Noticias
Corporate Accountability - Big business and its impacts on society
por editor_holanda
The last decades of economic globalisation have provided businesses, in particular large multinational corporations, with new and more favourable opportunities, where economic investments easily can be done over borders. Following this development both the number of transnational corporations has drastically increased (1) and the social and environmental impacts of their operations have gained in their global dimension of consequence.
Legal conditions encouraging cowboy-capitalism
Unfortunately the development of a framework of duties and obligations ensuring that those powerful and influent economic players must take their responsibilities did not follow the change. Instead regulations of corporations are still today to a large extent dependent on national legislation, while States are the responsible stakeholders for international laws, conventions and treaties regarding human and social rights and the environment.
The mix of those legal limitations and also the complex structure of corporations today, - their unclear connections between the holding company (-ies) and its subsidies that is often referred as corporate veil - make it almost impossible to regulate companies' activities and tend to reward cowboy-capitalism with high environmental and social costs for the taxpayer.
The race to the bottom by national governments
While short term benefits dictate to a large extent the operations of corporations today in order to satisfy shareholder appetite and survive in the stock markets, the temptation to cut costs on the social and environmental side are very high. Therefore, governments seeking to attract investment are in competition against each other to offer the most 'interesting' conditions for foreign companies. Since no global binding framework exists ensuring the respect by corporations of minimum environmental and social standards, this translates into the erosion of national environmental and social protection and taxation systems. This has a double negative impact - not only the social and environmental costs are dumped on the back of taxpayers, but furthermore corporate taxes are lost and States get even more in difficulty to finance public services - such as social security, public health or education - which are fundamental to the good functioning of society.
Holding corporations accountable
A number of CSR guidelines are used by more and more companies today. The guidelines are however all voluntary initiatives and do not hold companies legally accountable towards the community in which they operate or include any sanction mechanisms (2). The voluntary CSR initiatives have the potential to bring environmental and social responsibility into practice to some extent, but CSR-labelling is too often used as a pure marketing tool. Friends of the Earth are everyday in contact with communities negatively affected by corporations. Some of them benefits from a label of responsibility, but who continue to damage the environment, and harm people and communities. This is what is called greenwash or bluewash.
Along with the economic globalisation and the favourable development for corporations the last decades, there has been a growing demand from civil society to make corporations directly responsible for their actions. Social movements, environmental NGO's and human rights organisation, among others, are demanding corporate accountability. For example the CORE coalition in the UK, where Friends of the Earth is member, is campaigning on new laws in three key areas: Mandatory CSR reporting, directors' duties and foreign direct liability. Those proposals aim to increase the possibility to control a company's CSR performance and decrease greenwash, which now seems to be the aim of many companies CSR-reporting. The direct foreign liability would increase the security for people and communities affected by a company's activities and aim to make corporations follow the same laws and rules wherever operating.
Failures of responsibility
The cases presented here were researched by Friends of the Earth's groups and other environmental NGO's who are concerned about corporations behavior. The cases show European companies that are acting in contradiction to their own or their home country's rules or principles.
Source: Friends of the Earth
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1. According to UN's (UNCTAD) was the number of transnationals with origin in the OECD countries in 1990 24 000. Today the number has increased to 65 000 companies, controlling 800 000 subsidies, and accounts for 2/3 of the world trade. (UNCTAD, Transnationals corporations, 2003, p 8.) 2. Read more about the most used guidelines at www.unclobalcompact.org, www.oecd.org, www.ilo.org
Unfortunately the development of a framework of duties and obligations ensuring that those powerful and influent economic players must take their responsibilities did not follow the change. Instead regulations of corporations are still today to a large extent dependent on national legislation, while States are the responsible stakeholders for international laws, conventions and treaties regarding human and social rights and the environment.
The mix of those legal limitations and also the complex structure of corporations today, - their unclear connections between the holding company (-ies) and its subsidies that is often referred as corporate veil - make it almost impossible to regulate companies' activities and tend to reward cowboy-capitalism with high environmental and social costs for the taxpayer.
The race to the bottom by national governments
While short term benefits dictate to a large extent the operations of corporations today in order to satisfy shareholder appetite and survive in the stock markets, the temptation to cut costs on the social and environmental side are very high. Therefore, governments seeking to attract investment are in competition against each other to offer the most 'interesting' conditions for foreign companies. Since no global binding framework exists ensuring the respect by corporations of minimum environmental and social standards, this translates into the erosion of national environmental and social protection and taxation systems. This has a double negative impact - not only the social and environmental costs are dumped on the back of taxpayers, but furthermore corporate taxes are lost and States get even more in difficulty to finance public services - such as social security, public health or education - which are fundamental to the good functioning of society.
Holding corporations accountable
A number of CSR guidelines are used by more and more companies today. The guidelines are however all voluntary initiatives and do not hold companies legally accountable towards the community in which they operate or include any sanction mechanisms (2). The voluntary CSR initiatives have the potential to bring environmental and social responsibility into practice to some extent, but CSR-labelling is too often used as a pure marketing tool. Friends of the Earth are everyday in contact with communities negatively affected by corporations. Some of them benefits from a label of responsibility, but who continue to damage the environment, and harm people and communities. This is what is called greenwash or bluewash.
Along with the economic globalisation and the favourable development for corporations the last decades, there has been a growing demand from civil society to make corporations directly responsible for their actions. Social movements, environmental NGO's and human rights organisation, among others, are demanding corporate accountability. For example the CORE coalition in the UK, where Friends of the Earth is member, is campaigning on new laws in three key areas: Mandatory CSR reporting, directors' duties and foreign direct liability. Those proposals aim to increase the possibility to control a company's CSR performance and decrease greenwash, which now seems to be the aim of many companies CSR-reporting. The direct foreign liability would increase the security for people and communities affected by a company's activities and aim to make corporations follow the same laws and rules wherever operating.
Failures of responsibility
The cases presented here were researched by Friends of the Earth's groups and other environmental NGO's who are concerned about corporations behavior. The cases show European companies that are acting in contradiction to their own or their home country's rules or principles.
Source: Friends of the Earth
_________________________
1. According to UN's (UNCTAD) was the number of transnationals with origin in the OECD countries in 1990 24 000. Today the number has increased to 65 000 companies, controlling 800 000 subsidies, and accounts for 2/3 of the world trade. (UNCTAD, Transnationals corporations, 2003, p 8.) 2. Read more about the most used guidelines at www.unclobalcompact.org, www.oecd.org, www.ilo.org