TNC’s can sometimes play off national governments against each other, however, the idea of corporate social responsibility was, for a long time, developed by firms themselves as something that they did to fulfil the certain obligations to society, OR is this a strategy to try and attract attention away dubious behaviour? Giant firms have moral initiative grasped by enterprises that devise their own agendas of corporate social responsibility. However it has been argued that this agenda is actually a problematic manifestation of corporate power (Crouch 2011).
Corporate Social Responsibility is different from charitable activities or the establishment of charitable trusts and foundations. These actions are usually governed by a distinct body, regulating the existence of a particular form of publicly orientated activity that is neither part of the state nor profit-seeking, the strategy is to pursue public policy goals (Crouch 2011). It is interesting how some authors have developed the idea of ‘corporate citizenship’, however, Crane et al., in their 2008 book “corporations and citizenship”, mentioned how corporations cannot be citizens as in democracies as this quality belongs solely to the electorate. The idea remains to be problematic as citizens have no formal capacity to access the corporation as they are only the rights of shareholders yet, these giant firms have a say in policy making in governments.
Externalities is a market failure that has to be highlighted when talking about corporate social responsibility. Environmental damage is a negative externality that is the most important and by far the most obvious in today’s global political economy. Pollution imposes costs on many people and companies operate more efficiently because of this as they do not have to take into account this cost. To control the pollution it will cost the firm money, since firms do not benefit, environmental damage and pollution remains to be the bottom of the list.
The Guardian newspaper article, highlights the way in which a relatively small number of large companies are at the heart of the current carbon-intensive growth model and how this is a fundamental challenge. Goldenberg found that companies’ operations spanned the globe, with company headquarters in 43 different countries. ChevronTexaco was the leading emitter among investor-owned companies, causing 3.5% of greenhouse gas emissions to date, with Exxon not far behind at 3.2%. In third place, BP caused 2.5% of global emissions to date. And the numbers are predicted to increase.
The fact that these companies are not obligated to do anything about their impact on the world demonstrates how urgent this issue is. Adding to this, companies in the US are not required by law to disclose their energy use or carbon emissions (Goldenberg, 2013). This itself poses a problem in the global political economy as letting these giant firms not disclose this type of information suggests that they’re almost getting away with causing environmental damage and not being held accountable for their actions. These companies are going to kill us all and the world will end (too dramatic? But at least you get the point.)
For Giant firms, corporate social responsibility may also help them improve consumer trust. It is difficult for customers to conclude whether or not the firms are honest. It has been argued that firms find it rational to have short term costs of reducing negative externalities from their activities. This could mean using claims and self-advertisement without actually changing behaviour as reputation for good behaviour and not good behaviour itself is what firms need and rely on. Obviously it would be cheaper to pursue reputation alone. Firms may treat social responsibility as a PR exercise. However for them it will be hard to just rely on reputation alone e.g. Greenpeace report puts Apple at bottom of green league table due to reliance on coal at data centres (Carus, F. 2011). NGO’s such as, Green peace can help put pressure on Giant firms. Unfortunately how many companies will actually do anything about it?
By Fahima Hamid
Crouch, C. (2011). The strange non-death of neoliberalism. Cambridge, UK: Polity Press.
Goldenberg, S. (2013). Just 90 companies caused two-thirds of man-made global warming emissions. [online] the Guardian. Available at: http://www.theguardian.com/environment/2013/nov/20/90-companies-man-made-global-warming-emissions-climate-change
Crane, A., Matten, D. and Moon, J. (2008). Corporations and citizenship. Cambridge, UK: Cambridge University Press.
Carus, F. (2011). Apple named ‘least green’ tech company. [online] the Guardian. Available at: http://www.theguardian.com/environment/2011/apr/21/apple-least-green-tech-company