Wednesday, 23 February 2011 01:27

Product Stewardship and the MIgration of Industrial Hazards

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Multinational corporations are dominant in the manufacturing and marketing of chemicals and other products where occupational health and safety hazards are known to exist. These corporations have long but variable experience in managing to control such hazards and some have developed large staffs and procedures for this purpose. With the trend towards ever more free-trade agreements, the dominance of multinational corporations (MNCs) is expected to expand, with a corresponding decline in the scale of state-owned industries and privately owned industries within nations. It is thus appropriate to consider the proper role of MNCs as industries are expanded all over the world, particularly in countries that have to date had minimal resources made available for worker and environmental protection.

The European Chemical Industry Council (CEFIC), in its CEFIC Guidelines on Transfer of Technology (Safety, Health and Environment Aspects), says that transferred technology should achieve a degree of safety, health protection and protection of the environment equal to that of the technology supplier from which it is derived and “equivalent to that achieved in the home facilities of the technology supplier” (CEFIC 1991). This would seem especially applicable to the worldwide subsidiary operations of MNCs.

Double Standards

There have been many examples where MNCs have not been as thorough in controlling industrial hazards in developing countries as they were in their home countries. The most numerous reports of this double standard have arisen in connection with asbestos and other ultra-hazardous materials, where substantial control of the hazards would represent a major share of overall costs of production and reduce sales in other ways. The cases described in the 1970s and early 1980s involved firms based in West Germany, the United States, the United Kingdom, Switzerland, Italy, Austria and Japan (Castleman and Navarro 1987).

The best-examined case of this double standard involves the pesticide manufacturing plant which caused thousands of deaths and permanent health impairment to many thousands of people in Bhopal, India, in 1984. Comparison of the Bhopal plant with a similar plant operated in the United States showed numerous double standards in plant design and operation, safety auditing, worker training, staffing of hazardous jobs, plant maintenance and management accountability. Additional relevant factors were the relative lack of government regulation and civil liability in India, compared with the United States (Castleman and Purkayastha 1985).

The Bhopal disaster focused world attention on the policies and practices of MNCs for safeguarding worker health and safety and the environment. Many giant manufacturing companies suddenly realized that they were running excessive, reducible risks and moved to reduce the amounts of highly toxic compressed gases they were storing and transporting. Transport of large cylinders of phosgene gas, for example, went from being a common practice in the United States to being completely avoided. Such changes were in no small part due to the fact that insurance for the consequences of chemical releases into communities became virtually unavailable. But above and beyond purely economic considerations, the ethics and morality of the conduct of the multinational companies were subjected to unprecedented scrutiny.

Obviously, lower standards of worker and environmental protection can confer at least short-term savings on factory owners. The temptation to increase profits by cutting costs is especially great where there is virtually no governmental regulation, public awareness, trade union pressure or liability for damages when something does go wrong. The Bhopal case showed that when profit levels are low, there is an added pressure on management to reduce operating costs by methods whose immediate costs are slight but whose long-term risks may be catastrophic. The structure of MNCs seemed ideal, moreover, for insulating top management from bearing any personal responsibility for the consequences of complying with local standards around the world.

The ILO investigation, Safety and Health Practices of Multinational Enterprises, found that “in comparing the health and safety performance of home-based (MNCs) with that of the subsidiaries, it could generally be said that the home country operations were better than those of the subsidiaries in the developing countries” (ILO 1984). A United Nations Centre on Transnational Corporations (UNCTC) report urged examination of MNC policies with regard to “occupational health and safety in their global operations.” The report concluded that there were “numerous examples of a ‘double standard’ in which worker and community health protection measures by transnational corporations are far weaker in the developing countries than in the transnational corporations’ home nations”. Examples of this were in vinyl chloride, pesticides, chromates, steel, chlorine and asbestos industries (UNCTC 1985).

The response of the very largest chemical MNCs based in the United States and the United Kingdom was to deny that it was company policy to have different standards in different countries for protecting people from the same industrial hazards. However, these sentiments have been expressed in different ways, some of which entail greater commitment than others. Moreover, many remain sceptical that a wide gulf remains between corporate policy statements and the reality of double standards in corporate conduct.

