toda Asia
sudoriental. Las exigencias de demostrar un firme compromiso ambiental en Singapur, en
particular cuando éste se extiende a la huella ecológica de las organizaciones empresariales,
pueden acelerar el papel de liderazgo ambiental que pueden desempeñar las empresas
transnacionales. Como “estado de desarrollo”, la prioridad de Singapur ha sido potenciar al
máximo las oportunidades económicas, al tiempo que proteger a las organizaciones
empresariales del examen de las ONG o de la comunidad más extensa. En consecuencia,
aunque los ingresos per cápita superan actualmente los de muchos países industriales más
antiguos, el interés en la responsabilidad ambiental está a la zaga de lo que puede esperarse
sobre la base de la experiencia de Occidente.
La preocupación ambiental en Malasia ha experimentado un mayor crecimiento que en
Singapur, a juzgar por la actividad de las ONG, que procuran aplicar una presión informal en el
comportamiento empresarial y regulador. La vigilancia de grupos de presión internacionales
también es importante para la industria basada en la explotación de recursos naturales, lo que
supone una presión adicional para las iniciativas ambientales voluntarias. Los ingresos cada vez
mayores, una presencia importante de las empresas transnacionales y la aceptación oficial de
grupos locales de presión ambiental indican que las iniciativas voluntarias están preparadas
para desempeñar un papel cada vez más importante en Malasia. Esta probabilidad es aún
mayor debido a los esfuerzos desplegados por el Banco Mundial para fomentar la
reglamentación “informal”, previendo la presión comunitaria en las empresas para que mejoren
sus resultados ambientales, y otras formas nuevas de formular la política ambiental.
viii
Las influencias que fomentan las iniciativas ambientales voluntarias, los tipos de medidas
adoptadas y la medida en que éstas pueden reemplazar otras formas de reglamentación
ambiental constituyen la base del debate en este documento. Comienza con un estudio de las
motivaciones que se considera fomentan las iniciativas voluntarias por encima de otras formas
de fomentar la mejora ambiental. A continuación se discute la medida en que la acción
voluntaria debería considerarse una alternativa a la reglamentación gubernamental,
observando, entre otras cuestiones, que dicha acción a menudo está estrechamente relacionada
con la aplicación reglamentaria. La discusión se centra entonces en un estudio de las iniciativas
ambientales voluntarias empresariales en Singapur y Malasia, basado en los resultados
originales de una encuesta obtenidos de algunos ejemplos de empresas transnacionales de
propiedad extranjera en ambos países. En la última sección se comenta la importancia de la
acción voluntaria observada en Singapur y Malasia.
Cuando se escribió este documento, Martin Perry era Profesor Adjunto del Departamento de
Geografía en la Universidad Nacional de Singapur. Actualmente es analista investigador
principal en el Ministerio de Trabajo de Nueva Zelandia. Sanjeev Singh es estudiante de
doctorado en el Departamento de Geografía de la Universidad Nacional de Singapur.
ix
Corporate Greening
TNCs have recently turned their attention to environmental issues in a more coherent and
active manner than was previously the case—although it remains doubtful that this indicates a
permanent and substantial shift in management practice. Corporate environmentalism in older
industrial countries is being encouraged by economic, political and industrial organization
factors. Economic conditions support acceptance of increased environmental responsibilities, if
there are opportunities to obtain market benefits and production cost savings. The existence of a
“win-win” situation has been widely speculated upon but, as discussed further below, the
ability to profit from investment in environmental improvement may be less than initial
optimism suggested.
Political advantage is to be gained if organizations, perceiving the opportunity to accommodate
the environmental challenge, portray their response as evidence of progressive responsibility
(Levy, 1997). In terms of industrial organization, individual firms seeking to upgrade their
environmental performance must ensure that suppliers and contractors support its investment;
otherwise the risk of “contamination by association” can be a major disincentive to action.
Globalization and the growth of “buyer-driven commodity chains” (Gereffi, 1994) in many
labour-intensive consumer goods industries have accentuated this constraint. Such commodity
chains rely on tightly specified contracting relations between independent companies, although
the enforcement of contracting conditions among organizations of varying capacities and
experiences is often difficult (Utting, 2000).
The form that corporate environmentalism takes can be linked to different motives for taking
action. Three broad motives may be defined, each associated with characteristic actions (table
1): to gain strategic advantage; to avoid strategic disadvantage and to act responsibly (Eden,
1996; Bansal, 1997). When these motives and strategies are considered, the long-term
commitment of TNCs to voluntary environmental initiatives is questioned.
Strateg c advantage i
Many organizations have come to believe that there is profit to be made from “green business”.
At the most immediate level, it is often claimed that being environmentally cleaner can bring
cost savings. Pollution prevention can pay through saving resources, recycling materials at a
lower cost than using new materials, and reducing clean up costs. Beyond cost savings, there is
a potential market for new “environmentally friendly” products. In addition, the reputation of
an organization may be enhanced by an environmentally sensitive image, which may generate
good publicity and encourage customer loyalty. Longer-term benefits of “green business” may
include the enhanced ability to recruit young staff, perceived to be particularly attracted to
companies with progressive environmental reputations, in a competitive employment market.
Early optimism about the profitability of green marketing, however, has not been completely
justified. Consumer survey evidence frequently indicates that there is an increased willingness
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PAPER NUMBER 3
to pay for environmental improvements but, in practice, this tends to be limited to household
products such as detergents, paper and certain food items. Even where governments have
contributed to the promotion of “green” products, sales have often been low (Eden, 1996:9).
Although, in market research surveys, people express preferences for “clean” products, it
cannot be concluded that they will act on those preferences, nor will they necessarily believe
that a “green label” is a reliable indicator of a product’s qualities (Esty et al., 2000:83). Similarly,
just how far the corporate world can go with “eco-efficiency” is a matter of increasing
contention. Some claim big opportunities exist (Porter and Van der Linde, 1995; Flavin and
Tunali, 1996) while others are sceptical about the extent of the win-win scenario (Jaffe et al.,
1995). In the case of newly industrializing economies, the growth of capital-intensive
manufacturing may be at the expense of local producers with methods adapted to local resource
conditions. In the case of the pulp industry in Southeast Asia, for example, industrial
modernization results in fewer and more capital-intensive producers that make less use of
locally recycled inputs than the producers they displace (Sonnenfeld, 1999). The sustainability
of green corporatism motivated by strategic advantage, therefore, will be influenced by the
extent to which competitive advantage is realized.
Avoiding disadvantage
Companies may voluntarily raise their environmental standards because of the perceived
danger of not doing so. They may, for example, attempt to match the behaviour of competitors,
in order to avoid placing themselves at a strategic disadvantage. This disadvantage may be a
loss of market share—if the strategies of competitors prove effective—or it may be a loss of
reputation or standing. The impact of poor publicity can be seen in the reaction of individual
company share prices to good and bad environmental news (see World Bank 2000:61). Bad
publicity, in particular, has a marked effect on share values. Indeed, environmental
transgressions can be more damaging indirectly, through their impact on equity values and
reputation, than through the financial penalties directly imposed by regulators (Piesse, 1992).
Eden (1996) points out that, according to survey evidence, over two thirds of companies see
environmental issues as threats, “requiring defensive or corrective actions”, rather than
opportunities to open up new markets.
Corporations often view environmentalism as a means of deflecting or pre-empting new
legislation, which is seen as detrimental to market advantage. To deter demands for legislation,
TNC self-regulation needs to attain a high degree of credibility. This is far from straightforward
as, in many countries, businesses sustain lower levels of public trust than many other
institutions (Simmons and Wynne, 1993; Eden, 1996). Previous efforts to pre-empt regulation by
industry self-regulation have failed, frequently because compliance with voluntary codes has
been weak (Roht-Arriaza, 1995:534).
Act ng responsib y i l
The above motivations lead to voluntary environmental actions that are, to varying degrees, the
incidental by-product of profit-driven actions. Other pressures on business, which have less
immediate linkage to profit or returns on investment, are adding to the acceptance of larger
environmental responsibilities than in the past (Patten, 1991). This is frequently discussed in
2
CORPORATE ENVIRONMENTAL RESPONSIBILITY IN SINGAPORE AND MALAYSIA
MARTIN PERRY AND SANJEEV SINGH
terms of the need for business to establish legitimacy in the eyes of consumers, the public at
large and government—legitimacy being defined as a “generalised perception or assumption
that the actions of an entity are desirable, proper or appropriate” (Suchman, 1995:574).
Beyond the need to keep pace with changes in what society perceives to be acceptable,
environmentally sensitive business organizations are facing new demands to demonstrate their
legitimacy as their global reach increases (Grolin, 1998; Rodgers, 2000). This is because, it is
argued, the legitimacy conferred by national governments through regulation, law and
representation of public opinion has lessened due to the political emphasis on deregulation and
the internationalization of business activity. In this vacuum, corporate business has been under
pressure to find new sources of legitimacy. Environmental performance is especially affected by
this because of the high profile and scientific uncertainty of environmental issues, as well as
public scepticism about the effectiveness of government regulations (Jacobs, 1997:56). To bolster
their reputations, businesses are being encouraged to seek the acceptance and endorsement of
major stakeholder groups, giving rise to so-called “extended stakeholder management”. To
keep this dialogue within manageable proportions, partnerships between corporations and
environmental NGOs have become one method of implementing extended stakeholder
management (Lober, 1997).
The extent to which engagement with stakeholders will continue to be viewed as worthwhile is
uncertain. Corporate engagement with environmental NGOs is partly predicated on the belief
that this will contain adversarial relations with NGOs and that partnerships can be confined to
specific issues rather than the overall environmental performance of the business (Murphy and
Bendell, 1997). Both outlooks run into conflict with the expectations of environmental NGOs,
particularly those with the greatest capacity to confer legitimacy based on their wide networks
and accountability to constituencies in society (Rodgers, 2000:47). More generally, it has been
argued that self-regulation does not have the capacity to increase the legitimization of business
environmental practices (Eden, 1996:122). The chemical industry’s code of practice,
“Responsible Care”, illustrates this—in the case of a sector that has particular need to retain
public confidence in view of its pollution-intensity. Responsible Care requires that adherents
seek to match best practice environmental management and to assist other chemical companies
do likewise. Part of this involves increased information transparency. Even so, it has been
argued that this has not reduced the legitimacy gap faced by the chemical industry (Simmons
and Wynne, 1993). Responsible Care has left unaltered the public perception that chemical
companies selectively release information about their environmental impacts and have greater
influence over government than does the public at large.
Voluntary Environmental Initiatives and Self-Regulation
Across many areas of social concern there has long been a debate about the desirability of
voluntary compliance as an alternative to government regulation (Hawkins, 1990; Petts, 2000).
This discussion can exaggerate the independence of separate approaches and overlook the
variability of command and control regulation. Enforcement mechanisms, for example, may
3
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PAPER NUMBER 3
stress prevention and consultation or they may stress enforcement, including severe penalties
for transgressing regulation. Advocates of voluntary environmental management have now
joined this debate, adding their criticism of command and control regulation.
In environmental matters, advocates of voluntary approaches suggest that there are efficiency
gains in giving industries a choice over their investment in environmental improvement, and
less need for monitoring and enforcement agencies than where mandatory standards are
imposed. In addition, the flexibility to determine their own standards and priorities is said to
make businesses more positive about improvement than where regulation enforces specific
actions. As well, to the extent that voluntary regulation does not depend on legislation and
political agreement, it can be enacted quickly and maintain responsiveness to current problems.
In practice, voluntary action can be closely dependent on regulatory enforcement for three
reasons: (i) participation in so-called voluntary initiatives is frequently determined by the
efforts of third parties, including government regulators; (ii) government regulation may form a
benchmark against which voluntary efforts are designed; and (iii) conversion of voluntary
measures into legislation is possible and not necessarily opposed by “first movers”.
Third-party involvement
Voluntary environmental initiatives have grown partly because governments are influencing
their design and implementation. In other words, a good deal of the activity classed as
voluntary environmental improvement is not purely self-motivated. Public agencies encourage
the willingness to participate by establishing frameworks or institutions that help to develop,
administer or verify voluntary initiatives. Voluntary action has also been a reaction to
government efforts to publicize voluntary initiatives and threats to strengthen regulation in the
absence of voluntary improvement (Gouldson and Murphy, 1998). A Canadian study, for
example, identified four reasons for “voluntary” action: (i) the threat of regulation; (ii) public
concern and industry perception that public image affects business; (iii) financial advantage,
through the direct returns from environmental improvement and improved standing with
financial agencies; and (iv) peer pressure, especially that transmitted through industry
associations (Labatt and Maclaren, 1998).
A potentially diverse and incoherent range of voluntary environmental initiatives tends, in
practice, to be highly ordered because of the influence of external agencies in encouraging
action. A threefold distinction summarizes much voluntary activity: (i) self-regulation; (ii)
voluntary agreements; and (iii) voluntary challenge (Labatt and Maclaren, 1998). Self-regulation
comprises action initiated by individual businesses or industry associations, as in the form of
voluntary codes of practice (UNCTAD, 1996). Voluntary agreements involve some form of
partnership between business, either individually or through their industry association, and
government agencies or environmental campaign groups (Murphy and Bendell, 1997). Under
the voluntary challenge, most of the initiative for developing, disseminating and monitoring
lies with government rather than industry. Governments present the scheme as a challenge to a
target community, possibly including a specified time and standard to be complied with. For
example, challenges for specified reductions in toxic chemical releases or reductions in
packaging may be given to groups of companies. An East Asian example is the PROKASIH
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(Clean Rivers) programme introduced in Indonesia in 1989 that is credited with eliciting
substantial pollution reduction from industrial plants in 11 provinces and 23 river basins (Afsah
et al., 1996). PROKASIH covered about 5 per cent of Indonesian manufacturing facilities but
was conceived as a prelude to formal comprehensive regulation (Pargal et al., 1997).
