Transnational Corporations

Statement of the Problem

The revenues of the largest transnational corporations (TNCs) today exceed the size of many national economies. Many have lost any sense of national identity or loyalty through their footloose operations and through internationalizing their staff. Many are becoming difficult to regulate in the context of national laws. By their political power and influence, they are becoming sovereign-like entities in their own right. They should not forget that they are creatures of civil society (e.g., corporations are inventions of law) and need to serve its purposes. Collectively they are developing instruments of global governance that challenge sources of legitimate democratic authority (as through the WTO, ISO, etc.).

Momentum to compete globally is putting pressure on the social and environmental safety nets of advanced countries. Some TNCs use this pressure to undermine them. Domestic environmental safeguards are often attacked by TNCs as trade barriers since they hinder the rush to globalization.

Some TNCs search the globe for places to operate where environmental and social standards are low or are not enforced. These TNCs are getting an undeserved subsidy by not meeting their stewardship obligations (they are failing to internalize their environmental costs). Local governments are forced to bid for these plants by lowering their environmental standards. Instead of leveling the playing field through enacting high uniform global environmental standards, TNCs push for leveling it through beating down national environmental standards, which in their variability are viewed as trade barriers. The competitive advantages they gain (with greater efficiencies and access to markets) puts local businesses at a disadvantge, hindering the process of sustainable economic development in developing nations.

With their huge demand for raw materials, TNCs provide impetus for opening major new mines, oil fields, forestry operations, etc. that stress natural systems. TNCs push unsustainable levels of consumption of energy and materials, often for non-priority products. However, there are aspects of the operations of TNCs that can be viewed more positively. They tend to rise above provincialism and nationalism. They tend to use modern cleaner technology and more efficient practices. Most have internalized a degree of environmental responsibility, having developed their own staff of environmental experts.

The more advanced and public spirited TNCs apply first-world environmental standards worldwide in their operations. These TNCs are motivated to want to raise standards in developing nations so as to remove any economic advantage for their local competitors. A number of TNCs are associating themselves with voluntary programs to improve their environmental performance (e.g., Natural Step, CERES, Business Council for Sustainable Development, Responsible Care, etc.). But many are not part of these efforts.

Background

In the early l990s, the United Nations spent some time studying this subject through its Centre on Transnational Corporations (UCTC) and its Commission on Transnational Corporations. Various proposals were made for offical policy, and some were adopted as part of Agenda 21. Subsequently more of the environmental community became interested in this subject as an outgrowth of involvement with trade issues. In l993, the Worldwide Fund for Nature adopted a position on TNCs.

In l997, the NGO Taskforce on Business and Industry (through Jeffrey Barber) developed a set of guidelines on TNCs, as part of input to the UN Commission on Sustainable Development. The Club's International Program chose not to sign that statement but expressed interest in generating its own statement, which follows. It was approved by the Club's International Committee on October 17, l998.

SIERRA CLUB GUIDELINES

Responsible Management

 

    1. Firms must operate in a sustainable manner so as to respect the ecological bounds of the planet.

 

 

    1. (a) Firms should comply with the spirit and letter of all legal requirements to protect the environment and public health and should exceed those requirements when they are insufficiently protective. They should practice the Precautionary Principle and operate so as to "Do No Harm." 
      (b) As a minimum, firms should, in all plants, meet the highest health, safety and environmental standards required by government regulations at any of their plants anywhere in the world.

 

 

    1. Firms should act responsibly so as to prevent adverse environmental and social impacts of their products, by-products, and processes through Lifecycle Stewardship programs and policies.

 

 

    1. Firms should practice Product Stewardship so minimize adverse impacts of their products. Through "designing for the environment," for instance, they can eliminate toxics in processes and products and design for ease of recylability.

 

 

    1. Firms should work to have the prices of their products reflect true environmental costs. Through internalizing the costs of environmental impacts, they will put into effect the principle that the "Polluter Pays." They should not only internalize all environmental costs but not seek subsidies nor inducements that will distort price signals and enlarge demand, nor should governments grant such subsidies. They should also practice full-cost accounting.

