Case 2: Should Companies Dump Their Wastes In Poor Countries?

Lawrence Summers, Director of the White House National Economic Council for
President Barack Obama, once wrote a memo claiming that the world’s welfare would
improve if the wastes of rich countries were sent to poor countries. He gave four
arguments for this claim which we can summarize as follows:
1. Clearly, it will be best for everyone if pollution is shipped to the country where its
health effects will have the lowest costs. The costs of “health impairing pollution”
depend on the wages lost when pollution makes people sick or kills them. So the
country with the lowest wages will be the country where the health effects of pollution
will be lowest. So with “impeccable” “economic logic” we can infer that it will be best for
everyone if we dump our toxic wastes in the lowest wage countries.

2. Adding more pollution to an environment that is already highly polluted has worse
health effects, than putting that same pollution into a clean environment where it can
disperse. So we can reduce the harm pollution causes by transferring it out of highly
polluted cities like Los Angeles, and dumping it into countries in Africa that “are vastly
under-polluted.” This will make better use of those countries’ clean air quality which we
now are using “vastly inefficiently,” and it will improve “world welfare.”

3. The same pollution will cause more harm in a country where people have “long life-
spans,” than in a country where people die young. When people have “long life-spans,”
they survive long enough to get diseases, like prostate cancer, that people who die
young do not get. So pollution will cause more diseases like prostate cancer in countries
where people have long lives than countries where people die young. It follows that we
can reduce the diseases pollution causes by moving it out of rich countries where
people have long lives, and dumping it into poor countries where people die young.

4. Pollution can cause “aesthetic” damage, such as dirty-looking air, that “may have very
little direct health impact.” Since the wealthy are willing to pay more for clean-looking air
than the poor, clean-looking air is worth more to the wealthy than to the poor. So it
should be possible for people in wealthy countries to find people in poor countries who
are willing to trade their clean air for the money the wealthy are willing to offer. This kind
of trade will be “welfare enhancing” for both parties.
Source: “Let Them Eat Pollution,”
The Economist , February 8, 1992
Requirement:

Analyze the case and answer identify the Business ethics issues and the CSR issues in
the case. Analyze and answer the case following the format:

SN. Ethical/moral Theories or Consequences Theories or concepts that

Issues or CSR Principles or (explain the can be applied to solve the
issues concept that major effects of issue (identify the theory
(list the issues in were not the issues to then explain)
the case) complied stakeholders)
(identify the
theory then
explain)
1. Environmental Justice  The proposal of Dumping toxic waste The principle of environmental justice
dumping toxic waste in poor countries demands that no group of people
in poor countries would expose should bear a disproportionate
violates the principle vulnerable burden of environmental harm. To
of environmental populations to solve the issue, companies should
justice. Environmental harmful pollutants, adopt a more equitable approach to
justice demands that perpetuate waste management that prioritizes
no group of people environmental racism, the well-being of local populations.
should bear a and violate the
disproportionate human rights of
burden of individuals in the
environmental harm. affected communities.
2. Social Responsibility  The proposal of Dumping toxic waste The principle of social responsibility
dumping toxic waste in poor countries can demands that companies respect the
in poor countries is have serious health dignity and rights of individuals and
exploitative and and environmental avoid practices that harm or exploit
violates the principle consequences for vulnerable populations. To solve the
of social responsibility. local populations. issue, companies should adopt
Companies have a responsible practices that prioritize
responsibility to the health and well-being of local
respect the dignity populations.
and rights of
individuals and should
not engage in
practices that harm or
exploit vulnerable
populations.
3. Human Rights Dumping toxic waste  Dumping toxic waste The principle of human rights
in poor countries in poor countries can demands that companies respect the
violates the human have serious health fundamental rights of individuals,
rights of individuals in and environmental including the right to a healthy
affected communities. consequences for environment and the right to life. To
The right to a healthy local populations. solve the issue, companies should
environment and the adopt practices that respect the
right to life are human rights of local populations and
 fundamental human avoid actions that violate these rights.
rights, and companies
have a responsibility
to respect these
rights. 
4. Corporate Social The proposal of Dumping toxic waste The principle of corporate social
Responsibility dumping toxic waste in poor countries can responsibility demands that
in poor countries is have serious health companies operate in a socially and
not in line with the and environmental environmentally responsible manner
principles of corporate consequences for and minimize harm to people and the
social responsibility. local populations and environment. To solve the issue,
Companies have a can damage a companies should adopt responsible
responsibility to company's practices that prioritize the well-being
operate in a socially reputation. of local populations and the
and environmentally environment.
responsible manner
and to minimize harm
to people and the
environment.
5. Sustainability  The proposal of  Dumping toxic waste The principle of sustainability
dumping toxic waste in poor countries can demands that companies adopt
in poor countries is have serious health practices that are environmentally,
not sustainable in the and environmental socially, and economically sustainable
long term. consequences for in the long term. To solve the issue,
local populations, companies should adopt sustainable
which can lead to practices that minimize harm to
economic and social people and the environment and
instability. In the long promote economic and social
term, this can have stability.
negative effects on
local economies and
the environment.
6. Lack of Transparency The proposal of The decision-making The principle of transparency
dumping toxic waste process is not demands that the decision-making
in poor countries lacks transparent, and the process should be transparent, and
transparency stakeholders are not stakeholders should be consulted. To
consulted. This can solve the issue, companies should
lead to mistrust and adopt transparent practices and
lack of confidence in involve stakeholders in the decision-
the decision-making making process.
process.
7. Lack of Accountability The proposal of This can lead to a lack The principle of accountability
dumping toxic waste of responsibility and a demands that companies be held
in poor countries lacks lack of consequences accountable for their actions and their
accountability. The for harmful actions. impact on the environment and
companies responsible society. To solve the issue, companies
for dumping the waste should adopt accountable practices
are not held and be held responsible for any harm
accountable for their they cause to the environment and
actions.  society.