Regulat on as a benchmark i
i i
Mandatory targets and regulatory controls are often an important reference point for voluntary
action (Gouldson and Murphy, 1998). For example, one of the concerns expressed by business
in complying with certified environmental management standards is the uncertainty as to
appropriate improvement targets (Netherwood, 1996). Progressive businesses may be prepared
to exceed regulatory minimum standards, but a framework of regulatory standards and
systems may be looked to as a performance benchmark. A statutory benchmark is needed, for
example, to capture reputation advantages from behaviour that exceeds the compliance
standard. In addition, government agencies may devise and monitor voluntary programmes.
As noted above, the threat of regulation is frequently cited as a prime motive for participation
in voluntary initiatives. It is important, therefore, that voluntary initiatives are recognized by
government regulators if they are to forestall mandatory controls.
Relat onship to mandatory regulat on
One effect of business participation in voluntary action is frequently to curtail mandatory
regulation, but it is doubtful that this ultimately persuades governments not to act, or that
businesses necessarily have this as their intention (Roht-Arriaza, 1995; Eden, 1996). In industrial
countries, the pressure to initiate, integrate and strengthen environmental regulation is strong.
This pressure reaches newly industrializing economies through concern to maintain access to
industrial markets and through obligations under international environmental agreements
(Deans, 1998; Esty et al., 2000). In this context, voluntary action is more likely to delay new
regulation rather than entirely displace it. Nonetheless there is still an incentive to be a “first
mover”, as this can provide an opportunity to influence the form that regulation takes, as well
as minimizing the risk of being non-compliant when mandatory controls are introduced.
Furthermore, statutory enforcement may not be opposed as it reduces the opportunity for
competitors to free-ride on the environmental initiatives of progressive organizations.
Corporate Voluntary Initiatives in Singapore and Malaysia
Singapore and Malaysia responded to deteriorating environmental conditions in the 1970s
primarily through command and control regulation. Some positive results have been obtained
from these measures. In Singapore, comprehensive regulatory standards and investment in
environmental infrastructure have enabled the city-state to maintain economic growth and
promote itself as a “clean, green city” (Ministry of Environment, 1992). Statutory requirements
for environmental impact assessment (EIA) in respect of significant development projects are a
key aspect of Malaysian regulation (Markandya and Shibli, 1995). These measures mean that the
prior investigation of potentially serious environmental impacts has increased. In addition (and
perhaps more importantly) EIAs provide opportunities for third parties to challenge proposals
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initiated or endorsed by government agencies (see case study of Penang Hill in Harding, 1996).
This is important in Malaysia because the government is often closely involved in development
projects that have serious environmental impacts, such as the Bakun Dam (Rasiah, 1999:33). As
well as impact assessment, a much-cited Malaysian success has been the clean-up of the palm
oil industry. Although sometimes presented as evidence of the effectiveness of market-based
incentives (Markandya and Shibli, 1995), the reduction in organic pollution was ultimately
achieved through strict enforcement of mandatory standards (World Bank, 2000:44).
In both countries, the tightening of standards and extension of regulatory controls has been a
more important response to new concerns and gaps in original environmental controls than
investment in alternative environmental management strategies, either in the form of economic
instruments or voluntary initiatives. Environmental policy in Malaysia and Singapore is
influenced by their dependence on international trade and foreign direct investment (Bankoff
and Elston, 1994). This has introduced Western environmental expectations to both countries,
and standards above those demanded by domestic regulation. There is concern that standards
in Western markets will be converted into de facto non-tariff barriers. Governments have
encouraged voluntary responses, recognizing that higher standards across the board would
disadvantage those businesses not exposed to international pressure. This is seen in the help
given to obtain ISO14001 certification of environmental management systems, with assistance
targeted toward exporters and suppliers to TNCs (Zarsky and Tay, 2000:150). Comparatively
high levels of certification have thus been achieved in Southeast Asia, although not to the levels
predicted by the earlier diffusion of ISO9000 certification for quality management systems (table
2). Before assessing the significance of this and other voluntary actions, we briefly review
environmental issues in Singapore and Malaysia.
Environmental issues in S ngapore i
The Singapore government’s environmental management has been driven by economic
considerations (Bankoff and Elston, 1994). This has resulted in the enforcement of
comprehensive land use and emissions standards, as well as investment in environmental
infrastructure. The primary purpose of these interventions has been to maximize economic
activity and increase population within the small city-state. A tendency to equate a clean
environment with a green environment is an indicator of this, as in the Ministry of
Environment-sponsored annual “Clean and Green Week” that tends to emphasize activities
such as waste removal from beaches and anti-littering campaigns. Substantial gaps can be
identified in Singapore’s environmental performance, however, as indicated by the following
issues.
First, environmental legislation omits a commitment to a formal EIA process, in contrast to
other Southeast Asian countries (Briffett, 1996). Government unwillingness to introduce EIA
reflects concerns about its potential to delay or inhibit economic development, increase costs
and introduce “extraneous issues” into the development process. Rather than a transparent and
contestable decision-making process, development decisions are made through internalized
decision making under the control of state development agencies and senior government
ministers (Bankoff and Elston, 1994). Advocates of EIA suggest that its absence has stifled
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public debate about the environment and has resulted in inadequate attention being given to
environmental considerations (Hesp, 1995; Hilton and Manning, 1995).
Second, the “green initiatives” fostered by the government’s environmental agencies have not
incorporated ecological principles. For example, the Nature Society has criticized the areas
selected as nature reserves, noting that most are of no ecological significance, while locations
important to migratory wildlife and endemic species have been taken for development (Hesp,
1995:139). Similarly, parks and roadside planting of trees give a green appearance but the
vegetation is generally exotic and unhelpful to native fauna (Corlett, 1992).
Third, public environmental consciousness over issues such as product recycling, green
consumerism and ecological awareness is low. Surveys of environmental behaviour among
Singaporean students and women have shown that Singaporeans are generally ignorant of and
resistant to incorporating environmental protection in everyday life, by minimizing domestic
waste, using recycling bins and buying environmentally friendly products (Lau, 1993; Ng, 1994;
Savage, 1995).
Fourth, there has been little development of an environmental leadership role by Singaporean
public or private agencies in the region, despite the city-state’s economic wealth and trade and
investment linkages to neighbouring countries. The widespread destruction of tropical
rainforest in Indonesia through illegal land clearance was seen as one such opportunity,
particularly as Singaporean investors are involved in many of the illegal operations (Harwell,
2000:316). Singapore has supported ASEAN declarations and provided remote imaging
technology to help monitor the outbreak of fires, but these actions have done little to stem the
unfolding environmental disaster (Shepherd, 1997). Similarly, although Singapore has a major
stake in the shipping and petroleum industries, it has been less important than Japan in
promoting marine environment initiatives in the region (Chia, 1995).
Fifth, business in Singapore has tended to view regulatory compliance as the extent of their
responsibility. An investigation of business awareness of and investment in clean technology
concluded that “the public and private sectors in Singapore are not aware of cleaner production
concepts” (Tay, 1995:421). It was found that local companies viewed environmental issues as a
major deterrent to profit generation and typically lacked information, resources, technology and
labour needed to adopt clean production. Foreign TNCs showed greater awareness and
commitment to environmental management than local companies, mainly because of the need
to meet the expectations of their corporate management. This research suggested that
introducing stringent effluent and emission regulations would be the most effective way of
advancing cleaner production, as well as offering financial incentives to companies that exceed
regulation requirements.
These performance gaps arise partly from the absence of community interest in environmental
issues. The island’s limited land area and near total loss of natural environment has reduced
awareness of development-environment conflicts. Even so, concern for the environment has
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been one of the few issues that has prompted organized community action in opposition to
government proposals (Perry et al., 1997). A further and perhaps more important explanation of
the lack of environmental awareness in the state is maybe, therefore, the government’s tight
control of information on the subject.
Post-independence (1965), the People’s Action Party (PAP) government has retained a
monopoly on political control. The PAP has used its dominance to curtail opposition to its
policies and to build an “oligarchic elite” that has “merged government, state structures and
para-political organizations, and has co-opted and sponsored civil society actors” (Gomez,
1999:1). Citizen participation in issues that pose immediate development threats to the city-
state, such as waste generation and water consumption, is solicited, but larger environmental
activism has not been encouraged. Such activism might challenge government hopes to
accelerate population growth (from the present 4 million to near 6 million) and oppose plans to
increase investment in pollution-intensive petrochemical industries. It might also bring
demands for greater action on regional environmental issues that would compromise the
government’s reluctance to criticize neighbouring governments. At present, PAP claims about
its effective management of environmental issues and the necessity of its development
strategies go largely unchallenged. An exception is the Singapore Nature Society, which has
instigated a number of successful campaigns to protect areas of importance to wildlife. It
remains as one of the few active NGOs, although co-optation of senior members has muted its
voice in recent years. More generally, the political environment has acted against the
development of a vocal middle class concerned about environmental or other public matters in
Singapore (Jones and Brown, 1994; Perry et al., 1997). Green label products have, for example,
met with little consumer interest, even among affluent consumers (Wong, 1997).
Stakeholder groups also tend to be reluctant to campaign for greater business accountability. In
comparison with the role played by the International Chamber of Commerce in promoting
environmental best practice in Europe and North America (Hansen and Gleckman, 1993;
Brophy and Starkey, 1996), the Singapore International Chamber of Commerce has not taken up
environmental causes on the grounds that its members have no interest in doing so (Teng,
1997). The Singapore Confederation of Industry did promote a revised version of the
International Chamber of Commerce’s Business Charter for Sustainable Development. The
Singapore version omits eight clauses, including the one that calls for companies to report
annually on their environmental performance and progress. The Confederation believed that
disclosure would be seen as a threat, especially among Chinese-owned business that operate
through a tradition of secrecy and person-to-person communication rather than written
declarations and formal agreements (Teng, 1997). The Singapore Environment Council, a
government-supported NGO with a remit to promote environmental awareness in the
community and among business, has in recent years sought to foster business environmental
responsibility. Its principal tool has been an annual Singapore Environmental Achievement
Award given to an individual company demonstrating proactive environmental responsibility.
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The absence of community interest removes an important source of pressure on companies. On
the other hand, because of the strong presence of foreign TNCs in the Singaporean economy,
corporate pressure on Singaporean subsidiaries and affiliates is, potentially, an important
stimulant of voluntary action. This dual context can be seen in three sources of evidence about
the incidence of voluntary environmental initiatives: (i) corporate environmental reporting; (ii)
ISO14001 policy statements; and (iii) Responsible Care.
Environmental reporting
The voluntary reporting of environmental impacts and initiatives in company annual reports
has become widespread among organizations accepting an obligation to extend their
environmental responsibilities beyond regulatory compliance (Collier, 1995; Brophy and
Starkey, 1996). A review of annual reports produced by 264 publicly listed companies in
Singapore (all those with operations in Singapore) for the financial years 1995/96 and 1996/97
found that 6.5 per cent of companies made reference to the environment in both years (Perry
and Teng, 1998). The content of disclosure was minimal. Two thirds of the reports with
environmental references had no more than two sentences of comment. In terms of the space
occupied, the most extensive reporting was by two companies that reported in both years with
over ten sentences of information (a property company, DBS Land and a car distribution
company, Cycle and Carriage). Neither case included any data relating to environmental
impacts.
A follow-up survey that obtained a 30 per cent response from non-disclosing companies (66 out
of 221) and a 45 per cent response from disclosing companies (14 out of 31) found three main
reasons for the absence of significant environmental disclosure: (i) a perception that their
organization had no environmental impacts; (ii) a lack of perceived benefit, either in status with
consumers or within the business community; and (iii) lack of pressure from the government.
Government direction to disclose environmental information was identified as the influence
most likely to cause a change of practice.
The government has not sought to encourage disclosure, partly because it feels that ISO14001 is
a greater priority and partly because calls for disclosure are seen as a deterrent to
environmental certification. For the present, the absence of any cases approaching a serious
commitment to disclosure is perhaps a more significant indicator of environmental apathy than
the overall low disclosure rate. Singapore’s public companies are small compared with the
organizations that have invested most in environmental reporting. On the other hand, the
absence of reporting among companies involved in pollution-intensive activities means that
Singapore is falling behind standard practice internationally.
Representatives of three foreign TNCs, selected because of their leadership in environmental
reporting in their home country, were interviewed as a further part of the study (Perry and
Teng, 1998). The interviews revealed that leadership was not being transferred to Singapore.
The low level of public and government interest in environmental issues was given as the
reason for not disclosing information. One environmental manager commented: “the level of
awareness is very low; who will care if you report environmental initiatives or not? No one
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will”. An organization accredited to the European Environmental Management and Audit
Scheme (EMAS), advised that it would cease to report in Singapore were it not part of the
EMAS requirement to distribute an annual environmental report for each operating site. The
Singapore environmental manager indicated that the town council covering the factory site had
asked not to receive the report they sent. This caused the manager to comment: “why create
trouble for yourself when there is no requirement at all in Singapore to report such information
to the public?”.
