Corporate Responsibility and the Environment
Corporate Responsibility and the Environment.
In recent decades, large corporations have grown to become amongst the most powerful entities in the world. Of the world’s 100 largest economies, just 49 of them are countries - the others are corporations. General Motors’ economy, for example, is larger than Denmark. While governments are directly responsible to their citizens for social issues such as the environment, corporations are responsible only to their shareholders. Those shareholders’ main, and normally sole interest is profit.
The profit motive has a terrible impact on social issues like human rights and the environment. Corporations are required by law to always act in the best interests of their shareholders, and that is almost always interpreted as keeping profits and the share price high. The issue of corporate responsibility is a relatively new one and companies are now clambering over themselves to prove their green credentials. A lot of their energy is going into ‘greenwash’. ‘Greenwash’ or ‘green wash’ is defined as disinformation disseminated by an organization so as to present an environmentally responsible public image. Many corporations spend more money on environmental public relations than the actual act of building sustainability.
Corporate responsibility has always been voluntary but voluntary mechanisms do not work well in a market based system. Corporations are not working to protect the environment. It is against their interest to take initiatives to reduce consumption and most corporations oppose laws designed to protect the environment because they hurt their business. Corporations have caused environmental destruction globally for many years and the scale of the problem is increasing.
Of the world’s wealthiest and largest corporations, the largest number are tied up in oil, petrol and car manufacturing. Retail and financial services are some of the other major players. Environmental sustainability is clearly contrary to their short-term interests. What’s more, their lobby is one of the most powerful in many world governments. Sheer financial wealth allows them to support politics and expect paybacks in return. The major 82 American corporations made political donations in 2000 totalling over US$34 million. Corporate lobbying influence in Brussels and Washington is massive.
In particular, many corporations push governments to ease environmental regulations. Large corporations stand to save millions from shortcuts in environmental care. The failure of the American government to sign the Kyoto treaty came as no surprise to those who know the petrol and car lobbies’ power in Washington. But while a corporation has few legal limits on what it can do, what are its moral responsibilities? In market terms, the answer is obvious. For a business to continue, it must have healthy consumers and plenty of resources to use, both of which come about through environmental sustainability. But does short-term greed override this long-term pragmatism?
Pollution is a major concern to environmentalists who worry that corporations are reluctant to cutback on greenhouse gas emissions in their industries. In addition to air and water pollution, noise pollution and waste production are major by-products of large industries, particularly toxic waste. To get around this, some corporations shift their operations to third world countries with less rigid environmental and employment laws.
Recognising these problems, social groups have pressured corporations into an agenda of social responsibility. Because of globalisation, many corporations work under the legislation of many different countries making legal restrictions very difficult, and so the power of the consumer is being called on to make these corporations act responsibly.
Corporations do not have a deliberate intent to harm the environment. Greed and laziness are behind their destructiveness. Some corporations are now starting to realise their moral obligations. Millions of dollars are being poured into promoting many companies’ green image, but these are often little more than exercises in public relations. In May 2002, the United Nations Environment Program released an extensive report saying that “only a small number of companies in each industry are actively integrating social and environmental factors into business decisions.”
What can you do?
Be an informed consumer. Most important of all is to reward those companies that are doing what they can. Use responsibleshopper.org which lists the success stories. Congratulate those businesses and let them know you have noticed.
Buy your food from local producers or from a co-op and help reduce the amount of fossil fuel used to transport food around the world. By purchasing organically grown food produced locally you will be supporting local farmers. When you purchase imported food you do not know if you have contributed to habitat destruction or over-farming, both of which are commonly practiced by corporations in developing countries. Boycott those who aren’t changing their ways. Write a letter or email the company and tell them why you are boycotting their products.
Investigate companies and be wary of their claims, especially when investing money. Socially Responsible Investing (SRI) and ethical fund management are now relatively easy to find. Money is invested by brokers into projects and companies that fulfil certain criteria to show that they are responsible.
If you are a shareholder, be sure to attend the annual general meeting, read your investment-related mail and keep track of resolutions that affect the environment. If you cannot attend the annual meeting, send someone else in your place to speak up on the issues that are important to you. You will need to give authority for the person to be your proxy. Express your views on resolutions that affect corporate, social and environmental performance. Write or email company management and communicate your concerns. Support shareholder campaigns for corporate reform. Request corporations disclose their voting records and make their decisions transparent. Encourage fund managers to vote for social and environmental resolutions. Be a share holder activist.