Product Stewardship

Product stewardship refers to a seller’s responsibility for preventing harm arising from products marketed, throughout the life cycle of product use and disposal. It includes the responsibility of assuring that a company buying the seller’s chemical product does not use it in a hazardous manner; at least one US firm, Dow Chemical, has long expressed a policy of refusing to sell chemicals to such customers. In 1992, the Chemical Manufacturers Association member companies in the United States adopted a code that contemplates termination of sales to customers who do not correct “improper practices” in the use of the chemicals they sell.

Examples of the need for product stewardship by pesticide producers abound. Repackaging of pesticides in food containers and the use of pesticide drums to store drinking water are causes of widespread death and disease. Small farmers’ use and storage of pesticides and pesticide containers reflect a general lack of training that manufacturers could provide.

In the Dominican Republic’s Costanza Valley, defoliation from overuse of pesticides has caused the area to be called the “Valley of Death”. As the area gained media attention in 1991, Ciba-Geigy, a major chemical MNC, introduced a programme to teach small farmers something about agronomy, integrated pest management and safety. It was recognized that pesticide use in the valley had to be reduced. Community response to Ciba’s effort to “prove the economic and social benefits of a sustainable market” was reported to be encouraging in the trade press. Ciba operates similar small farmer programmes in Colombia, the Philippines, Indonesia, Pakistan, Mali, Mozambique and Nigeria. The Pesticide Action Network is sceptical of corporate versions of “integrated pest management” that stress the “best mix” of pesticides instead of training people in techniques whereby pesticide use is seen as a last resort.

An important aspect of product stewardship is educational outreach to workers and the public using the product, through warning labels, brochures and customer training programmes. For certain hazardous products and containers in which they are sold, product stewardship entails retrieving materials that customers would otherwise use improperly or dispose of as hazardous wastes.

In US courts, product stewardship is strongly encouraged by the existence of liability for damages caused by hazardous products and pollution. Individuals harmed by products whose dangers were not always expressed in warnings by manufacturers have been awarded substantial compensation for economic loss, pain and suffering and in some cases punitive damages in addition. Manufacturers have withdrawn from the US market products shown in animal experiments to cause reproductive abnormalities—rather than risk multimillion dollar lawsuits from children of workers using the agent who have been born with birth defects. These same products have sometimes continued to be marketed by the same companies in other countries, where product liability is not a factor.

Liability and regulation have thus imposed a duty on manufacturers in some countries to develop less toxic processes and products. But in the absence of public awareness, liability and regulation, there is the possibility that the discredited, more hazardous technologies will remain economically competitive, and there may even be a market for the older technology that can be exploited in many countries. Thus, despite the advances being made by MNCs in the development of “clean technology”, there is no reason to expect that these improvements will be promptly transmitted to Africa, Asia, Latin America and Central and Eastern Europe. It is very possible that some of the newly built industry in these regions will be made with used, imported equipment. This poses an ethical challenge to the MNCs who own equipment that is being replaced in Europe and North America.

Public Health Advances

A number of advances have occurred in recent years, which would unquestionably contribute to the protection of public health and the environment wherever they take root. Industrial research chemists, whose goal has traditionally been the maximization of product yield with little concern about toxicity of products and by-products, now discuss developments in less toxic technology at symposia on “green chemistry”, or “industrial ecology” (Illman 1994). Examples include:

    • the replacement of glycol ethers, chlorinated solvents and chlorofluorocarbon solvents as cleaning agents in microelectronics processing
    • replacement of organic solvents by water-based solvents in adhesives and sealants
    • reduction of volatile, organic solvents in many paints, in favour of water-based paints, spray-painting technology using supercritical carbon dioxide, and powder coatings
    • replacement of cadmium and lead in pigments
    • elimination of nitrous oxide air pollution in making adipic acid (used to make nylon, polyester and polyurethane)
    • replacement of acrylamide in grouting compounds
    • replacement of chlorine bleaching in making paper
    • conversion of phosgene, arsine and other toxic gases to less toxic intermediates which can be handled instead in industrial processes, thus avoiding the need to store and transport large quantities of highly toxic, compressed gases
    • replacement of the phosgene process for making polycarbonates with a dimethyl carbonate process
    • synthesis of aliphatic isocyanates from amines and carbon dioxide instead of processes using phosgene
    • replacement of hydrofluoric acid with sulphuric acid or, better still, with solid catalysts, in oil refinery gasoline alkylation units
    • use of zeolite catalysts in cumene production, replacing phosphoric acid or aluminium chloride catalysts and eliminating problems of acid waste disposal and the handling of corrosive materials.


