It’s Time to Control Them

They are ungovernable and wild and they do what they want.

That’s why it’s time to find a way to control Transnational Companies. Therefore, the Forum for a New World Governance wants to generate “the breakthroughs and changes necessary for building a new, fairer and more sustainable world governance.”The Forum for a new World Governance report was published in December last year and embodies 46 proposals on how to regulate transnational companies. These propositions answer the “difficulties states have in agreeing to a common set of rules reflecting the scale of the various factors that have to be reconciled if we are to prevent and repair damage to the environment and violations to basic rights.”

Let’s take the example of climate and the environment. “The current state of the law makes it impossible to effectively gauge the social and environmental impact of TNC activities.” While corporations continue to do as they please and plunder whatever there is left on the planet, political bodies have talks without any outcomes. It is time for real global governance – or in the words of the forum, “the collective management of the planet.

But why do we need global governance, not local? Because the problems we are facing are global too. Problems don’t know any borders and nor does climate. Unfortunately, the only ones which are successfully playing the global game are transnational companies. They are playing it so well that in today TNCs are influencing states more than vice versa. The rule of law is out of order.

That is why global governance should first and foremost focus on controlling these borderless companies who so far enjoy the principles of legal autonomy and of limited responsibility.

Therefore, the report starts with the following words: “At a time when the future of our societies is cloaked in doubt, redefining the role of transnational companies within the international community has become a central issue.”

You might think now, what about Corporate Social Responsibility? The thing is CSR is fully voluntary and non-binding. Yes, “they are producing results, as demonstrated by the increasing importance placed by investors on non-financial performance. Nevertheless, the most flagrant violations (water pollution, unprotected workers, illegal wood imports, etc.) and the less overt (tax fraud, collusion, non- compliant labelling, false advertising, etc.) remain generally unpunished.” There is further a lack of compensation for victims, think about cases like Bhopal.

Now, what is the solution. Given the 46 different propositions, we can imagine it to be rather complicated. I will give you a couple of examples:

  • Incorporate environmental and social obligations in the very definition of articles of association
  • Put in place a general requirement that sustainable development be taken into account in every decision taken by companies and set in place a regime for directors’ civil and criminal responsibility for non-respect of their obligation to adhere to the overall standard of behaviour
  • Increase employee responsibility towards the impact their job has in terms of sustainable development
  • Provide stakeholders concerned with defending the public interest (public health, protection of the environment, social rights, etc.) and all other victims of a wrong with guaranteed access to busines- ses’ social and environmental information
  • Extend the “misleading advertising” offence to information on the ethical or environmental nature of products

For more ideas on how to control and regulate TNCs and create a functioning global governance body, read the full report.

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4 thoughts on “It’s Time to Control Them

  1. if we talk about the CSR, we have to mention the Patagonia company. It has done a great job to take their social responsibilities. They not only support thousands of NGOs, sharing experiences with other companies, but also their environment protection spirits penetrate every employees’ minds. It;s a good case that most of the companies lack of CRS can learn from.
    In addition, the problem for the governance, especially in global scale, is that the principles is one thing and putting these principles into practise is another thing. Some countries, such as my country, China. The strict environmental standards imposed by the central government could not really be achieved in local scale since the high corruption and low efficiency exists among most of local government.

    • I guess CSR is not really enough even if as you mention some companies do it very well… still CSR remains on a voluntary basis. What we need is something which goes beyond it…
      As far as China is concerned, recent news can make us feel hopeful that things will eventually turn out better than they are right now … even if we don’t believe in the Kuznet curve :)

  2. It’s definitely easier said than done, though that doesn’t discount the importance to have global governance in the least bit. Hopefully, those companies who have no semblance of corporate responsibility will be forced in time to adhere to some form of governance that follows (at least) some of the propositions you listed above which could really enhance corporate sustainability and safe business practices that meet social and civil obligations.

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