If the company you have investments with is unresponsive to your concerns and continues to harm the environment, consider changing to funds that better reflect your values. Let the fund's investor relations department know why you are withdrawing from their fund.
Do your banking with a community development bank or credit union. These institutions focus on funding low to medium size economic community developments.
Check out the websites of groups which monitor and judge corporations’ behaviour. Beware of groups that are not really independent but which are biased in favour of their corporate sponsors. Business and Ethics, for example has five major sponsors, all of whom appear in the top 20 of its most ethical business list.
Support Information for Action and other activist groups which aim to bring a change of thinking in the community about corporations and their impact on the environment and society. Also support organisations which are working with corporations to develop policies and practices which are environmentally and socially responsible. A list of these groups can be found in our database. They include corpwatch.com, ethicalcorp.com, mallenbaker.net, accalliance.asn.au, coopamerica.org and bitc.org.uk
Write a letter or email to the editor of your local newspaper; urge him/her to publish your concerns about ‘green washing’ and corporate responsibility.
Make corporate lobbying an election issue. Make politicians aware that you know that corporations’ votes counts more than yours does.
Links to following pages:
Lobbying and Political Donations
Search our database for the contact details of organizations that directly address Corporate Responsibility
Since the industrial revolution, productivity and growth have been the central purpose of business. As time, communications, travel and world population have all accelerated, businesses have got bigger by swallowing their competitors. Henry Ford’s factory - where massive productivity took precedence over any social or environmental issues - gave birth to the rise of the super corporations. Increasingly global, these corporations have become a part of everyday life for people throughout the world. Their growth has been so rapid that they have had little time to consider the environmental side effects of their activities.
In the 1970’s however, with the rise of social awareness, corporations became major targets of advocacy groups. With notorious incidents such as the Exxon Valdez oil disaster in Alaska and the Nike sweatshops debate, corporations began to realise that their obligations went beyond the accumulation of wealth.
In recent times buzzwords like corporate self-regulation, corporate responsibility and environmental sustainability have become common. Formerly notorious companies now spend millions on advertising how environmentally sound their practises have become. Earthday, however, warns that it is often a case of ‘greenwashing’ where corporations hide behind a pretence of cleanliness but have actually changed very little. It has named BP, Starbucks and Subaru as being amongst the worst offenders (www.thegreenlife.org).
Washington, Brussels, Ottawa and Canberra are all scenes of intense debate and political lobbying from different power groups. Individual, corporate, ideological and environmental groups all have offices and infrastructure in these capitals to try and influence the decision makers of the day. The point of a lobby group is to put forward the ideology of its backers and to ensure that legislation favourable to them is put into place.
While educators, environmental groups and other NGOs all participate, they can never dream of equalling corporations in sheer economic influence. Industries often pool their resources and set up Industry Associations to influence politicians and bureaucrats, and some of these Association have such a strong influence that they are easily able to alter individual legislation. Corporations spend so much money on political donations that once the time comes to govern they wait expectantly for the favour to be returned.
Lobbyists are generally either ex-politicians or people who are connected to politicians. They may be politicians who no longer have a seat, professionals such as lawyers with links to politicians and the public service or they may be friends or relatives of politicians. Old school networks play a role in connecting lobbyists to politicians in some countries such as the UK. Many politicians become lobbyists if they fail to get re-elected. If reselected by the party they may be re-elected to power again at the next election. Analogous to a revolving door, many politicians move between positions in government or opposition and high level lobbying positions in corporations. Problems of conflicting interest arise when politicians have a financial or personal interest in a particular company.
Ties have become so close between corporations and politicians that individuals frequently transfer between the two as their careers develop. Board members become politicians or are given lucrative diplomatic or government posts, while politicians can anticipate an easy retirement in the corporate sector. The most striking example of this is the current US Vice-President, Dick Cheney, who was CEO of Halliburton Oil which received contracts worth billions of dollars in Iraq. Despite being a figurehead in the government that awarded these uncontested contracts, he still holds a large interest in the company.
Thousands of companies and hundreds of corporations act both individually and as organised industry groups to wield substantial influence on governments. They vary in size and political power. The large corporations and cross-industry groups possess more memberships and greater financial muscle to employ more staff compared to the smaller companies.
