Corporate Ethics in the Era of Globalization: The Promise and Peril of International Environmental Standards

The growing assumption that transnational corporations (TNCs) will apply "best practice" and "international standards" in their operations in developing countries has seldom been checked against close observation of corporate behavior. In this article, I present a case study, based on field research, of one voluntary initiative to use international standards and best practice for environmental protection in the Amazon Rainforest, by a US-based oil company, Occidental Petroleum (Oxy) in Ecuador. The most striking finding is that the company refuses to disclose the precise standards that apply to its operations. This, and the refusal to disclose other important environmental information, make it impossible to verify independently Oxy's claims of environmental excellence, or assess the effectiveness of the initiative. At the same time, Oxy uses the invocation of international standards to wrap itself in a veneer of corporate responsibility; reassure government officials and local residents; cultivate confusion about standards and practices that apply to the operations; deflect meaningful oversight and transparency; and arbitrarily legitimize norms that have been defined by special interests. In short, international standards offer great promise for needed environmental improvements; but can also be used to impede, rather than advance, corporate responsibility and the development of effective environmental law at the national level. These findings suggest that for the application of international standards to be meaningful, the international community needs to move beyond statements of principle and develop mechanisms that can be used to evaluate, verify, and monitor independently environmental claims by TNCs. [PUBLICATION ABSTRACT]