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

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.

KEYWORDS:

• Cement industry
• climate responsibility
• CO₂ emissions
• energy efficiency/management
• third-party costs
• pollution heaven hypothesis

Acknowledgements

An earlier version of the paper (https://www.africaknows.eu/pdfs/D21-03.pdf) was presented at the conference “Africa Knows! It is time to Decolonise the Minds” in February 2021, which was organized by the African Studies Centre, Leiden University. We are thankful to the conference participants for their valuable comments which have helped to improve the quality of the manuscript. We are also grateful to the editors of Energy for Sustainable Development for their very useful comments on this version of the paper. The authors acknowledge the African Studies Centre, Leiden University where this work was completed in October 2023. The unanimous reviewers are also appreciated for their insightful review comments that helped to improve the paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 In June 1998, it was discovered that waste brokers dumped toxic waste in Koko, a remote town in Warri North Local Government Area of Delta State (Ogbodo, 2009).

2 See detail at https://www.fao.org/faolex/results/details/fr/c/LEX-FAOC120569/

3 See: Thermal energy intensity must fall considerably and bioenergy use must expand for cement to align with the Net Zero Scenario. https://www.iea.org/reports/cement

4 100 scores is the highest performer among the 180 countries ranked in the index.

5 These include, among others, the National Renewable Energy and Energy Efficiency Policy of 2015, the 2021 updated Nationally Determined Conditions under Article 4.2 of the Paris Agreement of 2015, Climate Change Act 2021 that gives a legal framework to the country’s Glasgow carbon neutrality commitment and establishes the National Council on Climate Change, and Energy Transition Plan of 2021.

Additional information

Notes on contributors

Nelson Nkwor

Nelson Nkwor is a Senior lecturer in the Department of Banking and Finance, Faculty of Management Sciences, Alex Ekwueme Federal University Ndufu-Alike. His areas of research interest cover environmental risk management, general insurance, and governance of finance. Nelson had over 25 years of practical experience in the insurance industry before joining academics in 2012.

Abel Ezeoha

Abel Ezeoha is a professor of finance and presently the Deputy Vice-Chanellor, Administration at Alex Ekwueme Federal University Ndufu-Alike. He was an Andrew Mellow and a Hobart Houghton Research Fellow in Economics and Economic History at Rhodes University, South Africa, and a visiting fellow of the Africa Studies Centre, Leiden University, The Netherlands. His research interests include economic reforms, capital flows, governance and institutions.

Chibuike Uche

Chibuike Uche is the chairholder of the Stephen Ellis Chair for the Governance of Finance and Integrity in Africa. Chibuike Uche has extensive research experience in Nigeria, Ghana, and Sierra Leone in the fields of political economy, business and financial history, financial institutions regulation, and regional integration. His current research interest is foreign business operations in Africa.

Akinyinka Akinyoade

Akinyinka Akinyoade is the Chair of the Researchers' Assembly of the African Studies Centre Leiden. He is a Hydrologist turned Demographer. His research activities are on population health and development, with special attention on fertility dynamics and family planning in West Africa; migration (human trafficking and forced labour in Nigeria); public service delivery in education and health sectors of Nigeria, Cameroon, Tanzania, and Indonesia.

Augustine Ujunwa

Augustine Ujunwa is a senior economist in the Monetary Policy Department of the Central Bank of Nigeria. He has practical and research experience in macroeconomic analysis, financial and monetary policies, and project management. He was the Head of Insurance and Capital Market Office, the Project Manager of the Development of Domestic Debt Markets in the WAMZ Phase 1 Project (African Development Bank (AfDB) funded project), and the Monitoring and Evaluation Officer of the West African Capital Market Integration Phase 2 AfDB funded project).