ISO14001 policy statements
As noted above, the promotion of ISO14001 certification has been the main way by which the
government has sought to foster voluntary action in the business community. The promotion
included expenditure of around S$1million ($570,000) up to September 2000 on financial grants
to local companies. These grants can provide 70 per cent of the cost of engaging a consultant, up
to a maximum of S$40,000 ($23,000). Public support is also given to two industry-government
committees involved in ISO promotion work, and to the Singapore Accreditation Council, a
body that accredits certifying agencies to gain international acceptability. No regulatory
concessions are granted to organizations obtaining certification, although government agencies
may take certification into account in the allocation of their regulatory enforcement effort.
The impact of ISO14001 on business behaviour can be judged by examining the policy
statements of certified companies (Singh and Perry, 2000). Examination of 52 of the first 55
certificates awarded in Singapore found that 12 policy statements made no commitments
beyond necessary conditions for certification (such as the need to have top management
involvement and to continuously improve the environment management system) and a pledge
to comply with legislation (Singh and Perry, 2000). A similar number (14) made two or more
commitments beyond those required for certification. The most frequently made additional
commitments were: (i) some positive action to be taken, such as the elimination of ozone
depleting chemicals; (ii) product modification to reduce environmental impacts; and (iii) work
with suppliers, contractors and customers to promote environmental responsibility recognizing
product lifecycle impacts. In addition, a few organizations had a commitment to exceed
legislative and other regulatory requirements. IBM (Singapore) Pte. Ltd. was the sole company
to include all four of these types of commitment in its policy. Overall policy statements with
two or more beyond-the-minimum commitments were only produced by foreign-owned TNCs.
On the other hand, with the exception of European-owned TNCs, all types of business
organization included at least some organizations with minimal environmental policies.
As well as examining the policy statements, the study considered the process through which the
policy had been generated, as well as subsequent implementation. Interviews with 25
organizations found four where the policy was linked to significant management priority to
environmental improvement. All four were foreign-owned transnationals (the Singapore
branches of IBM, Molex, Tetra Pak and Lucent Technologies).
Overall, the investigation of policy statements concluded that certification has generally
induced little action among Singapore-based organizations. In some instances it would appear
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to encourage no additional activity to that which is required to comply with government
regulations and the minimal requirements of the certification process itself. The performance of
foreign-owned companies typically falls short of the types of commitments being made by
business in their home countries, but it is among Singapore-owned organizations that least
change is taking place.
”Responsible Care”
The Singapore Chemical Industry Council (SCIC) officially joined Responsible Care in October
1999, having given its intention of so doing in 1990 (the interim period was taken to spread
interest in the programme and to ensure a sufficient number of members had the capacity to
join). The petrochemical and chemical sectors currently account for around a fifth of value-
added in Singapore’s manufacturing sector, and are dominated by global corporations.
Singaporean economic promotion agencies have sought to capitalize on the island’s long
established role as an oil depot and refining base for the region to expand these activities still
further (Perry et al., 1997). Land reclamation has created purpose-designed production space on
offshore islands and financial incentives have offset capital investment costs. Despite the
sector’s extensive land requirements, and potential risk to nearby high population densities and
vulnerable ecosystems, government agencies continue to prioritize the sector.
Companies that join Responsible Care accept 10 guiding principles and a code outlining
expected management practices. These commit organizations to match industry best practice
with respect to the health, safety and environmental aspects of their operations, to accept
product stewardship obligations and to work co-operatively which each other, the community
and governments to advance Responsible Care. When launched, 50 of the 180 members of SCIC
committed themselves to the programme. One year later the participation had grown to 65, of
which 80 per cent were foreign-owned TNCs, the prime drivers of the spread of Responsible
Care to Singapore. For foreign TNCs, it provides a structure for attaining common standards
among their international branches and of ensuring that suppliers and customers attain similar
performance. Such concerns among foreign multinationals, rather than local pressure to
participate in the programme from government or the community at large, explain the launch
of Responsible Care in Singapore. Subsequently, government has given some recognition to the
initiative by joining its organizing committee.
Responsible Care is new to Singapore and focuses on assisting organizations to improve
working practices and reporting systems. Much of the impetus for achieving this comes from
TNCs and their willingness to assist local companies. In North America, Responsible Care has
been criticized as an attempt to present the industry in a favourable light so as to pre-empt new
legislation and regulation (Eden, 1996). In Singapore, the programme may be credited with
some positive outcomes. It provides a framework within which foreign TNCs are taking steps
to extend environmental responsibility to overseas branches. This is important in Singapore,
where the absence of community and other pressures have resulted in environmental issues
being a low priority.
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Environmental issues in Malaysia
Malaysia exhibits most of the environmental problems that are typical of many developing
economies (for an overview see CAP, 1998). These include the over-logging of primary forest
resulting in the loss of wildlife habitats, soil erosion and the displacement of indigenous
communities; air and water pollution from industry and urban transportation, especially in the
main centres of economic activity (Kuala Lumpur and the Kelang Valley, Penang and Johor)
and the dumping of hazardous waste. The incidence of problems has changed with Malaysia’s
economic progress, but generally increased incomes have yet to be translated into improved
environmental conditions (Sham Sani, 1999; Rasiah, 1999). Part of the problem is that
urbanization is still increasing and this intensifies the environmental impacts from industry and
population. The urban population almost doubled from 1980 to 2000 and is expected to double
again by 2020 (World Resources Institute, 1997). Hence pollution problems tended to increase
despite the strengthening of environmental governance in the 1990s (Sham Sani, 1999:13–15).
The overall industrial contribution to pollution shows some changes in the intensity of
discharges. Particulate discharges increased in the initial phase of industrial growth but have
declined from their high in the mid 1990s (Markandya and Shibli, 1995; Rasiah, 1999). Other air
emissions (sulphur dioxide, nitrogen dioxide, carbon monoxide and hydrocarbons) continued
to increase through the 1990s, with all emissions except hydrocarbons at least doubling between
1987 and 1997 (Rasiah, 1999). Organic pollution of water-courses, as measured by biochemical
oxygen demand (BOD), dropped in the 1980s, but it has since increased, with manufacturing a
major contributor to this growth of pollution (Jenkins cited in Rasiah, 1999). In 1998, three
quarters of river monitoring stations recorded some degree of pollution, of which agro-sector
and manufacturing were the major sources for a fifth of the rivers examined (Environmental
Quality Report, 1998:9). In coastal waters, oil and grease contamination is widespread and
increasing; with more restricted but important problems of copper, mercury and lead levels
exceeding proposed standards adjacent to some industrial areas (Environmental Quality
Report, 1998:13). A World Bank study in the early 1990s identified hazardous waste as likely to
be the principal industrial pollution problem in future years (Markandya and Shibli, 1995).
Hazardous waste generation increased by 18 per cent from 1992 to 1998, with the major
industrial sources including metal finishing, chemicals, electronics, printing and packaging
(Environmental Quality Report, 1998:9). New controls on hazardous waste were included in the
Environmental Quality (Amendment) Act 1996, the original legislation having provided
Malaysia’s overall legal umbrella for pollution control since its enactment in 1974.
Monitoring of individual business behaviour continues to find a high incidence of non-
compliance. This may reflect surveillance effort rather than attitudes to environmental
responsibility, but it does suggest that business acceptance of regulatory obligations needs to be
strengthened before increasing the reliance on voluntary improvement initiatives. With the
exception of periods of economic slowdown (1985–1990 and 1997–1998) the number of
environmental offences prosecuted under the Environmental Quality Act has increased. In 1992,
for example, 130 cases were prosecuted compared with 253 in 1998 (Environmental Quality
Report, 1998:51). In 1998, a total of 3,889 manufacturing industries were inspected of which 86
per cent were judged compliant with sewage and industrial effluent regulations and 78 per cent
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were judged compliant with airborne emission regulations. Industries in which foreign
investment dominates, such as electronics, had a compliance rate of 86 per cent and 89 per cent
under the respective regulations; in the chemicals sector, the respective compliance was 88 per
cent and 94 per cent. The Environmental Quality Report 1998 noted that non-compliance was
frequently due to failures to maintain abatement equipment or to upgrade capacity with
increases in production capacity. Such problems, it was suggested, were most prevalent among
small and medium-sized enterprises, many of which were said to be operating without
appropriate control equipment. The compliance checks tend to concentrate on large enterprises,
with potentially the greatest impacts, and so probably do not capture the full extent of non
compliance (Markandya and Shibli, 1995).
A further indicator of business attitudes toward their environmental impacts can be obtained
from those who legally choose to exceed emission standards. Malaysia operates a system that
allows emission levels to be exceeded on receipt of a “contravention license”, for which there is
a fee and associated abatement charge. There has been a large reduction in the fees so collected
from the rubber and palm oil processing industries (Sham Sani, 1999:20). This improvement
partly reflects the comparative isolation of individual processing facilities in these industries,
making environmental impacts easier to monitor than where industry operates from urban
locations (World Bank, 2000). Even with the added impetus of community surveillance it
appears that environmental commitment remains a low priority. Under the licensing
regulations governing “prescribed premises” (including rubber and palm oil processors) an
excellent compliance record can lead to the award of licenses for more than the normal one-year
period. In 1998, 20 of the 143 licensed rubber factories had been granted extended licenses (14
for two years, six for three years). Of 328 licensed palm oil mills, 97 had been granted extended
licenses (70 for two years, 27 for three years) (Environmental Quality Report, 1998:22).
The limited extent of its monitoring and enforcement capacity has been identified as a critical
problem with Malaysia’s current environmental policy regime (Markandya and Shibli, 1995). It
means that, apart from large establishments in the palm oil and rubber sectors, industry is
largely self-monitored. The 1996 amendments to the Environmental Quality Act included
substantial increases to the penalties for a range of environmental offences (see Sham Sani,
1999:33). This was promulgated to increase the compliance pressure on industry, although in
the past courts were generally reluctant to impose maximum penalties. A public complaint
system exists, and this can trigger enforcement action. An increase in the number of public
complaints on environmental issues occurred during the 1990s. This took place alongside an
increase in media coverage and growing public awareness of environmental issues, reinforced
in the Seventh Malaysia Five-Year Plan in which environmental awareness is emphasized.
A significant difference between Malaysia and Singapore is the stronger role that environmental
NGOs are playing in encouraging environmental protection in Malaysia. Long-established
environmental and consumer protection campaign groups have been joined by groups
representing business interests. The Malaysian International Chamber of Commerce and
Industry (MICC) established an environmental committee in 1992, the same year that the
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Business Council for Sustainable Development was formed. The timing coincided with the
broader inclusion of environmental issues in the Malaysia Five-Year Plan and the awareness
among international businesses that they were particularly exposed to any tightening of
regulation. As well as providing business with collective representation to government, much
of the effort of the MICC is now devoted to the organization of an environmental award, the
Prime Minister’s Hibiscus Award. The award recognizes organizations that have demonstrated
environmental leadership, and is co-organized with the Federation of Malaysian Manufacturers
and ENSEARCH, an NGO representing environmental scientists and managers. In 2000, 39
companies (36 subsidiaries of TNCs) received recognition, having met the criteria for the award.
Community-based environmental campaign groups have attained a high profile partly through
their use of public law suits, a tactic that Singapore-based NGOs have avoided (Tay,
forthcoming). An early and well-known example of this was the Asian Rare Earth case in which
NGOs supported a group of villagers in legal action against a private company for its improper
storage and disposal of hazardous materials, an action that also implicated a government
agency for misadministration. The legal standing on which NGOs have sought to challenge
government decisions has been unclear, but their right to participate in environmental decisions
has gradually attained recognition. Thus, even though NGO action has often not been
successful, it is changing the way issues are dealt with and is bringing greater voluntary
willingness to minimize environmental impacts (Harding, 1996). On the other hand, the
suggestion that NGOs have become the “public watch-dog” for environmental care (Sham Sani,
1999) may overstate the situation. Few groups have large memberships and much of the
environmental activism originates in Penang, the small island that has seen rapid economic
transformation because of its success as an electronics manufacturing base (see Gonzalez et al.,
2000).
Environmental NGOs remain critical of the lack of enforcement and co-ordination of regulation
(CAP and SAM, 1996), but government has shown an increased willingness to accept outside
influence on environmental performance. When Austria became the first country to designate a
quality mark for tropical timber and raised tariffs on its importation, as part of efforts to
improve timber harvesting practices, it was Malaysia that promptly protested the measure to
the GATT (Roht-Arriaza, 1995). The internationalization of Malaysian timber companies has
brought a change of attitude. The Malaysia Minister of Primary Industry, who oversees the
Malaysian timber industry, has stated that companies should follow basic guidelines of good
corporate citizenship, including obeying national laws and not taking advantage of weak
governments (Nordin cited in Sizer and Plouvier, 2000:97). Similarly, increased international
criticism of its domestic forestry policies has also produced significant changes in attitude. A
National Timber Certification Centre has been established and the government, in partnership
with industry, has invested substantial resources to create the Malaysian Criteria and Indicators
for Sustainable Forest Management, which is the basis for an independent third-party
certification mechanism. Changes in business behaviour nonetheless appear to be slow to
emerge. To date, just one Malaysian TNC is said to be making serious efforts to incorporate
14
CORPORATE ENVIRONMENTAL RESPONSIBILITY IN SINGAPORE AND MALAYSIA
MARTIN PERRY AND SANJEEV SINGH
sustainability principals in its forestry management, and even it continues to be subject to
substantial criticism of its activities (Sizer and Plouvier, 2000:98).
