As part of our special coverage of the Johannesburg Earth Summit, CorpWatch is running three excerpts from the new book, Earthsummit.biz: The Corporate Takeover of Sustainable Development written by CorpWatch staffers Kenny Bruno and Joshua Karliner and co-published with Food First Books. The book has just rolled off the press, but won't be in bookstores until late fall. However, you can order it anytime from CorpWatch.
This third and final article is excerpted from Chapter 4 "Corporate Accountability in the 21st Century" of Earthsummit.biz: the Corporate Takeover of Sustainable Development (Food First Books.)
In intergovernmental environmental negotiations since Rio, it has been the United States, Canada and Australia that have most often thwarted effective multilateral agreements. The backdrop to this problem is the ongoing hold that corporations have on U.S. environmental policymaking and the related prioritization by the U.S. and its closest allies of the globalization project. A great deal of the efforts by citizen movements that went into Rio was undermined by the rise of corporate globalization. The U.N. was a marginal institution for the globalization process, which is no doubt where the U.S. preferred to keep it.
When the U.S. wing of the anti-corporate globalization movement burst on the scene in Seattle in late 1999, the most publicized elements were organized labor and the militant, mostly young, street blockaders. However, there was another faction critical of the WTO in Seattle, one that included internationally oriented NGOs, such as the environmental and developmental groups that had attended Rio with such high hopes in 1992.
This faction included a few clairvoyant critics, such as Indian activist and author Vandana Shiva, Martin Khor of the Malaysia-based Third World Network and die-hard consumer advocate Ralph Nader, who had essentially predicted the showdown over corporate globalization as early as Rio and had helped frame much of the critique of the WTO and other trade accords.
These groups were an important part of the mix in subsequent demonstrations in Washington, Prague, Quebec, Genoa and Porto Alegre. Their support for strong governmental and intergovernmental regulation of corporations was, in many cases, overshadowed by a more general anti-corporate message, including the anti-state views of anarchists.
A great deal of the mainstream media focused on the diversity of the movement, frequently ridiculing it for variations in policy among its various wings. For example, many protestors in Seattle advocated for environmental and labor side agreements to be part of the WTO, while others felt these agreements should be kept out of the WTO.
The latter group believed environmental and labor standards should be housed in U.N.-brokered multilateral agreements, with which trade and investment rules would have to comply. The spirit of both groups' policies is similar: a higher priority for labor and environmental protections and a lower one for trade and investment rules; the immediate policy recommendations vary.
For all the ideological diversity in what is known as the Seattle, or anti-corporate globalization, movement, virtually all wings agree on one fundamental thing: Corporations have too much power. The corollary belief is that we desperately need better corporate accountability mechanisms-greater democratic control over corporations-if we are ever going to get the world on a path of basic fairness, sustainability and democracy.
The U.N. must embrace corporate accountability if it is to maintain widespread support of citizen movements. The U.N. must advocate for international regulation of corporate behavior in the environmental, human rights and labor rights realms if it is going to be truly relevant in the age of globalization-if it is going to be more than a baby brother to the WTO. However, such an approach would put the U.N. at odds with its most powerful member states and governments, such as the U.S., which have already clearly demonstrated their propensity for economic blackmail when they disagree with the direction the U.N. is taking.
Corporations acknowledge that corporate responsibility is a tactic aimed at avoiding legislation and regulation of corporate behavior.
This conundrum was in full view in the lead-up to Johannesburg, where the global justice movement remained in limbo. Some wanted to protest the U.N., some to support the governments, some to protest only industry's role. Many were hoping for a more effective, democratic and powerful U.N., but were unable to throw their weight behind any institution so aligned with the corporate agenda.
Accountability vs. Responsibility
There is a great deal of confusion around the terms "corporate responsibility" and "corporate accountability." Corporate responsibility refers to voluntary measures for environmentally and socially beneficial behavior, while corporate accountability refers to holding companies to societal norms or having them face consequences.
Examples of corporate responsibility would include a company eliminating child labor, improving working conditions or reducing toxic waste emissions on its own. The motivation for the new behavior might be cost savings, improved reputation or simply that the managers thought it the ethical thing to do. Commonly, corporate responsibility advocates emphasize the "business argument," meaning that corporate responsibility is also good for the bottom line. The financial benefit can be from savings on direct costs, avoiding bad publicity and boycotts or finding a niche market for a product perceived as socially beneficial by a sufficient number of customers.
