Washington, D.C.----Transnational
corporations are now so numerous and in some cases so well capitalized
that their global influence now rivals and in many cases exceeds that of
governments, according to research published by the Worldwatch
Institute.
Around 80,000
transnational corporations (TNCs) operate worldwide, a mere 147 of which
control 40 percent of the total value of all these corporations' value.
Any vision of a sustainable future must include full recognition of the
role that TNCs play in shaping the planet's human and ecological
destiny, authors argue in the Worldwatch Institute's State of the World 2012: Moving Toward Sustainable Prosperity.
Because corporations
operate with a primary purpose of increasing value for their
shareholders, they have often tended to de-prioritize other fundamental
concerns. In the worst instances, the pursuit of profit by corporations
worldwide has led to neglect for their employees, lack of accountability
in their societies, and indifference in their contribution to negative
environmental effects. These failures have come under particular
scrutiny since the beginning of the financial crisis in 2008 and the
realization that financial corporations deemed "too big to fail" pose a
serious threat for the economy.
In their chapter, "Reinventing the Corporation," in State of the World 2012, Allen White and Monica Baraldi of the Tellus Institute outline four areas of needed transformation for the modern corporation:
Purpose.
A company is not required to have a statement of purpose in countries
that have common law traditions, including the United States, the United
Kingdom, Australia, and Canada. The B Corp (or "benefit" corporation)
is a U.S. example where participants are required to have a corporate
purpose to create material positive impact on society and the
environment.
Ownership.
Ownership systems such as trust ownership, hybrid social enterprises,
and cooperative ownership have much more potential to align their goals
and values for the benefit of society and to realize that their actions
form part of the larger economic system. These alternative ownership
structures are flourishing around the world and provide testament to the
ability of corporations to operate successfully while contributing to
the benefit of society.
Capital.
Historically, capital markets operated without regard to long-term
social or environmental impacts or regulations. Recent efforts to embed
sustainability within the investment decision-making process show that
it is possible to generate significant changes in corporate
sustainability behavior.
Governance.
If boards can shift from a narrow focus on increasing shareholder value
to a more comprehensive view of the corporation and its impacts,
progress toward sustainable development can be achieved. While far from
sufficient, corporate reporting is a first step in improving governance
through increased transparency and long-term goal setting.
In critically
thinking about corporations, it is necessary to remember that they are
not islands: corporations operate within a vast economic system that
includes a multitude of players and variables. Sustainable development
can become a viable future when transnational corporations recognize
that with their position of global influence comes responsibility to the
societies and environments in which they are embedded.
The current global
economic model is socially narrow and environmentally predatory, placing
private interests above public ones. As such, it is unable to address
the dire needs of a world burdened by a population of 7 billion people,
let alone the looming threat of climate change and alarming levels of
poverty. What is needed is a new economic model that draws from a new
paradigm of development that is not based solely on economic growth, but
rather integrates and embraces the natural limits of our planet, the
need for reducing inequalities of income and opportunity, ethical
principles, and the preservation of the rights of future generations.
In their State of the World 2012
chapter, "Mobilizing the Business Community in Brazil and Beyond,"
authors Jorge Abrahao, Paulo Itacarambi, and Henrique Lian (all members
of the governing body of the Ethos Institute) advocate for internalizing
a variety of multilateral commitments to bring the world closer to the
ideal global economy. These include:
Payment for Ecosystem Services. Natural
resources and environmental services should come with a quantifiable,
concrete price tag in order to change perceptions and the way markets
function. The goal is to close the production loop----by using renewable energy inputs and generating no waste outputs----and to fully acknowledge the shared benefits from biodiversity.
Establishment of Minimum Operation Standards. Businesses----domestic and international alike----should
be required to obey a certain set of standards that governs decent
work, inclusion of minorities, socio-environmental practices,
sustainable development, and closed-loop production.
Promotion of Sustainable Production and Consumption. Governments
must take the lead in lifting the pressure off of natural resources,
cutting carbon emissions, and facilitating decent work conditions
through innovative strategies such as sustainable government procurement
policies, research and development programs, and tax regimes. This in
turn can encourage sustainable production patterns that are effectively
paired with behavioral changes that start with the consumer.
Worldwatch's State of the World 2012, released in April
2012, focuses on the themes of inclusive sustainable development
discussed at Rio+20, the 20-year follow-up to the historic Earth Summit
of 1992, also held in Rio de Janeiro. The report presents a selection of
innovative ideas and practices to achieve global environmental
sustainability while meeting human needs and providing jobs and ensuring
dignity for all.
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