Since the emergence of the environment as an issue of political significance back in the 1960s almost all countries have an official environmental policy. The policy usually obliges the state to regulate the economy, and specifically the extractive and productive industries, in such a way as to encourage environmentally-friendly behaviour. Yet different countries have seen very different success rates in implementing such measures.
The extractive industries – those that take raw natural resources out of the ground – have been especially resistant to environmental regulations. “It’s because of the profits!”, you may say. And partially you will be right, but the reasons are far more complex and varied. Let’s take Russia – the world’s largest oil producer – as an example. For this country, pollution control regulations are nothing new. Russian legislation is often very stringent compared to other developing countries, although at times too ambitious, such as the aim of individually controlling over a 1,000 different air pollutants. Why then is environmental quality so bad there? (And yes, it is bad! In 2007, 3 of the world’s 10 most polluted places were in Russia. In 2013, two of these places were still in the top 10.)
The first thing that comes to mind is corruption – but this is just a symptom of deeper causes. Let us, therefore, look at a few roots to this problem. Firstly, the smaller, independent oil firms often cannot afford to comply with overly stringent environmental regulations, and feel forced to resort to corruption in order to stay in business. The large oil companies, however, don’t feel the pinch and can afford paying penalties while carrying on with polluting activity. It doesn’t help that the largest, state-owned firms – Rosneft and Gazprom – have been steadily absorbing the small, independent oil companies. Moreover, regulations are often used selectively to benefit particular vested interests.
Secondly, oil is an industry of national importance – it ensures national energy security and independence, and provides the state with significant political power in international affairs. For politicians it makes little political sense to burden this industry with enforced regulations. Indeed, some would argue, it would make more sense to put their own people – corrupt but loyal, or loyal through corruption – in charge of extraction activities. Furthermore, because extractive firms represent a key industry, the government will always lend a financial hand should the industry get itself into trouble. With such soft budget constraints, there is insufficient incentive to innovate outdated technologies or practices.
Thirdly, the Russian management approach is permeated by an acute ‘punishment culture’, in which punishment for underachieving is much greater than the reward for high or over-achieving. So if an employee suggests a new plan for streamlining production and reducing environmental impact but it goes wrong – not necessarily because it was a bad plan – the initiator stands to lose his job. This has meant not only that no one wants to propose or enact improvements – environmental or not – but also that no one wants to be responsible for making decisions. At the middle and lower levels of management this has meant that personnel do not stray from instructions from above. At the top level, delegation of responsibilities is impossible – all decisions from all levels get channelled to the top, creating an information overload for the bosses. Senior management can only get through so much work each day, and so priority is given to the most important, usually economic, concerns. Environmental and other concerns, therefore, remain squarely at the bottom of a firm’s agenda.
And so, we can see why environmental leadership is rare: firms can afford to ignore external government regulations, while there is little room for environmental initiatives from within. The same lack of initiative exists inside government structures, meaning that environmental concerns are often left until someone has time to look at them… and issue clear orders on what to do about them. For now, the incentives to do so remain weak.
Elena Gorianova, @elenagorianova
University of Sussex
*The views expressed in this blog are those of the author and are not designed to reflect the position of the PSA Specialist Group on Environmental Politics. The Group encourages thoughtful and respectful reflection on the content in the comments section of the post.*