Professional lobbyists generally monitor a specific piece of legislation through its developmental stages and know what is happening well before it reaches debate. They read discussion documents, papers from think-tanks and party groups, and talk to civil servants. They maintain files on politicians - their political beliefs, party commitments, constituency concerns and career aims. Further, they adjust their lobbying approach according to who supports the legislation and who opposes it.
In the first instant lobbyists will attempt to influence government by providing information. Senior policy makers regularly consult with members of the economically important industries. If this does not succeed, then they will employ more persuasive methods. Corporate lobby groups will use surveillance and intimidation to attain their policy objectives. They endeavour to form partnerships with the very institutions that are set up to monitor and police their activities. The ultimate lever is the withdrawal of campaign funding for a political party.
Corporations mostly use their influence to weaken, block or eliminate proposed public protection legislation. Occasionally they initiate legislation, and when they do, it is usually to dismantle existing protections or to promote and enact policies and regulations that benefit their bottom line - usually at the expense of the public good.
Corporate lobby groups also use ‘think tanks’ to pressure lawmakers. Think tanks are forums of supposed experts who generate reports on various issues and gain large publicity for it, resulting from their reputation. Think tanks are comprised of ex-politicians, academics and industry leaders. They are financed by corporations, individuals and NGOs who hope to give more credibility to their ideas. Both the left and right wings of politics are guilty of masquerading opinion as fact, in order to get governments to act in their favour. ExxonMobil, one of the world’s largest oil companies, helped fund a report by the British International Policy Network that claims that climate change has had a positive effect by increasing fish stocks in the North Atlantic Ocean.
Corporations promote their narrow interests and get away with serious environmental damage around the world because of their political influence. Corporate pressures continue daily. The setting of environmental regulations, import quotas, mining restrictions and competition laws all come under close inspection from corporate lobby groups. While environmental groups argue the opposite points, they have nowhere near the resources to influence policy makers.
The lobbying industry is massive. In the US alone, interest groups spend about US$2 billion a year on lobbying. Corporations are by far the major employer of the lobby industry, either acting independently but more often aligned with others in the same industry.
One of the major problems of capitalism is that it allows wealth and hence power to be consolidated in the hands of a few. In a democratic society everyone has an equal vote but not everyone has an equal opportunity of being heard or being able to influence his or her politicians. The corporations have too much wealth and power and, as a general rule, use that power to accumulate even more wealth and power.
The corporations argue that they should have greater input towards policy-making processes, since they are large taxpayers serving the interests of their shareholders, and responsible to their employees and customers.
It is in the nature of capitalism and corporations to fight for self-interest. The lobby goal is usually predictable, regardless of the industry type, as demonstrated by the following examples.
• The gun lobby in the US argues for the right of individuals to own guns, despite thousands of innocent people being killed each year.
• The financial services seek deregulation and looser controls.
• The utility companies lobby to secure large contracts and weaker pollution legislation.
• The mining companies lobby for the easing of environmental legislation and for increased mining quotas.
• The tobacco lobby argues for the right of individuals to smoke in public places, even when scientific evidence clearly indicates tobacco causes morbidity and mortality on a massive scale. They are fighting against legislation to hold them accountable for the harm caused by tobacco products.
• The oil industry campaigned to keep lead in petrol during the 1980s. More recently it has lobbied against the Kyoto Protocol and legislation to stop greenhouse gases causing climate change. It contributed millions of dollars towards the election campaigns of George Bush and was rewarded by being allowed to drill for oil in the pristine wilderness of Alaska.
• The building industry lobby argues for relaxation of land use regulations such as those relating to infrastructure and green belts, and for low interest rates.
• The agriculture lobby argues for a relaxation of pesticide and chemical fertiliser policies, which protect drinking water and wildlife. It argues for the promotion of genetically modified (GM) products and the blocking of GM labelling. It also argues for government subsidies even when this creates mountains of unwanted produce that gets dumped on developing countries struggling to develop their own agriculture.
• The plastics industry lobby argues for a relaxation of European legislation against PVC, which is a major source of dioxins and phthalates - both hormone-disrupting chemicals.
• The roads lobby argues against stricter emissions control, for fuel prices to be kept low, and for the building of more roads. In the UK it lobbied the Treasury not to cut the roads programme.
• The nuclear lobby argues that nuclear power plants should be built because they produce a lot of energy and their waste does not cause global warming. They underplay the incredibly long period that radioactive waste must be stored before it is safe and the related immense financial cost of that storage.