                          The worldwide promotion of less toxic technologies can be carried on both by individual MNCs and through collective bodies. The Industry Cooperative for Ozone Layer Protection is one vehicle major firms have used to promote environmentally superior technology. Through this organization, with additional support by the World Bank, IBM has tried to help companies in Asia and Latin America to switch to water-based cleaning and drying of circuit boards and disk components.

                          Roles of Government

                          Industrial expansion is taking place in many countries, and in considering applications for new industrial projects, governments have the opportunity and responsibility to evaluate health and safety hazards of the imported technology. The host country should seek to ensure that new operations will achieve high standards of performance. The project applicant should make the commitment to achieve specific levels of pollutant release that will not be exceeded during plant operations, and limits of worker exposure to toxic substances that will be attained. The applicant should be willing to pay for the government to obtain the necessary monitoring equipment to assure that these limits are observed in practice and to allow immediate access to government inspectors at any time.

                          Special attention should be directed towards having project applicants describe their past experience with the technology involved and its hazards. The host government has every reason and right to know what workplace hazards and pollution levels exist at similar factories operated by the project applicants. Similarly, it is important to know what laws, regulations and standards for public health protection are honoured by the applicants at similar facilities in other countries.

                          The host government application process should include critical evaluation from the standpoint, “Do we really need this?” And if the answer is yes, follow-up analysis should proceed along the lines of trying to ensure that the technology is designed to produce the least hazardous processes and products to provide whatever needs are served. This procedure comports with the stated policies of leading MNCs. The fulfilment of ethical duties by governments and corporations can best assure that public health related advances in technology are transmitted rapidly around the world.

                          Major new projects in developing countries usually involve participation of foreign investor MNCs. The accompanying guidelines (table 1) have been published by Greenpeace and Third World Network (Malaysia), detailing information that governments can request from foreign investors (Bruno 1994). To the extent that information on the technology and its hazards is not submitted by the prospective foreign investors, governments can and should take steps to obtain information on it independently.



                          Table 1. Information from foreign investors for environmental review

                          A. The foreign investor shall provide an Environmental Impact Analysis of the proposed project, including:

                          1.   list of all raw materials, intermediates, products and wastes (with flow diagram)

                          2.   list of all occupational health and safety standards and environment standards (wastewater effluent releases, atmospheric emission rates for all air pollutants, detailed description and rate of generation of solid wastes or other wastes to be disposed of on land or by incineration)

                          3.   plan for control of all occupational health and safety hazards in plant operation, storage, and transport of potentially hazardous raw materials, products and wastes

                          4.   copy of corporation guidelines of the foreign investor for conducting environmental and occupational health and safety impact analyses for new projects

                          5.   manufacturer’s safety data sheets on all substances involved.


                          B. The foreign investor shall provide complete information on locations, ages and performance of existing plants and plants closed within the past five years in which the foreign investor has partial or full ownership, where similar processes and products are used, including:

                          1.   list of all applicable occupational health and safety standards and environmental standards, including both legal requirements (standards, laws, regulations) and corporate voluntary standards and practices for the control of occupational and environmental hazards of all kinds

                          2.   description of all cases of permanent and/or total disability sustained or allegedly sustained by workers, including workers’ compensation claims

                          3.   explanation of all fines, penalties, citations, violations, regulatory agreements, and civil damage claims involving environmental and occupational health and safety matters as well as hazards from or harm attributed to the marketing and transport of the products of such enterprises

                          4.   description of the foreign investor’s percentage of ownership and technology involvement in each plant location and similar information for other equity partners and providers of technology

                          5.   names and addresses of governmental authorities who regulate or oversee environmental and occupational health and safety for each plant location

                          6.   explanation of cases where any plant’s environmental impact has been the subject of controversy within the local community or with regulatory authorities, including description of the practices criticized and how criticism was resolved in each case

                          7.   copies, with summary, of all corporate occupational health and safety and environmental audits and inspection reports for each location, including such audits and reports by consultants

                          8.   copies of safety reports, reports of hazard assessment, and risk analysis reports carried out with similar technology by the foreign investor and its consultants

                          9.   copies of toxic release forms that have been submitted to governmental bodies (e.g., the US Environmental Protection Agency or similar agencies in other countries) within the past five years, for all plant locations

                          10.any information considered relevant by the foreign investor.