Environmental performance of foreign TNCs
in Singapore and Malaysia
A study of TNC environmental practices published in 1988 (ESCAP/UNCTC, 1988) included
case studies of Singapore and Malaysia. These were based on small samples of TNCs and pre-
date contemporary environmental expectations. Consequently a new survey of foreign-owned
TNCs in Singapore and Malaysia was undertaken in 2000 to examine the extent and character of
“voluntary” environmental action, as well as the motivations underpinning such action. The
focus of the survey was on actions undertaken by the TNC in the host country, either Singapore
or Malaysia.
The survey covered industrial establishments identified in a published business directory for
which a present address and named contact could be obtained. Foreign-owned industrial
activities were the focus of the survey, because it was thought that they would exhibit greater
voluntary action than locally owned and service organizations. In Singapore, 400 questionnaires
were mailed to environmental officers and other persons identified as responsible for
environmental management in each organization contacted. This compares with 640 wholly
foreign-owned establishments listed in the latest Census of Industrial Production (EDB, 1998).
In Malaysia, 450 questionnaires were mailed to establishments listed in the KBD Dun Business
directory for foreign companies in ASEAN.
There were 89 useable responses in Singapore, a 22.25 per cent response rate, and 91 useable
responses in Malaysia, a 20 per cent response rate. The respondent organizations are broadly in
line with the ownership distribution of foreign companies in the two countries, although non-
Japanese Asian TNCs are underrepresented in the Malaysian responses (table 3). The responses
from both countries were concentrated in three sectors: electronics, chemicals and chemical
products, and fabricated metal products (table 4). The respondents also shared similar
characteristics in terms of: (i) pollution intensity (predominantly being either of high or medium
intensity); (ii) organizational size (predominantly being either small or medium-sized TNCs);
(iii) nationality (around half are Asian respondents, and the United States or Europe account for
a similar proportion of the remainder); and (iv) average age of capital (predominantly being
either five to 10 years, or 11 to 15 years) (table 4). The capital age, pollution intensity and size
characteristics may result in a low representation of organizations that are most exposed to
environmental pressure, as large, old, polluting plants are not present. More generally, it must
be expected that a postal survey of environmental performance is likely to gain fewer responses
from those establishments with a poor environmental record. Consequently, without a much
greater response rate, the surveys cannot claim to be representative of all TNCs in Malaysia and
Singapore. Differences between respondents and the attributes of those claiming to be most
active are the matters that we focus upon here.
15
UNRISD PROGRAMME ON TECHNOLOGY, BUSINESS AND SOCIETY
PAPER NUMBER 3
Respondent organizations were classified according to the extent to which they had
implemented the following actions: (i) set environmental performance standards above
government regulations; (ii) allocated environmental responsibilities to senior managers; (iii)
recently completed an environmental review of their establishment; (iv) produced an agreed
environmental policy statement; (v) implemented an environmental management system; (vi)
included environmental performance in the investment criteria for new technology; (vii)
participated in community-based environmental projects; and (viii) taken steps to increase
environmental awareness and responsibility among the workforce. Using these criteria,
organizations were classified according to whether their environmental commitment is high,
medium or low (figure 1).
Participation in at least six of the eight actions was needed to be classed as high, whereas low
performers had not undertaken more than one of the actions. In the case of the last three listed
criteria, various responses were possible, some of which indicate additional commitment above
the minimum threshold. Such responses were used to identify high performers. These criteria
and the range of responses are as follows.
• Investment criteria—High performers indicated one of two options relating to the
priority given to environmental impacts in the selection of new technology: (i) best
available environmental technology; and (ii) best available environmental
technology not entailing excessive cost. Lower options were to select either: (i)
environmental technology at a reasonable cost; and (ii) environmental technology
sufficient to meet local regulations.
• Community project participation—Participation in any one of four types of
community project was required, but with multiple participation possible for the
most active organizations. These projects were (i) sponsoring a community event
or environmental initiative; (ii) public reporting of their environmental impacts;
(iii) dialogue with community groups or an NGO or both; and (iv) green labelling.
• Workforce education/training—Participation in at least three of seven types of
workforce initiatives was required, again with the possibility that active
organizations exceed the threshold. The initiatives were: (i) environmental
training; (ii) environmental awareness orientation for new employees; (iii) display
of environmental policy around the workplace; (iv) copy of an environmental
policy given to each employee; (v) newsletter on environmental issues; (vi)
environmental awareness events; and (vii) environmental suggestion scheme.
The criteria for high performance were at a comparatively low threshold compared with the
environmentally most advanced corporations existing in older industrial countries. There is, for
example, no reference to product stewardship, public information disclosure or the delegation
of environmental responsibilities to all categories of employee. On the other hand,
implementation of six or more of the actions identified suggests that an organization has made
a consistent effort to raise its environmental performance. At the other end of the scale, it is
clear that organizations classified as “low” are not participating in voluntary environmental
initiatives. Organizations with environmental actions that bring immediate benefits, but
without a strategic commitment to voluntary improvement, feature on the scale as medium-
level organizations.
16
CORPORATE ENVIRONMENTAL RESPONSIBILITY IN SINGAPORE AND MALAYSIA
MARTIN PERRY AND SANJEEV SINGH
In both countries, medium performance accounted for almost half the respondents, but
Malaysia had a larger share of high performers: 48 per cent versus 34 per cent in Singapore
(figure 1). The difference in the share of high performers is statistically significant (chi square
value = 8.851, df = 2, p
The neighbouring Southeast Asian countries of Singapore and Malaysia have contrasting environmental reputations. The small city-state of Singapore, with a population of 4 million and a population density of around 6,150 per square kilometre, is often seen as a model green city.
Corporate Environmental Responsibility
in Singapore and Malaysia
The Potential and Limits
of Voluntary Initiatives
Martin Perry and Sanjeev Singh
Technology, Business and Society
Programme Paper Number 3
April 2001
United Nations
Research Institute
for Social Development
This United Nations Research Institute for Social Development (UNRISD) Programme Paper has been produced with the
support of the MacArthur Foundation. UNRISD also thanks the governments of Denmark, Finland, Mexico, the
Netherlands, Norway, Sweden, Switzerland and the United Kingdom for their core funding.
Copyright © UNRISD. Short extracts from this publication may be reproduced unaltered without authorization on
condition that the source is indicated. For rights of reproduction or translation, application should be made to UNRISD,
Palais des Nations, 1211 Geneva 10, Switzerland. UNRISD welcomes such applications.
The designations employed in UNRISD publications, which are in conformity with United Nations practice, and the
presentation of material therein do not imply the expression of any opinion whatsoever on the part of UNRISD
concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of
its frontiers or boundaries.
The responsibility for opinions expressed rests solely with the author(s), and publication does not constitute endorse-
ment by UNRISD.
ISSN 1020–8216
Contents
Acronyms iii
Summary/Résumé/Resumen iv
Summary iv
Résumé v
Resumen vii
Corporate Greening 1
Strategic advantage 1
Avoiding disadvantage 2
Acting responsibly 2
Voluntary Environmental Initiatives and Self-Regulation 3
Third-party involvement 4
Regulation as a benchmark 5
Relationship to mandatory regulation 5
Corporate Voluntary Initiatives in Singapore and Malaysia 5
Environmental issues in Singapore 6
Environmental reporting 9
ISO14001 policy statements 10
”Responsible Care” 11
Environmental issues in Malaysia 12
Environmental performance of foreign TNCs in Singapore and Malaysia 15
Explaining environmental commitment 17
Motivation for voluntary action 18
Perceived benefits of voluntary action 18
ISO14001 and environmental commitment 20
Codes of conduct 21
Conclusion 21
Bibliography 37
UNRISD Programme Papers on Technology, Business and Society 41
Figures
Figure 1: Environmental Action among TNCs in Singapore and Malaysia 34
Figure 2: Main advantage from investment in voluntary environmental initiatives
in Singapore and Malaysia 35
Figure 3: Second main advantage from investment in voluntary environmental initiatives
in Singapore and Malaysia 35
Figure 4: Main advantage from investment in voluntary environmental initiatives
by high and low performers in Singapore 36
Tables
Table 1: Motives for, and constraints on, corporate greening 24
Table 2: ISO 14001 certifications in Southeast Asia 24
Table 3: Response profile and representation of the organizations 25
Table 4: Summary of respondent characteristics 28
Table 5: Reasons for environmental management expenditure among pollution-
intensive organizations according to their environmental commitment 29
Table 6: Percentage distribution of firms by ownership, pollution intensity,
location, size, type of product manufactured and sector 30
Table 7: Environmental commitment and employment size in Singapore 32
Table 8: Influences (other than regulation) motivating environmental action 32
Table 9: Motivation to implement an environmental management system (EMS) 33
Table 10: Distribution of the type of environmental code of conduct
followed by the respondents in Malaysia 33
ii
Acronyms
ASEAN Association of Southeast Asian Nations
BOD biochemical oxygen demand
CAP Consumers Association of Penang
DBS Development Bank of Singapore
EDB Economic Development Board
EIA environmental impact assessment
EMAS European Environmental Management and Audit Scheme
ENSEARCH Environmental Management and Research Association of Malaysia
ESCAP Economic and Social Commission for Asia and the Pacific
GATT General Agreement on Tariffs and Trade
GDP gross domestic product
IBM International Business Machines Corporation
ISO International Organization for Standardization
MICC Malaysian International Chamber of Commerce and Industry
MIDA Malaysia Industrial Development Authority
NGO non-governmental organization
NITC National Information Technology Council
OECD Organisation for Economic Co-operation and Development
PAP People’s Action Party
PROKASIH “Clean River” Programme of the Indonesian Ministry for Population and Environment
SAM Sahabat Alam Malaysia
SCIC Singapore Chemical Industry Council
TNC transnational corporation
UNCTAD United Nations Conference on Trade and Development
UNCTC United Nations Centre on Transnational Corporations
UNRISD United Nations Research Institute for Social Development
iii
Summary/Résumé/Resumen
Summary
The neighbouring Southeast Asian countries of Singapore and Malaysia have contrasting
environmental reputations. The small city-state of Singapore, with a population of 4 million and
a population density of around 6,150 per square kilometre, is often seen as a model green city.
That reputation rests partly on its efforts to control urban congestion and pollution, as well as
the retention of green landscapes within the built environment. Malaysia, on the other hand,
with a total population of around 20 million distributed between the comparatively urbanized
peninsula and the less developed states of Sabah and Sarawak, has a poor environmental
image. Deforestation, loss of biodiversity and the marginalization of indigenous populations in
resource management decisions account for much of that negative image.
The real comparative environmental performance is a good deal harder to judge than
immediate impressions suggest, not least because Malaysia’s GDP per capita is a third of
Singapore’s. On current income, Singapore ranks among the world’s top 10 richest countries. Its
elevation to this group has been rapid, but Singapore has yet officially to accept the status of a
developed country. That mantle would bring economic implications and international
obligations, potentially including responsibilities under the United Nations Framework
Convention on Climate Change. Government reticence aside, Singapore’s affluence arguably
makes Western expectations of environmental responsibility a relevant performance
benchmark, particularly as its economy is built on the investment of foreign transnational
corporations. Malaysia, on the other hand, is still managing the transition to an industrial
society. Around a quarter of the workforce is employed in agriculture, and nearly half the
population lives outside urban areas. Malaysian lawmakers have demonstrated a willingness to
strengthen environmental protection, and high-income status may yet be achieved with a
greater proportion of the country’s land area designated as protected natural environment than
in many older industrial nations. This may be a reasonable expectation, given the ecological
significance of tropical forests.
Advocacy of corporate voluntary environmental initiatives—understood as actions taken to
reduce environmental impacts, and promote awareness thereof, that have not been required by
government regulation—to strengthen environmental management can be justified in
Singapore and Malaysia, although for different reasons.
Singapore is the regional headquarters of many transnational corporations with branch
establishments across Southeast Asia. Demands to demonstrate a strong environmental
commitment in Singapore, especially where this extends to the ecological footprint of business
organizations, may accelerate the potential environmental leadership role that transnational
corporations can play. As a “developmental state”, the priority in Singapore has been to
maximize immediate economic opportunities while protecting business organizations from
scrutiny by NGOs or the wider community. Consequently, although per capita incomes now
iv
exceed those of many older industrial countries, interest in environmental responsibility lags
behind that which might be expected on the basis of Western experience.
Malaysia has experienced a greater growth of environmental concern than Singapore, judging
by the activity of environmental NGOs that seek to apply informal pressure on corporate and
regulator behaviour. Surveillance by international pressure groups is also significant for
resource-based industry, and this adds to pressure for voluntary environmental initiatives.
Rising incomes, a significant presence of transnational corporations and official acceptance of
local environmental pressure groups provide indications that voluntary initiatives are poised to
play an increasing role in Malaysia. The likelihood is further increased by the World Bank’s
efforts to promote “informal” regulation, involving community pressure on business to
improve environmental performance, and other new ways of making environmental policy.
The influences that encourage voluntary environmental initiatives, the types of action taken and
the extent to which these may substitute for other forms of environmental regulation form the
basis for the discussion in this paper. It begins with a review of the motivations thought to
encourage voluntary initiatives over other ways of promoting environmental improvement. The
extent to which voluntary action should be seen as an alternative to governmental regulation is
then discussed, noting, among other issues, that such action is often closely related to
regulatory enforcement. The discussion then turns to a review of corporate voluntary
environmental initiatives in Singapore and Malaysia, which is based on original survey results
from a sample of foreign-owned transnational corporations in both countries. The concluding
section comments on the significance of voluntary action observed in Singapore and Malaysia.
