Final answer:
Environmental considerations in outsourcing include abiding by environmental laws and avoiding potential disaster costs. Companies tend to build plants with similar standards internationally and consider environmental costs minimally compared to other business factors. Global trade can also pressure low-income countries to improve their environmental practices.
Step-by-step explanation:
The environmental issues involved in a company's decision to outsource manufacturing operations to foreign countries encompass several factors. One of the main considerations is the enforcement of environmental laws in the host country. Typically, international companies build plants in low-income countries based on designs proven in high-income countries with stricter environmental standards. This is partially because the design and construction of an industrial plant are complex and costly, and using a successful template is more efficient.
Moreover, an international company recognizes that creating an environmental disaster can be enormously expensive in terms of damages, lost trust, and reduced sales. Because of these potential costs, foreign-owned plants in low-income countries often comply better with environmental laws than local plants.
It's also worth noting that many other factors are taken into account when companies decide where to locate a factory, and environmental costs are only a minor consideration compared to labor, capital, location, transportation, communication infrastructures, taxes, and local government integrity.
Additionally, there's a global pressure for higher environmental standards through international trade policies. For example, high-income countries have used trade restrictions, such as bans on ivory imports, to encourage better environmental practices in low-income countries by impacting the trade linked to illegal activities, like elephant poaching.