• The pharmaceutical industry lobby argues for privatised medical markets and against proposals to provide cheaper generic medicines to the poor in developing countries with illnesses such as AIDS. It opposes free national health care programs for all people.
Corporations gain political access through their political contributions. Corporate political donations are not always given with the simple goal of furthering their commercial interests. Sometimes the aim will be more generalised; supporting a particular ideology or a range of issues and policies, or winning favour with a particular party.
President George W. Bush's election campaigns were paid for by key industries - finance, real estate, communications, energy, health care, and insurance. In return for their support, Bush has consistently rewarded these industries with tax breaks, legislative favours and bestowed plum appointments on their executives.
Real estate developers are permitted to build on wetlands and other sensitive areas, electric and mining companies are allowed to continue emitting carbon dioxide, oil and gas exploration is given the go-ahead on public land including protected national parks, corporate executives are given top jobs in the US Interior Department, and the pharmaceutical industry receives the drug legislations it wants.
Donors who give more than $200,000 are called Rangers and donors who give more than $100,000 are called Pioneers. Together the Rangers and Pioneers raised US$60 million for George W. Bush’s 2004 election campaign. Businesses contributed nearly three quarters of all political donations, with finance, insurance and real estate companies contributing nearly a quarters of the donations. The remainder came from corporations involved in pharmaceuticals, communications, construction, agribusiness (especially tobacco), energy and natural resources, transportation and defence. The labour unions and single issue groups, like the National Rifle Association of America, were also large donors.
Although communication between the State and other sectors of society is necessary for good governance, corporations exert a disproportionate level of influence through their donations. Sometimes the leverage they exert borders on corruption. In some instances, corporations are drawn into “donation wars” where they have to compete with each other on their donations to political parties.
The laws regulating donations and the general political environment in which they are made varies between countries. In the US, donations are a more accepted part of the political process, while in the UK they are more strictly regulated, and in France they are banned. Hence the type and extent of lobbying will vary between countries
Companies should always maintain a clear policy on donations. Not all corporations make political donations and some have adopted company-wide bans on donations. In most cases, however, the policies and the activities of corporations are constrained solely by the laws which are in place for each country.
Not all corporations published information on their political contributions. Some corporations are so large and diverse that managers in one country are unaware of the company’s political donations in another country. Companies should declare their donation budgets, disclose the process of how they determine them and evaluate the amount of money they have donated to political parties.
Types of corporate lobbyists
Industrial associations such as the National Farmers Union (USA), the Minerals Council of Australia, the Association of Plastics Manufacturers in Europe.
These represent a particular industry or group within an industry. They lobby government and work in public relations, marketing and media liaisons. Senior executives of member companies, the directorate, make the decisions and meet with Ministers, whilst the secretariat perform the written and administrative tasks and meet regularly with civil servants and lower level government members.
Cross-industry groups such as the International Chamber of Commerce (ICC), European Round Table of Industrialists (ERT), CBI, Institute of Directors. These are mainly single-issue interest groups promoting privatisation, voluntary codes of conduct for corporations, economic globalisation and the removal of trade barriers.
In Europe they lobbied successfully for the single European market. They consistently oppose regulations protecting consumer rights and the environment, including Agenda 21 and Conventions on Climate Change.
'In-house' lobbyists such as Robert Walker of Wexler & Walker Public Policy Associates and Gerald Cassidy of Cassidy & Associates. Both of these are in Washington DC.
They are usually employees of individual companies. They act for large corporations or represent the interests of particular industries. Some lobbyists are former government officials possessing “inside information”. Some lobbyists can build coalitions of interests across a range of very different organisations and can help their clients communicate their message. In the US, Political Action Committees (PACs) are established with the goal of raising and spending money to elect and defeat political candidates. Some companies use PACs to hide their political donations.
According to the American Association of Political Consultants, there are over 1,000 operating in the USA.
These lobby for anyone who can afford to pay them. Their focus is election campaigns, i.e. helping to get candidates elected but they can also carry out lobbying tasks.
For example: Dick Cheney, US Vice-President, who retains shares in the Halliburton oil production and services company via trusts. Silvio Berlusconi, Prime Minister of Italy, who owns large media and construction companies.
These have a financial or personal interest in a particular company and are believed to have employed their political power to influence government legislation or policies in a way that would benefit their companies.
The International Chamber of Commerce (ICC) represents the international voice of business - mainly the multinational companies. It represents 7000 companies in over 130 countries.