When this paper was written, Martin Perry was an Associate Professor in the Department of
Geography at the National University of Singapore. He is now a Senior Research Analyst for the
Department of Labour, New Zealand. Sanjeev Singh is a Ph.D. scholar in the Department of
Geography at the National University of Singapore.
Résumé
Singapour et la Malaisie, pays voisins d’Asie du Sud-Est, ont des réputations diamétralement
opposées pour ce qui est de l’environnement. Le petit Etat-cité de Singapour, avec ses quatre
millions d’habitants et une densité d’environ 6.150 habitants au kilomètre carré, apparaît
souvent comme un modèle de cité verte. Cette réputation tient en partie à ses efforts pour
limiter l’engorgement et la pollution en ville, ainsi qu’aux efforts réalisés pour que des paysages
de verdure subsistent au milieu des constructions. La Malaisie, en revanche, avec une
population totale d’environ 20 millions, répartis entre la péninsule relativement urbanisée et les
Etats moins développés de Sabah et de Sarawak, offre une piètre image environnementale. Le
déboisement, l’appauvrissement de la biodiversité et le fait que les populations autochtones
sont tenues à l’écart des décisions relatives à la gestion des ressources en sont en grande partie
responsables.
v
Au-delà de ces impressions immédiates, il est très difficile de juger de ce qu’il en est vraiment
de l’environnement dans les deux pays, ne serait-ce que parce que le PIB de la Malaisie par
habitant est le tiers de celui de Singapour. Les recettes ordinaires de Singapour la classent parmi
les dix pays les plus riches du monde. Elle s’est rapidement hissée à ce rang mais n’a pas encore
officiellement le statut de pays développé. Celui-ci entraînerait des répercussions économiques
et des obligations internationales, dont éventuellement des responsabilités en vertu de la
Convention-cadre des Nations Unies sur les changements climatiques. Les réticences
gouvernementales mises à part, la richesse de Singapour fait sans doute des attentes
occidentales en matière de responsabilité environnementale un critère de performance
parfaitement applicable, d’autant plus que son économie repose sur les investissements de
sociétés transnationales étrangères. La Malaisie, de son côté, négocie encore son passage à la
société industrielle. Environ un quart de la main-d’œuvre est employée dans l’agriculture et
près de la moitié de la population vit hors des agglomérations urbaines. Le législateur malaisien
a montré sa volonté de renforcer la protection de l’environnement et la Malaisie pourrait se
hisser au rang des pays à haut revenu en ayant proportionnellement une superficie plus vaste
de parc naturel protégé que beaucoup de pays industrialisés de longue date. On peut
raisonnablement le penser, vu l’importance écologique des forêts tropicales.
Les initiatives environnementales volontaires—définies comme des actes destinés à atténuer les
effets sur l’environnement et à les faire mieux connaître sans qu’il y ait obligation légale d’agir
dans ce sens—que peuvent prendre des entreprises pour renforcer la gestion de
l’environnement se défendent à Singapour et en Malaisie, mais pour des raisons différentes.
Singapour est le siège régional de nombreuses sociétés transnationales implantées, au travers de
filiales, dans toute l’Asie du Sud-Est. Si elles se sentent obligées de se montrer écologistes
convaincues à Singapour, surtout si leur image est en jeu, il y a de bonnes chances que les
sociétés transnationales jouent plus vite que prévu un rôle moteur dans la protection de
l’environnement. La priorité de Singapour en tant qu’“Etat développemental” a été de
maximiser les débouchés économiques tout en protégeant les établissements à but lucratif du
contrôle des ONG ou de la collectivité dans son ensemble. En conséquence, bien que les revenus
par habitant dépassent maintenant ceux de bon nombre de pays industrialisés depuis
longtemps, la responsabilité environnementale n’éveille pas l’intérêt que l’on pourrait attendre
si l’on s’en tient à des critères occidentaux.
L’écologie s’est plus développée en Malaisie qu’à Singapour, si l’on en juge par l’activité des
ONG écologiques qui cherchent à faire officieusement pression sur les entreprises et les
organismes de régulation pour obtenir qu’ils modifient leur comportement. Des groupes de
pression internationaux, de leur côté, exercent une surveillance importante sur les industries à
base de ressources naturelles, ce qui pousse encore les entreprises à prendre des initiatives
volontaires en matière d’environnement. Des revenus en hausse, une présence importante de
sociétés transnationales et la reconnaissance officielle dont jouissent des groupes écologistes
locaux sont autant d’indices portant à croire que les initiatives volontaires vont jouer un rôle de
vi
plus en plus important en Malaisie. Les efforts déployés par la Banque mondiale pour
encourager une régulation “sans caractère officiel” en comptant sur la collectivité pour faire
pression sur les entreprises pour qu’elles améliorent leurs résultats environnementaux, ainsi
que d’autres modes nouveaux d’élaboration de la politique environnementale, augmentent
encore les chances qu’il en soit ainsi.
Les influences favorables aux initiatives volontaires, la nature de ces initiatives et la mesure
dans laquelle elles peuvent se substituer à d’autres formes de régulation environnementale sont
les principales questions traitées ici. Le document commence par un examen des motivations
susceptibles de faire préférer les initiatives volontaires à d’autres façons d’encourager un plus
grand respect de l’environnement. Les auteurs, qui font observer notamment que l’action
volontaire est souvent étroitement liée à l’application de la loi, se demandent ensuite dans
quelle mesure on peut voir dans cette action une solution de rechange à la réglementation
publique. Ils étudient aussi les initiatives écologiques volontaires prises à Singapour et en
Malaisie en se fondant sur les résultats d’une étude originale effectuée auprès d’un échantillon
de sociétés transnationales étrangères implantées dans les deux pays. Le document se conclut
par des commentaires sur l’importance de l’action volontaire observée à Singapour et en
Malaisie.
Au moment de la rédaction du document, Martin Perry était professeur associé au Département
de géographie de l’Université nationale de Singapour. Il est maintenant analyste en chef de
recherches pour le Ministère du Travail en Nouvelle-Zélande. Sanjeev Singh est doctorant au
Département de géographie de l’Université nationale de Singapour.
Resumen
Singapur y Malasia, países vecinos de Asia sudoriental, tienen una reputación ambiental
contrastante. La pequeña ciudad-Estado de Singapur, con una población de cuatro millones y
una densidad de población de aproximadamente 6.150 personas por kilómetro cuadrado, a
menudo se considera una ciudad ecológica modelo. La reputación reside parcialmente en sus
esfuerzos por controlar la congestión y polución urbanas, así como el mantenimiento de las
zonas verdes en las zonas edificadas. Malasia, por otra parte, con una población de
aproximadamente 20 millones de personas distribuidas entre la península comparativamente
urbanizada y los Estados menos desarrollados de Sabah y Sarawak, ofrece una imagen
ambiental muy pobre. La deforestación, la pérdida de biodiversidad y la marginación de las
poblaciones indígenas en las decisiones relativas a la gestión de recursos, contribuyen
considerablemente a esta imagen negativa.
El comportamiento ambiental comparativo real es mucho más difícil de juzgar de lo que pueda
parecer a primera vista, y menos aún porque el PIB per cápita de Malasia es un tercio del de
Singapur. En cuanto a los ingresos actuales, Singapur se encuentra entre los diez países más
ricos del mundo, pero aún debe aceptar oficialmente la condición de país desarrollado, lo que
vii
traería consecuencias económicas y obligaciones internacionales, incluyendo posiblemente
responsabilidades con arreglo a la Convención Marco de las Naciones Unidas sobre el Cambio
Climático. Dejando a un lado las reservas del gobierno, la prosperidad de Singapur
posiblemente convierte las expectativas de Occidente con respecto a la responsabilidad
ambiental, en un indicador importante de resultados, en particular porque su economía se basa
en la inversión de empresas transnacionales extranjeras. Por otra parte, Malasia lucha aún por
llegar a ser una sociedad industrial. Aproximadamente una cuarta parte de la fuerza de trabajo
labora en el sector de la agricultura, y casi la mitad de la población vive alejada de las zonas
urbanas. Los legisladores de Malasia han demostrado voluntad para reforzar la protección
ambiental, y aún puede llegar a ser un país de altos ingresos, al tener zonas rurales en el país
reconocidas como áreas protegidas, en mayor proporción que en muchos países industriales
más viejos. Esta expectativa puede ser razonable, dada la importancia ecológica de los bosques
tropicales.
En Singapur y Malasia puede estar justificada, aunque por razones diferentes, la defensa de
iniciativas ambientales voluntarias empresariales—entendidas como medidas adoptadas para
minimizar los efectos ambientales y fomentar la conciencia sobre los mismos, que no hayan sido
exigidas por reglamentación gubernamental.
Singapur es la sede regional de muchas empresas transnacionales con filiales en toda Asia
sudoriental. Las exigencias de demostrar un firme compromiso ambiental en Singapur, en
particular cuando éste se extiende a la huella ecológica de las organizaciones empresariales,
pueden acelerar el papel de liderazgo ambiental que pueden desempeñar las empresas
transnacionales. Como “estado de desarrollo”, la prioridad de Singapur ha sido potenciar al
máximo las oportunidades económicas, al tiempo que proteger a las organizaciones
empresariales del examen de las ONG o de la comunidad más extensa. En consecuencia,
aunque los ingresos per cápita superan actualmente los de muchos países industriales más
antiguos, el interés en la responsabilidad ambiental está a la zaga de lo que puede esperarse
sobre la base de la experiencia de Occidente.
La preocupación ambiental en Malasia ha experimentado un mayor crecimiento que en
Singapur, a juzgar por la actividad de las ONG, que procuran aplicar una presión informal en el
comportamiento empresarial y regulador. La vigilancia de grupos de presión internacionales
también es importante para la industria basada en la explotación de recursos naturales, lo que
supone una presión adicional para las iniciativas ambientales voluntarias. Los ingresos cada vez
mayores, una presencia importante de las empresas transnacionales y la aceptación oficial de
grupos locales de presión ambiental indican que las iniciativas voluntarias están preparadas
para desempeñar un papel cada vez más importante en Malasia. Esta probabilidad es aún
mayor debido a los esfuerzos desplegados por el Banco Mundial para fomentar la
reglamentación “informal”, previendo la presión comunitaria en las empresas para que mejoren
sus resultados ambientales, y otras formas nuevas de formular la política ambiental.
viii
Las influencias que fomentan las iniciativas ambientales voluntarias, los tipos de medidas
adoptadas y la medida en que éstas pueden reemplazar otras formas de reglamentación
ambiental constituyen la base del debate en este documento. Comienza con un estudio de las
motivaciones que se considera fomentan las iniciativas voluntarias por encima de otras formas
de fomentar la mejora ambiental. A continuación se discute la medida en que la acción
voluntaria debería considerarse una alternativa a la reglamentación gubernamental,
observando, entre otras cuestiones, que dicha acción a menudo está estrechamente relacionada
con la aplicación reglamentaria. La discusión se centra entonces en un estudio de las iniciativas
ambientales voluntarias empresariales en Singapur y Malasia, basado en los resultados
originales de una encuesta obtenidos de algunos ejemplos de empresas transnacionales de
propiedad extranjera en ambos países. En la última sección se comenta la importancia de la
acción voluntaria observada en Singapur y Malasia.
Cuando se escribió este documento, Martin Perry era Profesor Adjunto del Departamento de
Geografía en la Universidad Nacional de Singapur. Actualmente es analista investigador
principal en el Ministerio de Trabajo de Nueva Zelandia. Sanjeev Singh es estudiante de
doctorado en el Departamento de Geografía de la Universidad Nacional de Singapur.
ix
Corporate Greening
TNCs have recently turned their attention to environmental issues in a more coherent and
active manner than was previously the case—although it remains doubtful that this indicates a
permanent and substantial shift in management practice. Corporate environmentalism in older
industrial countries is being encouraged by economic, political and industrial organization
factors. Economic conditions support acceptance of increased environmental responsibilities, if
there are opportunities to obtain market benefits and production cost savings. The existence of a
“win-win” situation has been widely speculated upon but, as discussed further below, the
ability to profit from investment in environmental improvement may be less than initial
optimism suggested.
Political advantage is to be gained if organizations, perceiving the opportunity to accommodate
the environmental challenge, portray their response as evidence of progressive responsibility
(Levy, 1997). In terms of industrial organization, individual firms seeking to upgrade their
environmental performance must ensure that suppliers and contractors support its investment;
otherwise the risk of “contamination by association” can be a major disincentive to action.
Globalization and the growth of “buyer-driven commodity chains” (Gereffi, 1994) in many
labour-intensive consumer goods industries have accentuated this constraint. Such commodity
chains rely on tightly specified contracting relations between independent companies, although
the enforcement of contracting conditions among organizations of varying capacities and
experiences is often difficult (Utting, 2000).
The form that corporate environmentalism takes can be linked to different motives for taking
action. Three broad motives may be defined, each associated with characteristic actions (table
1): to gain strategic advantage; to avoid strategic disadvantage and to act responsibly (Eden,
1996; Bansal, 1997). When these motives and strategies are considered, the long-term
commitment of TNCs to voluntary environmental initiatives is questioned.
Strateg c advantage i
Many organizations have come to believe that there is profit to be made from “green business”.
