Indian authorities have developed an extensive set of environmental laws and policies, but have in many instances failed to prevent environmental degradation. There are several factors contributing to the gap between theory and reality, such as insufficient resources, corruption and lack of priority on the governmental agenda. Transnational corporations (TNCs) have often been a subject of controversy in the debate on environmental degradation in the South, and are argued to be both a source of and solution to environmental problems. The purpose of this thesis is to study what makes TNCs implement environmental policies and even go beyond national requirements. I approach the topic in a theoretical and empirical way, in which the first part of the thesis describes and discusses TNCs’ potential environmental role and the Indian authorities’ ability to enforce the government’s own policies, with reference to the hypotheses of pollution halos, pollution havens and the “soft state”. I link these theories with the empirical findings in the analysis chapter in the final part of the thesis.
Through a case study of four Scandinavian TNCs, I explore the ways in which they have been encouraged in and hindered from implementing environmental policies. The case companies are proactive in their environmental management, and through semi-structured interviews I got insight into what they emphasised as the most important factors. All of the case companies emphasized the importance of pressure from an authority, be it corporate or governmental. While pressure from the governmental authority was considered to be decisive for corporations to implement the governmental environmental policies, encouragement and requirements from TNCs’ headquarters, suppliers and customers was essential for proactive actions beyond the national laws. They were encouraged through training and guidance. The second most central factor, according to the informants, was the importance of knowledge about the problems, and how to prevent and solve them. Pollution prevention measures are considered by many as a burden and a potential expense (thus discouraging environmental measures) and this was attributed by several of my informants to a lack of knowledge. Several of the case companies had however managed to turn the company’s proactive strategies to their own advantage, achieving a so-called win-win situation.
Based on this study’s findings I find little evidence supporting the pollution haven hypothesis and the “soft state” debate as far as TNCs in India are concerned. Proactive TNCs, such as my case companies, have the potential to contribute to the making of pollution halos, but need to take further action to ensure proactive performance in the full value chain of their products. To encourage more corporations to implement environmental policies even beyond the national law, it is also essential that the authorities take an active role in enforcement, pressure and guidance.