The European Round Table of Industrialists (ERT) is a powerful lobby group representing the interests of 45 of the wealthiest businessmen in Europe - the chiefs of Europe's largest corporations, including ICI, Hoechst, BP, Shell, Volvo, Fiat, Unilever, Nestle, Carlsberg, BAT, Pilkington, Olivetti, Philips, and Siemens.
The Confederation of British Industry (CBI) is the ICC’s National Committee in the UK and represents British business as a whole. Its membership of 250,000 firms employs about half of Britain's workforce.
The National Farmers Union represents nearly 250,000 family-owned farms and ranches across the USA. The group lobbies the US Congress on many issues including trade, energy and the environment.
The Minerals Council of Australia lobbies the Australian government on behalf of companies engaged in mining, exploration and minerals processing. They address issues such as greater access to mineral resources, the environment and labour relations.
The Association of Plastics Manufacturers in Europe (APME) is the voice at the European Parliament for most plastics manufacturers based in the EU. They raise issues including recycling, emission control and packaging regulations.
Oil, gas and coal
With large corporations involved in every aspect of modern life, the scope for environmental damage is massive. One of the major concerns is resource exploitation. Oil, gas and mining are highly profitable for companies, and the more resources they extract from the earth, the more their profits grow. While national governments control the amount that can be taken, they earn large commissions from the process so are inevitably reluctant to curb extraction. This is often worse in third-world countries where oil revenues are fundamental to the economic health of the country. Bolivia, for example, has been the scene of fierce protests over the selling off of its oil and gas to foreign companies.
Non-renewable energy sources are given that name for a reason, and each gallon of oil pulled from the earth has taken millions of years to be produced. This issue is worsened by the burning of these fossil fuels which produces carbon dioxide and leads to air pollution. There has been a long reluctance amongst the main car and oil producers to explore alternative energy vehicles. While governments have promoted research into the possibilities, scientists have spoken about their frustrations in dealing with the main players. Although Shell set up a US$30mn fund to research alternative energy, this is an insignificant amount for a company with sales of US$135bn.
There is often a crossover between mineral deposits and biodiverse sites. In 1997, scientists working for a large oil company were found in Guatemala’s Maya Biosphere Reserve. Similarly, Exxon’s expansion of mining in Alaska is seen as an unnecessary risk in such a fragile and fertile environment.
Agriculture and fishing
Internationally controlled farming and fishing is also a point of conflict for environmentalists and corporations. While western countries tend to have strict quotas in place, many corporations use third world countries. McDonald’s was cited in a US government report for its practise of deforestation in the Amazon jungle. The unique ecosystem is carved up to make way for cattle which end up as hamburgers. Over exploitation leads to many thousands of square kilometres of previously farmable land becoming desert every year.
Commercial fishing is the scene of much debate at international trade conferences. If a national government sets its quota at an environmentally sustainable level, it comes under fire from fishing companies who point to their competitors’ freedoms. With an estimated 1 billion people around the world relying on fish as their primary source of protein, pressure on the world’s fish stocks is huge. Regulating this highly competitive, highly subsidised industry worldwide is a huge issue.
Despite noble efforts, it has been difficult to produce an enforceable world law on fishing, as states such as Norway and Japan cite their traditional ways as a reason to continue fishing endangered species. In Europe in particular there is a problem from pirate fishing vessels which enter foreign waters to fish.
Large corporations use their sheer size to dominate both the fishing and farming marketplace. As opposed to local farmers and co-operatives whose profit margins are minimal, multinational corporations don’t need to be efficient in their practices. Where a small businessman or farmer must use each resource to its maximum and care for it to increase his yield, corporations are dominated by a culture of exhausting and moving on. At the moment, 90% of all managed water is used to grow food. The overuse of fertiliser, trawlernets for fishing and overlogging are all perpetrated by large-scale organisations.
For companies churning out millions of products everyday, industrial waste is a huge issue. It is a huge issue to the company as it costs money to get rid of, and it is a huge issue for the environment as it is often toxic. Corporations often dump their waste on poor countries, paying them to do so and exploiting their lax environmental regulations. They dump waste in a way that would be illegal in wealthier countries.
In America, energy companies donated over US$4.8m to George Bush’s 2000 campaign and have seen the rewards come straight back. Members of the industry were appointed to the Environmental Protection Agency (EPA) which rules on all US environmental law. In August 2003, the EPA issued a new rule protecting large industries from fines and compliance costs.