At the most immediate level, it is often claimed that being environmentally cleaner can bring
cost savings. Pollution prevention can pay through saving resources, recycling materials at a
lower cost than using new materials, and reducing clean up costs. Beyond cost savings, there is
a potential market for new “environmentally friendly” products. In addition, the reputation of
an organization may be enhanced by an environmentally sensitive image, which may generate
good publicity and encourage customer loyalty. Longer-term benefits of “green business” may
include the enhanced ability to recruit young staff, perceived to be particularly attracted to
companies with progressive environmental reputations, in a competitive employment market.
Early optimism about the profitability of green marketing, however, has not been completely
justified. Consumer survey evidence frequently indicates that there is an increased willingness
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to pay for environmental improvements but, in practice, this tends to be limited to household
products such as detergents, paper and certain food items. Even where governments have
contributed to the promotion of “green” products, sales have often been low (Eden, 1996:9).
Although, in market research surveys, people express preferences for “clean” products, it
cannot be concluded that they will act on those preferences, nor will they necessarily believe
that a “green label” is a reliable indicator of a product’s qualities (Esty et al., 2000:83). Similarly,
just how far the corporate world can go with “eco-efficiency” is a matter of increasing
contention. Some claim big opportunities exist (Porter and Van der Linde, 1995; Flavin and
Tunali, 1996) while others are sceptical about the extent of the win-win scenario (Jaffe et al.,
1995). In the case of newly industrializing economies, the growth of capital-intensive
manufacturing may be at the expense of local producers with methods adapted to local resource
conditions. In the case of the pulp industry in Southeast Asia, for example, industrial
modernization results in fewer and more capital-intensive producers that make less use of
locally recycled inputs than the producers they displace (Sonnenfeld, 1999). The sustainability
of green corporatism motivated by strategic advantage, therefore, will be influenced by the
extent to which competitive advantage is realized.
Avoiding disadvantage
Companies may voluntarily raise their environmental standards because of the perceived
danger of not doing so. They may, for example, attempt to match the behaviour of competitors,
in order to avoid placing themselves at a strategic disadvantage. This disadvantage may be a
loss of market share—if the strategies of competitors prove effective—or it may be a loss of
reputation or standing. The impact of poor publicity can be seen in the reaction of individual
company share prices to good and bad environmental news (see World Bank 2000:61). Bad
publicity, in particular, has a marked effect on share values. Indeed, environmental
transgressions can be more damaging indirectly, through their impact on equity values and
reputation, than through the financial penalties directly imposed by regulators (Piesse, 1992).
Eden (1996) points out that, according to survey evidence, over two thirds of companies see
environmental issues as threats, “requiring defensive or corrective actions”, rather than
opportunities to open up new markets.
Corporations often view environmentalism as a means of deflecting or pre-empting new
legislation, which is seen as detrimental to market advantage. To deter demands for legislation,
TNC self-regulation needs to attain a high degree of credibility. This is far from straightforward
as, in many countries, businesses sustain lower levels of public trust than many other
institutions (Simmons and Wynne, 1993; Eden, 1996). Previous efforts to pre-empt regulation by
industry self-regulation have failed, frequently because compliance with voluntary codes has
been weak (Roht-Arriaza, 1995:534).
Act ng responsib y i l
The above motivations lead to voluntary environmental actions that are, to varying degrees, the
incidental by-product of profit-driven actions. Other pressures on business, which have less
immediate linkage to profit or returns on investment, are adding to the acceptance of larger
environmental responsibilities than in the past (Patten, 1991). This is frequently discussed in
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terms of the need for business to establish legitimacy in the eyes of consumers, the public at
large and government—legitimacy being defined as a “generalised perception or assumption
that the actions of an entity are desirable, proper or appropriate” (Suchman, 1995:574).
Beyond the need to keep pace with changes in what society perceives to be acceptable,
environmentally sensitive business organizations are facing new demands to demonstrate their
legitimacy as their global reach increases (Grolin, 1998; Rodgers, 2000). This is because, it is
argued, the legitimacy conferred by national governments through regulation, law and
representation of public opinion has lessened due to the political emphasis on deregulation and
the internationalization of business activity. In this vacuum, corporate business has been under
pressure to find new sources of legitimacy. Environmental performance is especially affected by
this because of the high profile and scientific uncertainty of environmental issues, as well as
public scepticism about the effectiveness of government regulations (Jacobs, 1997:56). To bolster
their reputations, businesses are being encouraged to seek the acceptance and endorsement of
major stakeholder groups, giving rise to so-called “extended stakeholder management”. To
keep this dialogue within manageable proportions, partnerships between corporations and
environmental NGOs have become one method of implementing extended stakeholder
management (Lober, 1997).
The extent to which engagement with stakeholders will continue to be viewed as worthwhile is
uncertain. Corporate engagement with environmental NGOs is partly predicated on the belief
that this will contain adversarial relations with NGOs and that partnerships can be confined to
specific issues rather than the overall environmental performance of the business (Murphy and
Bendell, 1997). Both outlooks run into conflict with the expectations of environmental NGOs,
particularly those with the greatest capacity to confer legitimacy based on their wide networks
and accountability to constituencies in society (Rodgers, 2000:47). More generally, it has been
argued that self-regulation does not have the capacity to increase the legitimization of business
environmental practices (Eden, 1996:122). The chemical industry’s code of practice,
“Responsible Care”, illustrates this—in the case of a sector that has particular need to retain
public confidence in view of its pollution-intensity. Responsible Care requires that adherents
seek to match best practice environmental management and to assist other chemical companies
do likewise. Part of this involves increased information transparency. Even so, it has been
argued that this has not reduced the legitimacy gap faced by the chemical industry (Simmons
and Wynne, 1993). Responsible Care has left unaltered the public perception that chemical
companies selectively release information about their environmental impacts and have greater
influence over government than does the public at large.
Voluntary Environmental Initiatives and Self-Regulation
Across many areas of social concern there has long been a debate about the desirability of
voluntary compliance as an alternative to government regulation (Hawkins, 1990; Petts, 2000).
This discussion can exaggerate the independence of separate approaches and overlook the
variability of command and control regulation. Enforcement mechanisms, for example, may
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stress prevention and consultation or they may stress enforcement, including severe penalties
for transgressing regulation. Advocates of voluntary environmental management have now
joined this debate, adding their criticism of command and control regulation.
In environmental matters, advocates of voluntary approaches suggest that there are efficiency
gains in giving industries a choice over their investment in environmental improvement, and
less need for monitoring and enforcement agencies than where mandatory standards are
imposed. In addition, the flexibility to determine their own standards and priorities is said to
make businesses more positive about improvement than where regulation enforces specific
actions. As well, to the extent that voluntary regulation does not depend on legislation and
political agreement, it can be enacted quickly and maintain responsiveness to current problems.
In practice, voluntary action can be closely dependent on regulatory enforcement for three
reasons: (i) participation in so-called voluntary initiatives is frequently determined by the
efforts of third parties, including government regulators; (ii) government regulation may form a
benchmark against which voluntary efforts are designed; and (iii) conversion of voluntary
measures into legislation is possible and not necessarily opposed by “first movers”.
Third-party involvement
Voluntary environmental initiatives have grown partly because governments are influencing
their design and implementation. In other words, a good deal of the activity classed as
voluntary environmental improvement is not purely self-motivated. Public agencies encourage
the willingness to participate by establishing frameworks or institutions that help to develop,
administer or verify voluntary initiatives. Voluntary action has also been a reaction to
government efforts to publicize voluntary initiatives and threats to strengthen regulation in the
absence of voluntary improvement (Gouldson and Murphy, 1998). A Canadian study, for
example, identified four reasons for “voluntary” action: (i) the threat of regulation; (ii) public
concern and industry perception that public image affects business; (iii) financial advantage,
through the direct returns from environmental improvement and improved standing with
financial agencies; and (iv) peer pressure, especially that transmitted through industry
associations (Labatt and Maclaren, 1998).
A potentially diverse and incoherent range of voluntary environmental initiatives tends, in
practice, to be highly ordered because of the influence of external agencies in encouraging
action. A threefold distinction summarizes much voluntary activity: (i) self-regulation; (ii)
voluntary agreements; and (iii) voluntary challenge (Labatt and Maclaren, 1998). Self-regulation
comprises action initiated by individual businesses or industry associations, as in the form of
voluntary codes of practice (UNCTAD, 1996). Voluntary agreements involve some form of
partnership between business, either individually or through their industry association, and
government agencies or environmental campaign groups (Murphy and Bendell, 1997). Under
the voluntary challenge, most of the initiative for developing, disseminating and monitoring
lies with government rather than industry. Governments present the scheme as a challenge to a
target community, possibly including a specified time and standard to be complied with. For
example, challenges for specified reductions in toxic chemical releases or reductions in
packaging may be given to groups of companies. An East Asian example is the PROKASIH
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(Clean Rivers) programme introduced in Indonesia in 1989 that is credited with eliciting
substantial pollution reduction from industrial plants in 11 provinces and 23 river basins (Afsah
et al., 1996). PROKASIH covered about 5 per cent of Indonesian manufacturing facilities but
was conceived as a prelude to formal comprehensive regulation (Pargal et al., 1997).
Regulat on as a benchmark i
i i
Mandatory targets and regulatory controls are often an important reference point for voluntary
action (Gouldson and Murphy, 1998). For example, one of the concerns expressed by business
in complying with certified environmental management standards is the uncertainty as to
appropriate improvement targets (Netherwood, 1996). Progressive businesses may be prepared
to exceed regulatory minimum standards, but a framework of regulatory standards and
systems may be looked to as a performance benchmark. A statutory benchmark is needed, for
example, to capture reputation advantages from behaviour that exceeds the compliance
standard. In addition, government agencies may devise and monitor voluntary programmes.
As noted above, the threat of regulation is frequently cited as a prime motive for participation
in voluntary initiatives. It is important, therefore, that voluntary initiatives are recognized by
government regulators if they are to forestall mandatory controls.
Relat onship to mandatory regulat on
One effect of business participation in voluntary action is frequently to curtail mandatory
regulation, but it is doubtful that this ultimately persuades governments not to act, or that
businesses necessarily have this as their intention (Roht-Arriaza, 1995; Eden, 1996). In industrial
countries, the pressure to initiate, integrate and strengthen environmental regulation is strong.
This pressure reaches newly industrializing economies through concern to maintain access to
industrial markets and through obligations under international environmental agreements
(Deans, 1998; Esty et al., 2000). In this context, voluntary action is more likely to delay new
regulation rather than entirely displace it. Nonetheless there is still an incentive to be a “first
mover”, as this can provide an opportunity to influence the form that regulation takes, as well
as minimizing the risk of being non-compliant when mandatory controls are introduced.
Furthermore, statutory enforcement may not be opposed as it reduces the opportunity for
competitors to free-ride on the environmental initiatives of progressive organizations.
Corporate Voluntary Initiatives in Singapore and Malaysia
Singapore and Malaysia responded to deteriorating environmental conditions in the 1970s
primarily through command and control regulation. Some positive results have been obtained
from these measures. In Singapore, comprehensive regulatory standards and investment in
environmental infrastructure have enabled the city-state to maintain economic growth and
promote itself as a “clean, green city” (Ministry of Environment, 1992). Statutory requirements
for environmental impact assessment (EIA) in respect of significant development projects are a
key aspect of Malaysian regulation (Markandya and Shibli, 1995). These measures mean that the
prior investigation of potentially serious environmental impacts has increased. In addition (and
perhaps more importantly) EIAs provide opportunities for third parties to challenge proposals
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initiated or endorsed by government agencies (see case study of Penang Hill in Harding, 1996).
This is important in Malaysia because the government is often closely involved in development
projects that have serious environmental impacts, such as the Bakun Dam (Rasiah, 1999:33). As
well as impact assessment, a much-cited Malaysian success has been the clean-up of the palm
oil industry. Although sometimes presented as evidence of the effectiveness of market-based
incentives (Markandya and Shibli, 1995), the reduction in organic pollution was ultimately
achieved through strict enforcement of mandatory standards (World Bank, 2000:44).
In both countries, the tightening of standards and extension of regulatory controls has been a
more important response to new concerns and gaps in original environmental controls than
investment in alternative environmental management strategies, either in the form of economic
instruments or voluntary initiatives. Environmental policy in Malaysia and Singapore is
influenced by their dependence on international trade and foreign direct investment (Bankoff
and Elston, 1994). This has introduced Western environmental expectations to both countries,
and standards above those demanded by domestic regulation. There is concern that standards
in Western markets will be converted into de facto non-tariff barriers. Governments have
encouraged voluntary responses, recognizing that higher standards across the board would
disadvantage those businesses not exposed to international pressure. This is seen in the help
given to obtain ISO14001 certification of environmental management systems, with assistance
targeted toward exporters and suppliers to TNCs (Zarsky and Tay, 2000:150). Comparatively
high levels of certification have thus been achieved in Southeast Asia, although not to the levels
predicted by the earlier diffusion of ISO9000 certification for quality management systems (table
2). Before assessing the significance of this and other voluntary actions, we briefly review
environmental issues in Singapore and Malaysia.
Environmental issues in S ngapore i
The Singapore government’s environmental management has been driven by economic
considerations (Bankoff and Elston, 1994). This has resulted in the enforcement of
comprehensive land use and emissions standards, as well as investment in environmental
infrastructure. The primary purpose of these interventions has been to maximize economic
activity and increase population within the small city-state. A tendency to equate a clean
environment with a green environment is an indicator of this, as in the Ministry of
Environment-sponsored annual “Clean and Green Week” that tends to emphasize activities
such as waste removal from beaches and anti-littering campaigns. Substantial gaps can be
identified in Singapore’s environmental performance, however, as indicated by the following
issues.
