When a fire broke out on May 10 at a naphtha cracker plant in central Taiwan, little did the island's burgeoning environmental movement know that there would be a silver lining in that cloud. As the early May incident — one of four fires at Formosa Plastic Group's controversial Mailiao complex in less than a year — drew public outcry over the range of hazards they were facing, it also brought the wrath of local politicians, who called for several petrochemical plants in the complex to suspend operations until safety could be assured.

While the ultimate outcome of those closures remain unclear, Taiwan's environmentalists have had much to celebrate already this year. In April alone, not only did the government reject plans in western Taiwan's Miaoli County to build a science park on prime farming land, local nongovernmental organizations (NGOs) in Tainan City in the south scuppered plans, after a 10-year battle, for a major property project to be built on a landfill after discovering the developer had filed falsified environmental impact reports.

But arguably their biggest victory happened on April 22, when Taiwan's president, Ma Ying-jeou, nixed a longstanding application for a US$24 billion offshore refinery that had been submitted by Kuokuang Petrochemical Technology Company, a firm set up in 2006 with major stakeholder, state-owned CPC. It was a welcome end to the many meetings, hearings and protests staged by environmentalists concerned about the potential damage to the proposed site's coastal wetlands base in the west and its wildlife, including the dwindling fleet of Indo-Pacific humpback dolphins that migrate through the area.

The Kuokuang case is now referred to locally as a turning point for environmentalism in Taiwan. The reason: Up until recently, the government threw its weight behind the island's corporate executives, not its conservationists. Now, as Taiwan’s environmental groups get stronger, changes are sweeping through Corporate Taiwan while potentially altering the island's economic trajectory. As Ma told a news conference on the day of Kuokang's cancellation, “The government … hopes to use this opportunity to review Taiwan's whole industrial structure and policy direction, promote an upgrade of the petrochemical industry and move toward high-value development."

The Green Light

Environmentalism in Taiwan has, in fact, come a very long way in a very short time. It was only after martial law ended in 1987 that NGOs in Taiwan became legal, enabling the arrival of its first green groups — the Taiwan Environmental Protection Union and the Homemakers Association. Today, those two are joined by more than 200 NGOs that are also dedicated to environmental causes, from watershed protection to animal rights, and hundreds of other local multi-focused organizations include some sort of green element in their portfolio of causes, observes Robin Winkler, a U.S.-born, Taiwanese environmental lawyer.

That's not to say environmentalism was immediately top of mind for most Taiwanese. Terence Tsai, a management professor at China Europe International Business School (CEIBS) in Shanghai, likens the environmental awareness of Taiwan in the 1980s and 1990s to that of central China today, where the dogged pursuit of economic development takes priority over environmental protection. "It's kind of expected as society becomes wealthier and people are worried about the quality of life a lot more," say Tsai, who has been researching the environmental policies of multinational companies in Taiwan, China and Hong Kong for more than 10 years.

As he recalls, from the late 1980s, Taiwan's ruling governments allowed industry to proliferate along the island’s west coast, with factories and plants being built both offshore and inland, all in the name of raising Taiwan's collective standard of living. Public hearings were rare then, and most Taiwanese tacitly accepted rapid economic development that turned the island into one of Asia’s economic tigers.

Like the region's other tigers to which it is often compared, such as South Korea, Taiwan's economy grew rapidly. Though contracting in 2008, its GDP is growing again, with growth forecasted at around 5% this year. Annual per capita income is no about US$16,550 on the island whose economy is dominated by a service sector and electronics and machinery exports.

Many Taiwanese "have started to consider whether we really need more heavy industry,” says Kan Chen-yi, secretary of Matsu's Fish Conservation Union, which was involved in the Kuokuang protests. “Everything has an economic angle. The GDP is a consideration, but it’s not that important anymore.”

A Bigger Voice

Unlike today, Taiwan's early environmental movement comprised a handful of intellectuals in Taipei, says Linda Arrigo, a member of the Green Party, who moved to Taiwan from the U.S. in 1963. And the shift to the mainstream has not been lost on politicians, she says, noting "there are tens of thousands of people in non-political NGOs … who are a latent source of political support for environmental issues.”

