Corporate accountability: battlefield or graveyard?

Yet another buzzword will reverberate from this year’s World Summit on Sustainable Development corridors — “corporate accountability”.

Environmental activists are adamant in demanding for an international and legally binding framework, to settle once and for all, corporate accountability and liability. On the other side, multinational corporations and many government representatives will attempt to dilute the framework, stagnating it to an unregulated, non-binding and voluntary area.

Social and environmental activists are increasingly concerned of the growing power and influence of multinational corporations around the world. This has manifested in various forms and levels of resistance including the much-quoted Seattle and Genoa protests.

Calls for clear, enforceable guidelines on this particular section of global economy come after witnessing decades of social and environmental devastation ranging from the accelerated clearing in the last pockets of tropical forests, the escalating dispossession of indigenous peoples from native lands and the effects of global warming.

What this particular framework of ‘corporate accountability’ provides for is the institution, on an international scale, of concepts and legal obligations of corporations, such as rights of citizens and communities, responsibilities of corporations with regard to social and environmental issues and regulations showcasing best practices. (1)

In fact, some advocacy groups are drawing parallels with existing international conventions and standards, such as those existing in the realm of international human rights.

Self-regulation

The lobby from multinational corporations and governments to make these standards non-binding, stems from the age-old argument that capital can self-regulate. Governments have also thrown their weight behind corporations, evidenced with their reluctance to legislate or to enforce existing regulations.

However there have been too few, if not no outstanding examples of successful voluntary actions. The United Nation’s Research Institute for Social Development (UNRISD) published a report on voluntary environmental efforts by corporations. The conclusion was that they “often result in ‘non-compliance, double standards, inadequate targets or standards, or green-washing.” (2) The report also said that the corporations created, "[T]he illusion of more profound change.” (3)

Hence, unless corporations are probed with the ‘big stick’ of social accountability, we will see negligible improvements in social and environmental spheres.

In Malaysia, the debate for corporate accountability must cover both local and multinational corporations. The challenge for the government to prove its mettle remains, 10 years on after the United Nations Conference on Environment and Development (UNCED).

A glaring example is the state of rivers in Malaysia. Last year, the Department of Environment (DOE) admitted both reluctance and incapacity of the government to penalise companies dumping toxic effluence into rivers. This was premised on the assertion that the guilty companies contributed to the national economy! (4)

The water crisis in Klang Valley in 1998 could have been averted if only rivers and catchment areas were maintained in the first place. The myriad of myths, in part propagated by unscrupulous dam builders and in part by the Selangor state government, only succeeded in diverting attention from the source of the problem, i.e. severe pollution of rivers and waterways caused by companies dumping toxic wastes.

Social and environmental groups may lose the battle for corporate accountability in proceeding days of the World Summit on Sustainable Development simply because the battle is fought within the confines of the market framework. This strategy of attempting defects ‘patch-up’ of capital by incorporating social and environmental accountability should instead be evaluated. The raison d’être of capital, of profit maximisation for stock holders, is often inconsistent with that of social and environmental needs.

Endnotes:

1. See ‘Towards binding corporate accountability”, Friends of the Earth International, May 2002. Available at http://www.foei.org
2. See http://www.unrisd.org
3. Ibid.
4. “DOE’s inability to check river pollution criticised”, The Sun, May 25, 2001 and "DOE Splashing around while river drowns", Malaysiakini.com. June 14, 2001.

(First published in Malaysiakini.com. Published in New Voices for Development, ed. Wong, Elizabeth, Suaram Komunikasi, Kuala Lumpur, 2002.)

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