 

 

    1. Firms should adopt environmental management systems that set explict policies and goals for environmental protection, including adopting policies for continuous improvement. Staff and funding must be provided to reach these goals.

 

 

    1. Firms should use renewable natural resources sustainably and conserve non-renewable resources through careful and efficient use.

 

 

    1. Firms should work with stakeholders to develop strong Codes of Conduct and comply with relevant codes for their industries and meet "Best Management Practices for the Environment" for their industry.

 

 

    1. Firms should take back products at the end of their useful life where that would better protect the environment, and then recycle the residues.

 

 

    1. Firms should adopt the insights to be gained from "industrial ecology" so as to not only prevent pollution but gain economic advantages through minimizing waste and achieving enhanced efficiencies (eco-efficiency).

 

 

    1. Firms should pursue and apply research to develop innovations that reduce impact and improve efficiency.

 

 

    1. (a) Firms should move aggressivly to eliminate use of toxic substances and, in no case, should firms produce or release chemicals without a full understanding of how to prevent adverse impacts in the first place, and how to mimimize effects that cannot be prevented.
      (b) Firms should have in place effective plans for preventing and responding to hazardous materials emergencies and regularly practice preparedness.

 

 

  1. Firms should avoid creating hazardous waste sites and then clean up hazardous waste sites when they are responsible; they should accept strict liability for exposures associated with these sites.

 

Accountability

 

    1. Firms should routinely measure, monitor, and disclose all releases to the environment.

 

 

    1. Firms should be required to keep track of toxic materials that they use, store, transport and release to the environment and to make this information available to the public.

 

 

    1. A standard system of environmental accounting and auditing should be developed and put into use, with results made available to the public.

 

 

    1. Firms should disclose environmental liabilities in accounting statements and stock reports.

 

 

    1. Firms should label their products so as to provide relevant environmental information, such as on toxicity, safety, energy efficiency, recyclability, decomposability, and use of virgin materials.

 

 

    1. (a) Firms should provide information to the public on the impacts, and potential impacts, of their operations on the environment, as well as health and safety implications. 
      (b) The public should be informed of all hazards, including pollution, discharges, toxics, hazardous wastes, and other toxics, as well as of safer alternatives. 
      (c) No one who reports dangerous conditions should be subject to reprisal. 
      (d) Firms should work under Community-Right-to-Know programs.

 

 

    1. Firms should collaborate with stakeholders on critical matters (EHS) that effect them.

 

 

    1. Firms should promptly compensate anyone injured by their operations or products. All should agree to the principle of strict liablity for injuries by toxics, endocrine disrupters, and other hazardous materials.

 

 

    1. Firms should work to harmonize nomenclature and classification of chemicals and labelling systems for chemicals using pictograms and the most widely understood languages.

 

 

    1. Firms should provide funds to independent authorities to ensure that their operations are properly monitored and that progress is being made to reach targets for reducing pollution.

 

 

  1. (a) Firms should recognize that involuntary exposure of individuals and communities to pollutants from their plants constitutes chemical trespass and physical invasion of privacy and person and, therefore, a violation of a basic human right. 
    (b) Firms should accept responsibility for preventing violations of human and environmental rights that might otherwise result from their operations, products and by-products.

 

Trade

 

    1. All transnational firms should operate worldwide in conformance with the highest standards they practice anywhere, which should never be lower than that legally required.

 

 

    1. Firms should not compete through pressuring localities into weakening their environmental, health, and safety standards to lure them into locating there.

 

 

    1. Firms should not export substances or products which are not allowed in their home countries, and in no case without Prior Informed Consent of citzens at risk.

 

 

    1. Transnational firms should work to open up to public participation standard setting organizations which they control in the trade field (e.g., ISO, Codex, etc.) and make them transparent and accountable.

 

Adopted by the Sierra Club International Committee, October 17, 1998.