Noise and air pollution are also costly measures which can be overlooked by large corporations. Depending on their relations with governments of the day, some corporations can get away with environmental degradation. Under the Bush Presidency, public prosecution of polluting companies has dropped by around 75%.
The promotion of a consumer/throwaway culture by major retailers and producers also leads to large amounts of waste production. Landfill is becoming an issue in many countries as space to put the waste becomes harder to find. Most of the worlds’ popular brands are owned by large multinational companies like Unilever, Procter and Gamble and Nestle who continue to excessively package their products and overproduce items. A positive has seen many European supermarkets charge customers for plastic bags to encourage recycling.
Destruction of local habitats and cultures
When corporations move their manufacturing to a third world country, they do it to save money. Lower wages and taxes are the principal incentive, but weak environmental laws can help. In Zambia in 2000, a law was passed which made a new mining venture immune from prosecution if it polluted the area. South East Asia is a popular place for the textile industry which set up factories to churn out shoes, shirts and shorts at low cost. The host governments are happy to have the foreign investment and so turn a blind eye to environmental damage.
The key benefit for corporations to move their industry to third world countries is lower wages. Local workers are not protected by the same labour laws as those in the developed world and are forced into working epic hours for minimum wage. Very few companies who do this have shown any commitment to bettering the lives of its workers and their community. Managers are inevitably brought in from the developed world and the existence of the factory encourages local children to enter the workforce at the expense of their education.
The positive news for the environment has almost universally happened in the developed world. Wealth and lifestyle make environmental protection a lot easier for people from the middle class. While recycling, ecotourism and general ecological awareness are all second nature for people from the developed world, the sheer struggle to survive in the developing world makes it more difficult for poor people to consider the environment. In short, the long term health of our planet has become a luxury for the middle class while the world’s poor are marginalised into forgetting the environment.
A fairer distribution of wealth will solve this. If the developing world’s standard of living can be brought to a level of comfort (without the culture of consumerism) then both money and time will be freed up to start cleaning their environment. The push for globalism, however, is having the opposite effect. With trade and agricultural subsidies, and corporations exploiting poor labour laws, the world’s poor continue to find themselves ironically too involved in staying alive to worry about their environment.
Important decisions affecting people and the environment should be based on the public interest, rather than maximizing corporate profits. The accumulation of powerful corporate self-interests is not the same as the common good. In fact it is usually the opposite.
Corporations need to operate in an environmentally sustainable way. It is in their long term interests to ensure the environment is healthy. Governments need to enforce stricter legislation and refuse to be swayed by corporate lobbying. Furthermore, corporations need to change from within. Companies operating in foreign countries must prove they are doing so in a responsible way before they are allowed to trade their products in the developed world.
Also, society should apply the “precautionary principle,” which puts the burden of proof on corporations to demonstrate that their practices and products will not harm our health or the environment.
With the financial might of corporations, this is not a difficult task for them. Corporations need to realise the power they have, both for good and bad, and act on that knowledge. They need to fund the research and development of alternative energy sources, to conduct sustainable farming, agricultural and fishing practices, and not take shortcuts in regards to pollution and waste.
Corporate social and environmental responsibility can be regulated and enforced. However, regulations must apply globally, otherwise corporations will evade regulations by relocating their operations to countries with weaker laws. Therefore, multinational corporations should be subject to global enforceable standards which protect people and the environment.
Standards of corporate conduct should be high and independent from corporate influence. Voluntary codes of corporate behaviour are often designed by the corporations to serve public relations purposes or to avoid independent regulation. Developing countries could be compensated, for a limited period to enable them to meet these higher standards without losing their economic competitiveness.
More specifically, corporations need to
• change from short-term profit-making to long-term sustainability.
• realise that a fairer distribution of wealth will help to save the environment.
We must end financial contributions by corporations to political candidates and parties worldwide. Funding of political parties should be provided through public funds on a fair and equitable basis.
Governments should make both corporate lobbying and corporate funding of political campaigns and parties illegal. Until this occurs, our democratic systems are open to manipulation by the groups with the most money and power, namely the multinational corporations. Policymakers and regulators must be free to protect people and the environment without intimidations from corporate lobbyists. The agenda of business should be business - not politics.
The activities of corporations should be more transparent. Corporations must fully and publicly disclose all lobbying activities around the world, including through trade associations and public relations campaigns. Corporations must respect the independent authority of government departments. It should be illegal for corporations to buy access to local, national or international public officials.
