Corporate environmental responsibility in Singapore and Malaysia: the potential and limits of voluntary initiatives

Assesses 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.

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.

Conclusions:

• the significance of the action taken by TNCs is difficult to assess without impact data, but the overall impression is that substantive activity is limited to a small proportion of organisations
• the low participation in environmental initiatives may be criticised, but equally it can be seen to highlight the limited advantage that an organisation gets from such investment
• there has been a tendency in much of the literature to assume that corporate support of voluntary environmental initiatives should, and can, be adopted across all sectors. This overlooks how the possibility of and incentive for participation is likely to vary considerably between industries. Consumer interest in green products, for example, continues to vary highly. Goods such as washing detergents and certain types of packaging attract significant environmental concern, while clothing and computers, for example, remain less susceptible to green marketing
• the Singaporean and Malaysian samples include a relatively large proportion of final good manufacturers. Although improved market standing through enhanced image among consumers is a fairly important motivation among these firms, it is not a prime motivator of action, nor a principle advantage obtained for the most active organisations. In both Singapore and Malaysia, governments have seen ISO14001 as an important indicator of voluntary business commitment to environmental improvement
• based on the evaluation of environmental policies of certified organisations in Singapore, it was concluded that for the most part it is encouraging little additional activity. The survey of foreign transnationals tends to confirm that certification does not significantly encourage substantive voluntary actions
• ISO14001 needs to be assessed differently in Malaysia, where pollution from "backyard" small industries remains a serious problem. For such firms, adoption of an environmental management system can stimulate important improvements in the absence of resources to ensure regulatory compliance

At the present time, voluntary corporate environmental action cannot be seen as an effective substitute for government regulation. Commitments to prioritise environmental impacts in their investment decisions, or to ensure that all parts of an organisation adhere to home-country standards, are limited to a minority of companies. Signs that some TNCs are adhering to performance standards above local regulatory requirements should be viewed as an opportunity to tighten regulation. In the absence of community interest in the environmental performance of business organisations, government-enforced upgrading of performance standards is important to reward those companies that invest ahead of regulatory requirements.

[Adapted from the author]