Tsai agrees. "Taiwan's full embrace of democracy has given people a lot more of a chance to voice their opinions, either in the media or informally," he says. Politicians know they can play to that, crafting policies around the environmental issues of the day, such as climate change. Ma, who will be running for re-election next January, has pledged to cut carbon dioxide emissions 30% by 2020, to 2005's level of about 257 million metric tons. To do that, the government says it will designate two districts in every city or county to be among the 50 low-carbon “villages,” which will promote electric vehicles, low-energy appliances and recycling, among other measures. The government has also said it wants six low-carbon cities by 2014, and Taiwan's Environmental Protection Administration (EPA) started gathering data on the emission levels of 270 industrial polluters, all volunteers so far, to help it eventually develop a mandatory carbon offset trading scheme.

But the environmental hot potato has been figuring prominently on both the political and activist agenda is nuclear power. Since the March 11 earthquake and tsunami that damaged the Fukushima Daiichi nuclear power plant in Japan, dozens of groups in Taiwan have been galvanized and staging demonstrations against the completion of the island's forth plant northeast of Taipei. Despite the government's previous promises to have the plant operational by the end of 2012, newspaper reports in recent weeks indicate a change of heart. According to a local newspaper in May, Shih Yen-shiang, Taiwan's economics minister, stated publicly for the first time that the government might not extend the life of the existing plants, and that the forth plant would "not become operational unless its safety could be guaranteed."

Three's a Charm

It's not just Taiwan's politicians who are facing a sea change. The island's business community is also having to adapt a new environmental equation. “The triangle of economic competitiveness, environmental protection and quality of life needs to be addressed,” says Freddie Hoeglund, CEO of the 400-member European Chamber of Commerce in Taipei. “If a company or nation wants to stay competitive, all three elements need to be considered.”

Other experts, however, point out that aligning corporate strategies with Taiwan's shifting environmental landscape isn't always easy.  About 30 regulations are highlighted on the EPA’s web site aimed at foreign investors, from guidelines for pollution control fee collection issued in 2003 to hazardous waste removal permit procedures released in 2009. The EPA makes changes to existing rules or policies almost daily to its web site, which experts say could deter foreign investors. “They don’t mind the costs, but under pressure from environmentalists, will the policy flip flop?” says Tony Phoo, an economist with Standard Chartered Bank in Taipei. “The thing about investment is, the less uncertainty, the better.”

Against this backdrop, Tsai of CEIBS describes how companies are facing environmental pressure "on all fronts." That includes the media and its ability to shape public opinion. According to Tsai, being isolated from international politics has left Taiwan very inwardly focused when it comes to news, and topics like corporate environmental missteps are favorite fodder for reporters, as NGOs are learning. The media "is always hungry for these kinds of issues," he says. "It's a very effective control of enterprises in Taiwan."

One company he cites that has moved with the times is Taiwan Semiconductor Manufacturing Company (TSMC). The US$14.4 billion (in annual revenues) firm, for example, began auditing the health, safety and environmental risks up and down its supply chain and has since set up a sustainability index and training programs for its main suppliers. It also recently was the first company in Taiwan to complete an inventory of its carbon footprint. Last year, it also hit its voluntary target to reduce the level of its factories' perfluorocarbons (a greenhouse gas emitted during aluminum production)to below the averages of 1997 to 1999.

Tsai's advice to other local as well as foreign companies? "Study the trends of policy adoption and public opinion very carefully," he says. "Because if you don't, [your lack of knowledge] will come back to haunt you one day."

But while public, media and political pressures still might not be enough to convince some companies of the need to go green, he points to another pressure: Global customers. As at TSMC, the revenues of most Taiwanese companies are generated in markets outside the island, with major customers and partners (such as Dutch multinational Philips Electronics, in TSMC's case) making green policies a prerequisite for doing business. Unlike, say, Chinese firms that have a large domestic market, "Taiwanese firms have no choice but to follow standard practice," he says. At a minimum, Taiwanese firms need to come up with some sort of environmental mission statement so that the American and European firms want to buy from them."

”Stronger environmental rules and enforcement, says Hoeglund, “do not translate into a reduction in business opportunities. In fact, the opposite is true."

But other experts warn that increased scrutiny of environmental practices can lead to unintended consequences. Winkler predicts a rise in corporate bribery of local officials if companies start finding the costs of meeting environmental upgrading too onerous. Other Taiwanese firms will move factories to Vietnam, Cambodia and other regions with more lax rules, Phoo says.

"That's probably what's behind a lot of the recent closer Taiwan-China business ties," says Tsai. "These companies can move to mainland China, where we don't have accurate data," and environmental protection regulation isn't advancing as rapidly the island's. "That's what I worry most about," he says.