A major component of the corporate responsibility approach -- one which has clearly manifested itself at both Earth Summits as well as in Kofi Annan's treatment of the issue -- is that of promoting dialogue between corporations and activist groups. But while this is often a good PR strategy for a company, its results in terms of truly changing corporate behavior are questionable.
As Petroleum Intelligence Weekly observes, "both Big Oil and the NGOs now talk in terms of dialogue rather than confrontation, but what has it achieved? Mostly, oil companies now recognize the need to improve communication and consultation-hence the mountain of material now produced on social and environmental performance. But what it hasn't done is lead to concrete changes in company policy."
Corporate responsibility is the approach advocated by the World Business Council for Sustainable Development, the International Chamber of Commerce, and Business Action for Sustainable Development and the Global Compact. Yet it is important to underscore that corporations themselves regularly acknowledge that promotion of corporate responsibility in environment, human rights, poverty alleviation and community service is, at least in part, a tactic aimed at avoiding accountability measures-that is, legislation and regulation of corporate behavior.
Examples of corporate accountability include international treaties, transnational lawsuits, national legislation, personal liability and consumer boycotts and campaigns.
An example of corporate accountability would be if a company causing harm or breaking the law is sued and forced to pay a fine or forced to change the illegal behavior. Another example of accountability is the requirement of reporting toxic emissions. Under U.S. law, for example, companies are required literally to "account" for their emissions. A third example would be a group of corporations, such as the manufacturers of ozone-depleting chemicals like CFCs or methyl bromide, being forced by an international U.N.-brokered accord to phase out these harmful chemicals.
A fourth example is when a company is forced to alter its behavior or pushed out of a certain line of business by a consumer or investment boycott. In this last example, the accountability is not to the government, but to consumers and investors. The line between "responsibility" (the company chooses to do the right thing) and "accountability" (the company is forced to do the right thing because it will lose money if it does not) is slightly blurred in this last case, but the essential difference is still clear: the company is being held accountable for its actions.
Often, the very same corporations promoting themselves as responsible are actively working to prevent measures for corporate accountability, such as international treaties and conventions, transnational lawsuits, national legislation, personal liability and so on. Companies lobbying against and evading accountability should not be considered "responsible." Corporate pledges of responsibility to communities, governments or the United Nations must not be taken at face value, but rather monitored.
Toward Global Accountability
The essence of the global justice movement consists of values that demand that the current corporate-globalization paradigm, which prioritizes corporate profit maximization over human rights, labor rights and environmental rights, be turned on its head.This core belief is wholly consistent with the charter and purpose of the United Nations.
Another central belief of the Seattle movement is that corporations have gained so much power in the realms of finance, culture and politics that democracy itself is under attack. The U.N. would also like to bring business in line with universal values; however, it has little leverage to do so, as its most powerful member states have chosen to give more power to the WTO. Given this dilemma, the U.N. has decided to try to persuade and cajole business into its orbit.
So, we find ourselves where we are today; with Earth Summit documents that emphasize corporate responsibility measures, rather than a binding legal framework for corporate accountability. In fact, during the negotiations leading up to Johannesburg, corporate responsibility and accountability were conflated in draft documents. A Friends of the Earth proposal for a Corporate Accountability Convention was deemed a "terrible idea" by a U.S. State Department official and never made it to the table, though watered down references to corporate accountability appeared in, disappeared from and reappeared in Johannesburg text drafts.
At the same time, forces within the United Nations are sympathetic to calls for greater corporate accountability. Powerful social forces-forces that are gathering strength again following a pause after September 11, 2001, and in the wake of the collapse of the Enron Corporation (and other corporate scandals)-will bring pressure on the member states and on the U.N. agencies to take the need for corporate accountability more seriously in the near future.
The U.N. and Global Corporate Accountability
Some international corporate accountability initiatives don't necessarily define themselves as such; rather they focus on forging international treaties, such as the ones on the ozone layer, tobacco, persistent organic pollutants, biodiversity and climate change. While corporations and their industry associations continue to lobby aggressively to weaken international agreements, these key mechanisms can be used to hold transnational corporations accountable on a global scale. These U.N.-brokered agreements are key battlefields in the struggle for global corporate accountability.
