It is a commonplace to state the all-pervasiveness of globalisation in modern times. Corporations have become multinational. The headquarters of a corporation may be registered in one country, the manufacture of the components of the product that it sells may be in another, the assembly of the product in yet another. Finance capital is mobile as well. Investment knows no boundaries and a corporation in country A financing development in country B may deposit its profits in country C because of the latter’s low rates of taxation.
The magnitude of these transactions dwarf the budgets of many countries where these corporations/businesses operate. It is clear that in many countries the power of the multinational corporation is greater than that of their governments. There is no question that in some cases, this state of affairs is beneficial to the countries that host the presence of the corporations. However, some cases, the activities of the corporation can lead to a variety of abuses, most often related to the welfare of the workers involved in manufacturing, but also in agriculture where agribusiness can lay waste to vast tracts of land and dispossesses traditional communities, in mining which may cause irreparable harm to the environment and in real estate developments.
In some cases, the governments’ hands are bound. The perception that the benefits to the governmental economic bottom line outweigh the harm done to its citizens, lead governments to ignore abuses committed by corporations. Additionally, a government’s economic bottom line can overlap with the personal commercial interest of senior state officials, who employ the state as a device for personal enrichment and rewarding clients.
Corporations with a paramount interest in maximizing financial benefits to their shareholders and to the their CEOs, may justify practices to negatively affect the local population by their loyalty to these. The situation enables activists in the countries where they operate and where they are headquartered to expose abuses caused by their policies and practices. And the shareholders – and indeed the companies themselves – can be uncomfortable with this, particularly since the exposure may even affect their bottom lines. So even where companies operate where governments are little concerned about the human rights of their citizens, companies might be vulnerable to international criticism.
In response, many multinational and domestic companies have developed codes of conduct and have stated policies on corporate social responsibilities. The issue here is that all of these are voluntary, that there are no normative standards, no accountability mechanisms, and no avenue for verification. This is not to say that some companies are not applying their social responsibility policies. But for some CSR can be used to boost the image of the company with little or no impact on its practices. Some companies use CSR to whitewash the human rights abuses so they actually don’t have to change their practices (including abuse) – they merely have to create a socially responsible reputation. We are all familiar with the cases of sportswear manufacturers with highly developed CSR policies that do not apply in the factories sub-contracted in poorer countries.
A mother and child from the Paga Hill community.