Multinational companies and climate change and sustainable development debate: evidence from cement production in Nigeria

Abstract

ABSTRACT Using the Third-party Cost Theory and the Pollution Haven Hypothesis as well as a comparative case study design, this study examined multinational companies' commitments to energy efficiency and responsive climate action in Africa. The study used cases of cement production in different African countries to benchmark the baseline operational context of Dangote Cement Plc. (a local MNC) and Lafarge Africa Plc. (a foreign MNC) in Nigeria. Although both companies operate in the same context, the findings show that their commitments are driven more by the strength of the host-country institutions and compliance with home-country standards. This negates the proposition that weak institutions in developing countries render foreign MNCs greater CO2 emitters than their local counterparts. Foreign MNCs of Western origin may be emitting less pollution because of the quality of their home country institutions. On the other hand, local MNCs may act less environmentally friendly because of the prevailing poor institutional quality. The evidence reveals that in institutionally lax jurisdictions, all MNCs in search of higher profit margins prioritize cheaper energy mixes. There is thus a need for African governments to strengthen their environmental governance frameworks and provide incentives to induce MNCs’ commitments to cleaner energy.