A Corporate Accountability Convention in turn, might transform the globalization dynamic from a corporate-driven one, to one driven by "we the peoples."
International treaties and conventions are created by governments. Because corporations are at the root of the problems they address, these accords-despite weak enforcement mechanisms as compared to institutions such as the WTO-can provide binding frameworks for empowering governments to subordinate transnational corporations to universal values such as environmental rights. The more successful of these efforts tend to combine local, national and global organization to create pressure for strong international rules.
Within the U.N. system, other structures and important individuals can be allies in the movement for corporate accountability. One of these structures is the Sub-Commission on the Promotion and Protection of Human Rights, composed of twenty-six independent members and the main subsidiary body of the U.N. Commission on Human Rights.
In the year 2000, the Sub-Commission issued a report looking at globalization through the prism of human rights, calling the WTO a "nightmare" for developing countries and recommending that the trade body be brought under the U.N.'s purview. In contrast to the Secretary General's belief that the multilateral trade regime is the success story of the century, the report calls for a "radical review of the whole system of trade liberalization."
The Sub-Commission has a Working Group on transnational corporations and human rights. This Working Group decided at its 1999 session to draft a Code of Conduct on corporations and human rights. The Code was approved for further development at the 2000 and 2001 meetings. The document made it clear that the Code might eventually be viewed as legally binding and that provisions for monitoring and compliance would be integrated into the Code.
Unfortunately, but predictably, the U.S. opposes this foray into the topic of human rights and corporations, and has called on the U.N. to eliminate the Sub-Commission entirely, backing proposals that would drastically curtail its capacity. Despite the long-shot odds against it, and despite its relative isolation on these issues in the constellation of U.N. agencies and commissions, the Sub-Commission provides a beacon of hope for continuing to build an approach that specifically aims to hold corporations accountable.
A Framework Convention on Corporate Accountability
In the preparatory meetings for Earth Summit II, the environmental group Friends of the Earth International proposed a Framework Convention on Corporate Accountability. Though it received scant support from governments, it lays out a vision for achieving a measure of democratic control over super powerful global corporations at the international level. The Convention proposal contains the following elements:
Corporate reporting requirements on environmental and social impacts. Prior consultation with affected communities, including environmental impact assessments and access to information
Extended liability to directors for corporate breaches of environmental and social laws; corporate liability for breaches of international laws or agreements
Rights of redress for citizens, including access for affected people anywhere in the world to pursue litigation when corporations are listed, a provision for legal challenge to company decisions by stakeholders, and a legal aid mechanism to provide public funds to support such challenges
Community rights to resources, including indigenous people's rights over common property, such as forest, fisheries and minerals
Veto rights over developmental projects and against displacement; a right to compensation for resources expropriated by corporations
Sanctions against companies breaching these duties, for example, suspending stock exchange listing, fines and (in extreme cases) de-chartering or withdrawal of limited liability status
What if the Third Earth Summit in 2012 shed its business-friendly focus and made corporate accountability for the environment its central theme? What if U.N. agencies were given the mandate to figure out corporate accountability mechanisms, instead of forging flimsy partnerships with the private sector?
What if U.N. Secretary General Kofi Annan, in his second and last term, were to put his prestige and influence behind an initiative such as an accountability convention-one that goes beyond the minor ambitions of the "learning forums," "best practices case studies" and "participatory platforms" that make up the Global Compact?
The cynical answer is "he would lose his job." But the answer may well be that if the Secretary General of the United Nation led the world in creating such a global accord, we might actually make some significant steps to flipping the dominant paradigm on its head and subordinating the corporate drive for profits to the imperatives of labor, environmental and human rights. This, in turn, might transform the globalization dynamic from a corporate-driven one, to one driven by "we the peoples."
Kenny Bruno is cordinates the Corporate-Free UN Campaign and co-authored "Greenwash:1310The Reality Behind Corporate Environmentalism."
1310CorpWatch Executive Director, Joshua Karliner, is author of "The Corporate Planet."