                          C. The foreign investor shall submit a statement of corporate policy on health, safety, and environmental performance of worldwide operations. This must include the corporate policy on laws, regulations, standards, guidelines, and practices for new industrial projects and production facilities. The foreign investor shall explain how its global policy is implemented by: describing the staff responsible for carrying out this policy, its authority and responsibilities, and its position in the foreign investor corporate structure. Such descriptions will also include the name, address, and telephone number of senior corporate management officials in charge of this staff function. The foreign investor shall state whether it follows the same standards worldwide for worker and environmental protection in all new projects; and if not, explain why not.

                          D. The foreign investor shall agree to provide the developing country immediate access to the proposed industrial facility at any time during its operation to conduct inspections, monitor exposure of workers to hazards, and sample for pollution releases.

                          E. The foreign investor shall agree to fully train all employees exposed to potential occupational hazards, including training on potential health effects of all exposures and the most effective control measures.

                          F. The foreign investor shall agree to provide the developing country with equipment to analyze workplace exposures and pollutant generation, including but not limited to all limits specified in A(2) above, for the lifetime of the proposed project. The foreign investor shall agree that the proposed project will pay the cost to the developing country government for all medical and exposure monitoring during the lifetime of the proposed project.

                          G. The foreign investor shall agree that the proposed project will fully compensate any person whose health, earning capacity, or property is harmed as a result of the project’s occupational hazards and environmental impacts, as determined by the government of the developing country.

                          H. The foreign investor shall follow marketing safeguards as restrictive as those it applies anywhere in the world, to assure that workers and members of the public are not harmed as a result of the use of its products.

                          I.    If the foreign investor becomes aware of a substantial risk of injury to health or the environment from a substance it manufactures or sells in the developing country, a risk not known and disclosed at the time of this application, the foreign investor agrees to notify the environmental protection agency of the government of the developing country immediately of such risk. (This is similar to requirements under section 8e of the Toxic Substances Control Act of the USA.)

                          J. The foreign investor shall provide the names, titles, addresses, phone, and fax numbers of its senior corporate officials charged with implementing environmental and occupational and safety and health policies including plant design and operations, corporate inspections and reviews of plant performance, and product stewardship.

                          Source: Bruno 1994.



                          Industrial hazards are not the only reason countries have for wanting to do environmental impact reviews, and industrial projects are not the only ones warranting such scrutiny. The importation and widespread use of energy-inefficient technology for manufacture of refrigerators, electric motors and lighting has caused significant problems. In many countries, electrical power generation could hardly keep up with demand even if energy efficiency were a criterion in the evaluation of new technology and the design of commercial buildings. Energy inefficiency poses major problems in development, including the cost of building and operating excessive power generation capacity, pollution and the disincentives to expansion caused by unreliable power supplies and breakdowns. Energy efficiency could free tremendous resources for meeting basic needs instead of building and operating unneeded power plants.


                          Multinational corporations are in the most powerful position to determine what types of technology will be transferred to countries in Asia, Africa, Latin America and Eastern and Central Europe. The big companies have an ethical and moral obligation to promptly implement global policies to eliminate double standards with respect to public health and the environment. The lives of present and future generations will be vitally affected by the rate of transfer of improved, less hazardous technologies throughout the world.

                          Governments, further, have the ethical duty to independently and critically screen industrial and commercial projects. This role is best fulfilled by conducting searching analyses of the technologies and companies involved. The credibility and effectiveness of the screening process will depend greatly upon the transparency of the process and public participation in it.

                          Quotations from corporate sources are based on reports published in chemical trade journals and communications to the author



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