First, environmental legislation omits a commitment to a formal EIA process, in contrast to
other Southeast Asian countries (Briffett, 1996). Government unwillingness to introduce EIA
reflects concerns about its potential to delay or inhibit economic development, increase costs
and introduce “extraneous issues” into the development process. Rather than a transparent and
contestable decision-making process, development decisions are made through internalized
decision making under the control of state development agencies and senior government
ministers (Bankoff and Elston, 1994). Advocates of EIA suggest that its absence has stifled
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public debate about the environment and has resulted in inadequate attention being given to
environmental considerations (Hesp, 1995; Hilton and Manning, 1995).
Second, the “green initiatives” fostered by the government’s environmental agencies have not
incorporated ecological principles. For example, the Nature Society has criticized the areas
selected as nature reserves, noting that most are of no ecological significance, while locations
important to migratory wildlife and endemic species have been taken for development (Hesp,
1995:139). Similarly, parks and roadside planting of trees give a green appearance but the
vegetation is generally exotic and unhelpful to native fauna (Corlett, 1992).
Third, public environmental consciousness over issues such as product recycling, green
consumerism and ecological awareness is low. Surveys of environmental behaviour among
Singaporean students and women have shown that Singaporeans are generally ignorant of and
resistant to incorporating environmental protection in everyday life, by minimizing domestic
waste, using recycling bins and buying environmentally friendly products (Lau, 1993; Ng, 1994;
Savage, 1995).
Fourth, there has been little development of an environmental leadership role by Singaporean
public or private agencies in the region, despite the city-state’s economic wealth and trade and
investment linkages to neighbouring countries. The widespread destruction of tropical
rainforest in Indonesia through illegal land clearance was seen as one such opportunity,
particularly as Singaporean investors are involved in many of the illegal operations (Harwell,
2000:316). Singapore has supported ASEAN declarations and provided remote imaging
technology to help monitor the outbreak of fires, but these actions have done little to stem the
unfolding environmental disaster (Shepherd, 1997). Similarly, although Singapore has a major
stake in the shipping and petroleum industries, it has been less important than Japan in
promoting marine environment initiatives in the region (Chia, 1995).
Fifth, business in Singapore has tended to view regulatory compliance as the extent of their
responsibility. An investigation of business awareness of and investment in clean technology
concluded that “the public and private sectors in Singapore are not aware of cleaner production
concepts” (Tay, 1995:421). It was found that local companies viewed environmental issues as a
major deterrent to profit generation and typically lacked information, resources, technology and
labour needed to adopt clean production. Foreign TNCs showed greater awareness and
commitment to environmental management than local companies, mainly because of the need
to meet the expectations of their corporate management. This research suggested that
introducing stringent effluent and emission regulations would be the most effective way of
advancing cleaner production, as well as offering financial incentives to companies that exceed
regulation requirements.
These performance gaps arise partly from the absence of community interest in environmental
issues. The island’s limited land area and near total loss of natural environment has reduced
awareness of development-environment conflicts. Even so, concern for the environment has
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been one of the few issues that has prompted organized community action in opposition to
government proposals (Perry et al., 1997). A further and perhaps more important explanation of
the lack of environmental awareness in the state is maybe, therefore, the government’s tight
control of information on the subject.
Post-independence (1965), the People’s Action Party (PAP) government has retained a
monopoly on political control. The PAP has used its dominance to curtail opposition to its
policies and to build an “oligarchic elite” that has “merged government, state structures and
para-political organizations, and has co-opted and sponsored civil society actors” (Gomez,
1999:1). Citizen participation in issues that pose immediate development threats to the city-
state, such as waste generation and water consumption, is solicited, but larger environmental
activism has not been encouraged. Such activism might challenge government hopes to
accelerate population growth (from the present 4 million to near 6 million) and oppose plans to
increase investment in pollution-intensive petrochemical industries. It might also bring
demands for greater action on regional environmental issues that would compromise the
government’s reluctance to criticize neighbouring governments. At present, PAP claims about
its effective management of environmental issues and the necessity of its development
strategies go largely unchallenged. An exception is the Singapore Nature Society, which has
instigated a number of successful campaigns to protect areas of importance to wildlife. It
remains as one of the few active NGOs, although co-optation of senior members has muted its
voice in recent years. More generally, the political environment has acted against the
development of a vocal middle class concerned about environmental or other public matters in
Singapore (Jones and Brown, 1994; Perry et al., 1997). Green label products have, for example,
met with little consumer interest, even among affluent consumers (Wong, 1997).
Stakeholder groups also tend to be reluctant to campaign for greater business accountability. In
comparison with the role played by the International Chamber of Commerce in promoting
environmental best practice in Europe and North America (Hansen and Gleckman, 1993;
Brophy and Starkey, 1996), the Singapore International Chamber of Commerce has not taken up
environmental causes on the grounds that its members have no interest in doing so (Teng,
1997). The Singapore Confederation of Industry did promote a revised version of the
International Chamber of Commerce’s Business Charter for Sustainable Development. The
Singapore version omits eight clauses, including the one that calls for companies to report
annually on their environmental performance and progress. The Confederation believed that
disclosure would be seen as a threat, especially among Chinese-owned business that operate
through a tradition of secrecy and person-to-person communication rather than written
declarations and formal agreements (Teng, 1997). The Singapore Environment Council, a
government-supported NGO with a remit to promote environmental awareness in the
community and among business, has in recent years sought to foster business environmental
responsibility. Its principal tool has been an annual Singapore Environmental Achievement
Award given to an individual company demonstrating proactive environmental responsibility.
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The absence of community interest removes an important source of pressure on companies. On
the other hand, because of the strong presence of foreign TNCs in the Singaporean economy,
corporate pressure on Singaporean subsidiaries and affiliates is, potentially, an important
stimulant of voluntary action. This dual context can be seen in three sources of evidence about
the incidence of voluntary environmental initiatives: (i) corporate environmental reporting; (ii)
ISO14001 policy statements; and (iii) Responsible Care.
Environmental reporting
The voluntary reporting of environmental impacts and initiatives in company annual reports
has become widespread among organizations accepting an obligation to extend their
environmental responsibilities beyond regulatory compliance (Collier, 1995; Brophy and
Starkey, 1996). A review of annual reports produced by 264 publicly listed companies in
Singapore (all those with operations in Singapore) for the financial years 1995/96 and 1996/97
found that 6.5 per cent of companies made reference to the environment in both years (Perry
and Teng, 1998). The content of disclosure was minimal. Two thirds of the reports with
environmental references had no more than two sentences of comment. In terms of the space
occupied, the most extensive reporting was by two companies that reported in both years with
over ten sentences of information (a property company, DBS Land and a car distribution
company, Cycle and Carriage). Neither case included any data relating to environmental
impacts.
A follow-up survey that obtained a 30 per cent response from non-disclosing companies (66 out
of 221) and a 45 per cent response from disclosing companies (14 out of 31) found three main
reasons for the absence of significant environmental disclosure: (i) a perception that their
organization had no environmental impacts; (ii) a lack of perceived benefit, either in status with
consumers or within the business community; and (iii) lack of pressure from the government.
Government direction to disclose environmental information was identified as the influence
most likely to cause a change of practice.
The government has not sought to encourage disclosure, partly because it feels that ISO14001 is
a greater priority and partly because calls for disclosure are seen as a deterrent to
environmental certification. For the present, the absence of any cases approaching a serious
commitment to disclosure is perhaps a more significant indicator of environmental apathy than
the overall low disclosure rate. Singapore’s public companies are small compared with the
organizations that have invested most in environmental reporting. On the other hand, the
absence of reporting among companies involved in pollution-intensive activities means that
Singapore is falling behind standard practice internationally.
Representatives of three foreign TNCs, selected because of their leadership in environmental
reporting in their home country, were interviewed as a further part of the study (Perry and
Teng, 1998). The interviews revealed that leadership was not being transferred to Singapore.
The low level of public and government interest in environmental issues was given as the
reason for not disclosing information. One environmental manager commented: “the level of
awareness is very low; who will care if you report environmental initiatives or not? No one
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will”. An organization accredited to the European Environmental Management and Audit
Scheme (EMAS), advised that it would cease to report in Singapore were it not part of the
EMAS requirement to distribute an annual environmental report for each operating site. The
Singapore environmental manager indicated that the town council covering the factory site had
asked not to receive the report they sent. This caused the manager to comment: “why create
trouble for yourself when there is no requirement at all in Singapore to report such information
to the public?”.
ISO14001 policy statements
As noted above, the promotion of ISO14001 certification has been the main way by which the
government has sought to foster voluntary action in the business community. The promotion
included expenditure of around S$1million ($570,000) up to September 2000 on financial grants
to local companies. These grants can provide 70 per cent of the cost of engaging a consultant, up
to a maximum of S$40,000 ($23,000). Public support is also given to two industry-government
committees involved in ISO promotion work, and to the Singapore Accreditation Council, a
body that accredits certifying agencies to gain international acceptability. No regulatory
concessions are granted to organizations obtaining certification, although government agencies
may take certification into account in the allocation of their regulatory enforcement effort.
The impact of ISO14001 on business behaviour can be judged by examining the policy
statements of certified companies (Singh and Perry, 2000). Examination of 52 of the first 55
certificates awarded in Singapore found that 12 policy statements made no commitments
beyond necessary conditions for certification (such as the need to have top management
involvement and to continuously improve the environment management system) and a pledge
to comply with legislation (Singh and Perry, 2000). A similar number (14) made two or more
commitments beyond those required for certification. The most frequently made additional
commitments were: (i) some positive action to be taken, such as the elimination of ozone
depleting chemicals; (ii) product modification to reduce environmental impacts; and (iii) work
with suppliers, contractors and customers to promote environmental responsibility recognizing
product lifecycle impacts. In addition, a few organizations had a commitment to exceed
legislative and other regulatory requirements. IBM (Singapore) Pte. Ltd. was the sole company
to include all four of these types of commitment in its policy. Overall policy statements with
two or more beyond-the-minimum commitments were only produced by foreign-owned TNCs.
On the other hand, with the exception of European-owned TNCs, all types of business
organization included at least some organizations with minimal environmental policies.
As well as examining the policy statements, the study considered the process through which the
policy had been generated, as well as subsequent implementation. Interviews with 25
organizations found four where the policy was linked to significant management priority to
environmental improvement. All four were foreign-owned transnationals (the Singapore
branches of IBM, Molex, Tetra Pak and Lucent Technologies).
Overall, the investigation of policy statements concluded that certification has generally
induced little action among Singapore-based organizations. In some instances it would appear
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to encourage no additional activity to that which is required to comply with government
regulations and the minimal requirements of the certification process itself. The performance of
foreign-owned companies typically falls short of the types of commitments being made by
business in their home countries, but it is among Singapore-owned organizations that least
change is taking place.
”Responsible Care”
The Singapore Chemical Industry Council (SCIC) officially joined Responsible Care in October
1999, having given its intention of so doing in 1990 (the interim period was taken to spread
interest in the programme and to ensure a sufficient number of members had the capacity to
join). The petrochemical and chemical sectors currently account for around a fifth of value-
added in Singapore’s manufacturing sector, and are dominated by global corporations.
Singaporean economic promotion agencies have sought to capitalize on the island’s long
established role as an oil depot and refining base for the region to expand these activities still
further (Perry et al., 1997). Land reclamation has created purpose-designed production space on
offshore islands and financial incentives have offset capital investment costs. Despite the
sector’s extensive land requirements, and potential risk to nearby high population densities and
vulnerable ecosystems, government agencies continue to prioritize the sector.
Companies that join Responsible Care accept 10 guiding principles and a code outlining
expected management practices. These commit organizations to match industry best practice
with respect to the health, safety and environmental aspects of their operations, to accept
product stewardship obligations and to work co-operatively which each other, the community
and governments to advance Responsible Care. When launched, 50 of the 180 members of SCIC
committed themselves to the programme. One year later the participation had grown to 65, of
which 80 per cent were foreign-owned TNCs, the prime drivers of the spread of Responsible
Care to Singapore. For foreign TNCs, it provides a structure for attaining common standards
among their international branches and of ensuring that suppliers and customers attain similar
performance. Such concerns among foreign multinationals, rather than local pressure to
participate in the programme from government or the community at large, explain the launch
of Responsible Care in Singapore. Subsequently, government has given some recognition to the
initiative by joining its organizing committee.
Responsible Care is new to Singapore and focuses on assisting organizations to improve
working practices and reporting systems. Much of the impetus for achieving this comes from
TNCs and their willingness to assist local companies. In North America, Responsible Care has
been criticized as an attempt to present the industry in a favourable light so as to pre-empt new
legislation and regulation (Eden, 1996). In Singapore, the programme may be credited with
some positive outcomes. It provides a framework within which foreign TNCs are taking steps
to extend environmental responsibility to overseas branches. This is important in Singapore,
where the absence of community and other pressures have resulted in environmental issues
being a low priority.