Corporations must respect international institutions, agreements and policies that protect people and the environment. Corporations frequently utilise international trade agreements and institutions such as the International Monetary Fund and World Trade Organization, for private gain.
We need greater regulation of corporate lobbying. Corporations must reveal on which issues they are lobbying, whom they have lobbied and how much they have spent. At the same time, governments must name those corporate lobbyists from whom they have received information or advice.
Governments could control the influence of corporations in other ways by
• introducing laws that limit the life of corporations; i.e. corporations are established for a set period of time, after which they are subject to a review.
• preventing politicians from becoming company directors for a period of time, like three years, after they have left politics.
• preventing company board members from occupying important government positions where they are able to influence policy.
• introducing laws that limit the size of corporations.
A well functioning economy depends on healthy competition. If the number of corporations in a given market is permitted to drop, then competition ceases and a monopoly is created. This has several repercussions, including a reduction in choice for the consumer, an increase of powers in the hands of fewer corporations, excessive influence, possible abuse of power, and undue pressure by large corporations on smaller suppliers in developed and developing countries.
In general, larger companies pay less tax. However, small and medium-sized businesses should have to pay less tax for several reasons. They employ more people, use less energy in transport, and perform an important social role in the community by providing services locally. The revenues raised from taxing larger companies should be used to support small-scale co-operatives and fledgling industries.
Offshore tax havens, trust funds and other loopholes for avoiding tax should be closed. Corporation managers should not be able to set up other companies that deliberately incur losses to offset their profits and which pay their children as if they are employees. Governments should ensure that multimillionaire managers are not able to rort the system with extremely low taxable personal incomes. Corporations and individuals should not be able to avoid their fiscal responsibilities. Countries that operate as tax havens could be compensated, for a limited period, for the revenue they would lose as a result of the abolition of their tax haven status.
Governments should give support to organisations which help corporations to develop policies and practices which are environmentally and socially responsible. These organisations include Business for Social Responsibility, The Centre for Social Markets, The Ecos Corporation and The International Institute for Sustainable Development.
As individuals we can support activist groups which aim to bring a change of thinking in the community about corporations and their impact on the environment and society. These groups include Essential Action, Program on Corporations, Law and Democracy, Reclaim Democracy, Corporate Accountability International, Corporate Europe Observatory, Corporate Watch and The Polaris Institute.
To change the way corporations behave is a massive undertaking which could involve legislative changes, as well as finding new ways to structure western economies. It is highly unlikely that governments will act without pressure from the public, due to the strong the connection between government and business.
Apart from those listed above, these are some examples of corporations who have a bad environmental record.
General Motors CEO Rick Wagoner stated in June 2001 that the company would oppose any efforts to increase fuel-efficiency standards in the U.S.
Ford cars have the lowest fuel efficiency of all major brands.
Shell Petroleum has run a campaign for years that shows its support for a Marine Sanctuary in Mexico. They have run double page ads in National Geographic Magazine, on TV and in newspapers - an advertising budget of many millions of dollars. Shell donates US$5000 a year to the sanctuary.
Many corporations have made steps to improve their practises. Here are some examples of what some corporations have done.
Local growers – shopping at a co-op allows you to gain an accurate picture of where your food has come from. When corporations become involved, misleading information and unsustainable farming comes into play.
Kraft foods, the world’s largest seller of food recently announced plans to double its purchase of ethical coffee to 6,000 tonnes in 2005. Kraft, and other food companies are looking into launching an ethical brand of their products. On the other hand, Kraft uses genetically modified corn and other food in many of its products.
Volkswagen has been commended for its efforts to reduce greenhouse gas emissions, as well as its voluntary recall of over 34 000 cars which emitted high levels of pollutants. At the same time, they have been cited for using overseas plants in Mexico
BP is one company that receives a lot of press on its social responsibility agenda. This is probably because it is one of the few companies that has made a real commitment to change, mainly due to its CEO John Browne. Whether that commitment to change is real or not is open to debate, and while it argues that its promotion of natural gas and an open business practice, others fume that a petrol company marketing itself as environmentally friendly is like a murderer lecturing children on playground behaviour. In particular however, BP must be commended for announcing that, as of 2002, it will no longer make any political donations anywhere in the world.
Have a question for Rowland? Ask or leave a comment below!