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Environmental issues in Malaysia
Malaysia exhibits most of the environmental problems that are typical of many developing
economies (for an overview see CAP, 1998). These include the over-logging of primary forest
resulting in the loss of wildlife habitats, soil erosion and the displacement of indigenous
communities; air and water pollution from industry and urban transportation, especially in the
main centres of economic activity (Kuala Lumpur and the Kelang Valley, Penang and Johor)
and the dumping of hazardous waste. The incidence of problems has changed with Malaysia’s
economic progress, but generally increased incomes have yet to be translated into improved
environmental conditions (Sham Sani, 1999; Rasiah, 1999). Part of the problem is that
urbanization is still increasing and this intensifies the environmental impacts from industry and
population. The urban population almost doubled from 1980 to 2000 and is expected to double
again by 2020 (World Resources Institute, 1997). Hence pollution problems tended to increase
despite the strengthening of environmental governance in the 1990s (Sham Sani, 1999:13–15).
The overall industrial contribution to pollution shows some changes in the intensity of
discharges. Particulate discharges increased in the initial phase of industrial growth but have
declined from their high in the mid 1990s (Markandya and Shibli, 1995; Rasiah, 1999). Other air
emissions (sulphur dioxide, nitrogen dioxide, carbon monoxide and hydrocarbons) continued
to increase through the 1990s, with all emissions except hydrocarbons at least doubling between
1987 and 1997 (Rasiah, 1999). Organic pollution of water-courses, as measured by biochemical
oxygen demand (BOD), dropped in the 1980s, but it has since increased, with manufacturing a
major contributor to this growth of pollution (Jenkins cited in Rasiah, 1999). In 1998, three
quarters of river monitoring stations recorded some degree of pollution, of which agro-sector
and manufacturing were the major sources for a fifth of the rivers examined (Environmental
Quality Report, 1998:9). In coastal waters, oil and grease contamination is widespread and
increasing; with more restricted but important problems of copper, mercury and lead levels
exceeding proposed standards adjacent to some industrial areas (Environmental Quality
Report, 1998:13). A World Bank study in the early 1990s identified hazardous waste as likely to
be the principal industrial pollution problem in future years (Markandya and Shibli, 1995).
Hazardous waste generation increased by 18 per cent from 1992 to 1998, with the major
industrial sources including metal finishing, chemicals, electronics, printing and packaging
(Environmental Quality Report, 1998:9). New controls on hazardous waste were included in the
Environmental Quality (Amendment) Act 1996, the original legislation having provided
Malaysia’s overall legal umbrella for pollution control since its enactment in 1974.
Monitoring of individual business behaviour continues to find a high incidence of non-
compliance. This may reflect surveillance effort rather than attitudes to environmental
responsibility, but it does suggest that business acceptance of regulatory obligations needs to be
strengthened before increasing the reliance on voluntary improvement initiatives. With the
exception of periods of economic slowdown (1985–1990 and 1997–1998) the number of
environmental offences prosecuted under the Environmental Quality Act has increased. In 1992,
for example, 130 cases were prosecuted compared with 253 in 1998 (Environmental Quality
Report, 1998:51). In 1998, a total of 3,889 manufacturing industries were inspected of which 86
per cent were judged compliant with sewage and industrial effluent regulations and 78 per cent
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were judged compliant with airborne emission regulations. Industries in which foreign
investment dominates, such as electronics, had a compliance rate of 86 per cent and 89 per cent
under the respective regulations; in the chemicals sector, the respective compliance was 88 per
cent and 94 per cent. The Environmental Quality Report 1998 noted that non-compliance was
frequently due to failures to maintain abatement equipment or to upgrade capacity with
increases in production capacity. Such problems, it was suggested, were most prevalent among
small and medium-sized enterprises, many of which were said to be operating without
appropriate control equipment. The compliance checks tend to concentrate on large enterprises,
with potentially the greatest impacts, and so probably do not capture the full extent of non
compliance (Markandya and Shibli, 1995).
A further indicator of business attitudes toward their environmental impacts can be obtained
from those who legally choose to exceed emission standards. Malaysia operates a system that
allows emission levels to be exceeded on receipt of a “contravention license”, for which there is
a fee and associated abatement charge. There has been a large reduction in the fees so collected
from the rubber and palm oil processing industries (Sham Sani, 1999:20). This improvement
partly reflects the comparative isolation of individual processing facilities in these industries,
making environmental impacts easier to monitor than where industry operates from urban
locations (World Bank, 2000). Even with the added impetus of community surveillance it
appears that environmental commitment remains a low priority. Under the licensing
regulations governing “prescribed premises” (including rubber and palm oil processors) an
excellent compliance record can lead to the award of licenses for more than the normal one-year
period. In 1998, 20 of the 143 licensed rubber factories had been granted extended licenses (14
for two years, six for three years). Of 328 licensed palm oil mills, 97 had been granted extended
licenses (70 for two years, 27 for three years) (Environmental Quality Report, 1998:22).
The limited extent of its monitoring and enforcement capacity has been identified as a critical
problem with Malaysia’s current environmental policy regime (Markandya and Shibli, 1995). It
means that, apart from large establishments in the palm oil and rubber sectors, industry is
largely self-monitored. The 1996 amendments to the Environmental Quality Act included
substantial increases to the penalties for a range of environmental offences (see Sham Sani,
1999:33). This was promulgated to increase the compliance pressure on industry, although in
the past courts were generally reluctant to impose maximum penalties. A public complaint
system exists, and this can trigger enforcement action. An increase in the number of public
complaints on environmental issues occurred during the 1990s. This took place alongside an
increase in media coverage and growing public awareness of environmental issues, reinforced
in the Seventh Malaysia Five-Year Plan in which environmental awareness is emphasized.
A significant difference between Malaysia and Singapore is the stronger role that environmental
NGOs are playing in encouraging environmental protection in Malaysia. Long-established
environmental and consumer protection campaign groups have been joined by groups
representing business interests. The Malaysian International Chamber of Commerce and
Industry (MICC) established an environmental committee in 1992, the same year that the
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Business Council for Sustainable Development was formed. The timing coincided with the
broader inclusion of environmental issues in the Malaysia Five-Year Plan and the awareness
among international businesses that they were particularly exposed to any tightening of
regulation. As well as providing business with collective representation to government, much
of the effort of the MICC is now devoted to the organization of an environmental award, the
Prime Minister’s Hibiscus Award. The award recognizes organizations that have demonstrated
environmental leadership, and is co-organized with the Federation of Malaysian Manufacturers
and ENSEARCH, an NGO representing environmental scientists and managers. In 2000, 39
companies (36 subsidiaries of TNCs) received recognition, having met the criteria for the award.
Community-based environmental campaign groups have attained a high profile partly through
their use of public law suits, a tactic that Singapore-based NGOs have avoided (Tay,
forthcoming). An early and well-known example of this was the Asian Rare Earth case in which
NGOs supported a group of villagers in legal action against a private company for its improper
storage and disposal of hazardous materials, an action that also implicated a government
agency for misadministration. The legal standing on which NGOs have sought to challenge
government decisions has been unclear, but their right to participate in environmental decisions
has gradually attained recognition. Thus, even though NGO action has often not been
successful, it is changing the way issues are dealt with and is bringing greater voluntary
willingness to minimize environmental impacts (Harding, 1996). On the other hand, the
suggestion that NGOs have become the “public watch-dog” for environmental care (Sham Sani,
1999) may overstate the situation. Few groups have large memberships and much of the
environmental activism originates in Penang, the small island that has seen rapid economic
transformation because of its success as an electronics manufacturing base (see Gonzalez et al.,
2000).
Environmental NGOs remain critical of the lack of enforcement and co-ordination of regulation
(CAP and SAM, 1996), but government has shown an increased willingness to accept outside
influence on environmental performance. When Austria became the first country to designate a
quality mark for tropical timber and raised tariffs on its importation, as part of efforts to
improve timber harvesting practices, it was Malaysia that promptly protested the measure to
the GATT (Roht-Arriaza, 1995). The internationalization of Malaysian timber companies has
brought a change of attitude. The Malaysia Minister of Primary Industry, who oversees the
Malaysian timber industry, has stated that companies should follow basic guidelines of good
corporate citizenship, including obeying national laws and not taking advantage of weak
governments (Nordin cited in Sizer and Plouvier, 2000:97). Similarly, increased international
criticism of its domestic forestry policies has also produced significant changes in attitude. A
National Timber Certification Centre has been established and the government, in partnership
with industry, has invested substantial resources to create the Malaysian Criteria and Indicators
for Sustainable Forest Management, which is the basis for an independent third-party
certification mechanism. Changes in business behaviour nonetheless appear to be slow to
emerge. To date, just one Malaysian TNC is said to be making serious efforts to incorporate
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sustainability principals in its forestry management, and even it continues to be subject to
substantial criticism of its activities (Sizer and Plouvier, 2000:98).
Environmental performance of foreign TNCs
in Singapore and Malaysia
A study of TNC environmental practices published in 1988 (ESCAP/UNCTC, 1988) included
case studies of Singapore and Malaysia. These were based on small samples of TNCs and pre-
date contemporary environmental expectations. Consequently a new survey of foreign-owned
TNCs in Singapore and Malaysia was undertaken in 2000 to examine the extent and character of
“voluntary” environmental action, as well as the motivations underpinning such action. The
focus of the survey was on actions undertaken by the TNC in the host country, either Singapore
or Malaysia.
The survey covered industrial establishments identified in a published business directory for
which a present address and named contact could be obtained. Foreign-owned industrial
activities were the focus of the survey, because it was thought that they would exhibit greater
voluntary action than locally owned and service organizations. In Singapore, 400 questionnaires
were mailed to environmental officers and other persons identified as responsible for
environmental management in each organization contacted. This compares with 640 wholly
foreign-owned establishments listed in the latest Census of Industrial Production (EDB, 1998).
In Malaysia, 450 questionnaires were mailed to establishments listed in the KBD Dun Business
directory for foreign companies in ASEAN.
There were 89 useable responses in Singapore, a 22.25 per cent response rate, and 91 useable
responses in Malaysia, a 20 per cent response rate. The respondent organizations are broadly in
line with the ownership distribution of foreign companies in the two countries, although non-
Japanese Asian TNCs are underrepresented in the Malaysian responses (table 3). The responses
from both countries were concentrated in three sectors: electronics, chemicals and chemical
products, and fabricated metal products (table 4). The respondents also shared similar
characteristics in terms of: (i) pollution intensity (predominantly being either of high or medium
intensity); (ii) organizational size (predominantly being either small or medium-sized TNCs);
(iii) nationality (around half are Asian respondents, and the United States or Europe account for
a similar proportion of the remainder); and (iv) average age of capital (predominantly being
either five to 10 years, or 11 to 15 years) (table 4). The capital age, pollution intensity and size
characteristics may result in a low representation of organizations that are most exposed to
environmental pressure, as large, old, polluting plants are not present. More generally, it must
be expected that a postal survey of environmental performance is likely to gain fewer responses
from those establishments with a poor environmental record. Consequently, without a much
greater response rate, the surveys cannot claim to be representative of all TNCs in Malaysia and
Singapore. Differences between respondents and the attributes of those claiming to be most
active are the matters that we focus upon here.
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Respondent organizations were classified according to the extent to which they had
implemented the following actions: (i) set environmental performance standards above
government regulations; (ii) allocated environmental responsibilities to senior managers; (iii)
recently completed an environmental review of their establishment; (iv) produced an agreed
environmental policy statement; (v) implemented an environmental management system; (vi)
included environmental performance in the investment criteria for new technology; (vii)
participated in community-based environmental projects; and (viii) taken steps to increase
environmental awareness and responsibility among the workforce. Using these criteria,
organizations were classified according to whether their environmental commitment is high,
medium or low (figure 1).
Participation in at least six of the eight actions was needed to be classed as high, whereas low
performers had not undertaken more than one of the actions. In the case of the last three listed
criteria, various responses were possible, some of which indicate additional commitment above
the minimum threshold. Such responses were used to identify high performers. These criteria
and the range of responses are as follows.
• Investment criteria—High performers indicated one of two options relating to the
priority given to environmental impacts in the selection of new technology: (i) best
available environmental technology; and (ii) best available environmental
technology not entailing excessive cost. Lower options were to select either: (i)
environmental technology at a reasonable cost; and (ii) environmental technology
sufficient to meet local regulations.
• Community project participation—Participation in any one of four types of
community project was required, but with multiple participation possible for the
most active organizations. These projects were (i) sponsoring a community event
or environmental initiative; (ii) public reporting of their environmental impacts;
(iii) dialogue with community groups or an NGO or both; and (iv) green labelling.
• Workforce education/training—Participation in at least three of seven types of
workforce initiatives was required, again with the possibility that active
organizations exceed the threshold. The initiatives were: (i) environmental
training; (ii) environmental awareness orientation for new employees; (iii) display
of environmental policy around the workplace; (iv) copy of an environmental
policy given to each employee; (v) newsletter on environmental issues; (vi)
environmental awareness events; and (vii) environmental suggestion scheme.
The criteria for high performance were at a comparatively low threshold compared with the
environmentally most advanced corporations existing in older industrial countries. There is, for
example, no reference to product stewardship, public information disclosure or the delegation
of environmental responsibilities to all categories of employee. On the other hand,
implementation of six or more of the actions identified suggests that an organization has made
a consistent effort to raise its environmental performance. At the other end of the scale, it is
clear that organizations classified as “low” are not participating in voluntary environmental
initiatives. Organizations with environmental actions that bring immediate benefits, but
without a strategic commitment to voluntary improvement, feature on the scale as medium-
level organizations.
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In both countries, medium performance accounted for almost half the respondents, but
Malaysia had a larger share of high performers: 48 per cent versus 34 per cent in Singapore
(figure 1). The difference in the share of high performers is statistically significant (chi square
value = 8.851, df = 2, p