With the rise of globalization, the world has seen a major expansion of the global economy and the number of multinational firms. This has transformed the nature of non-state actors and the relationship between the state and business actors like MNCs. As the global economy expanded, many countries and communities were keen on taking advantage of opportunities for development. However, the activities of many MNCs around the world have been criticized for significant human rights abuses.
According to Ruggie, there is considerable evidence of harsh sweatshop conditions in many labor factories supplying prestigious global brands. For instance, Bangladesh which has a “$29 billion clothing industry, contains sweatshops that pay garment workers only about $0.35 an hour while multinationals like H&M, Walmart and Aldi take advantage of the country’s dismally low minimum wage” (Volodzko). Ruggie also mentions how MNCs have displaced indigenous peoples’ communities without adequate consultation or compensation to make way for oil and gas company installations. This is most apparent in the Americas. For instance, in Canada there is currently a dispute between Indigenous peoples and Kinder Morgan over the Trans Mountain Expansion Project. In fact, the matter is so controversial that it has been taken to court to ensure that Kinder Morgan and the government follow their obligations under the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) (Kaljur and Jang). Such human right violations have led many to mistrust MNCs even though they have great potential to contribute to the development for all stakeholders.
But there is still hope. MNCs can still deliver significant development and economic growth in many impoverished parts of the world. However, to ensure that abuses such as the ones mentioned above are not repeated, all MNCs should be pressured by states and transnational organizations or movements to adopt or practice measures of Corporate Social Responsibility (CSR) especially in countries that are most vulnerable to MNC exploitation.
The case of Nike is a clear example of how a MNC can adopt or demonstrate CSR and improve their standing as a globally responsible organization of development. According to the Sharon Waxman, CEO of the Fair Labor Association (FLA),Nike for nearly 20 years has demonstrated a steadfast commitment to improving its labor practices by maintaining its Fair Labor Association accreditation. “As Nike has grown the company has expanded its efforts to promote high labor standards across its supply chain.” Big MNCs like Nike can be positive role models in the global economic system regarding labor practices in the global supply chain. Nonetheless, it is imperative thatevery MNC adopt CSR measures to enhance the benefits to all stakeholders and ensure that workers are treated humanely and compensated fairly no matter which country they are located in. To be brief, CSR is an important instrument in the regulation of MNC activities around the world, especially in the most impoverished parts of the globe.
Releases, Press. “Nike Accredited for Fair Labor Practices.” Shop-Eat-Surf, 25 Mar. 2019, www.shop-eat-surf.com/2019/03/nike-accredited-for-fair-labor-practices/.
Ruggie, John. Just Business: MNCs and Human Rights. WW Norton, 2013.
Volodzko, David. “Bangladesh Is Burning and Sweatshops Are the Fuel.” Forbes, Forbes Magazine, 26 Mar. 2019, www.forbes.com/sites/davidvolodzko/2019/03/05/bangladesh-and-the-fire-next-time/#425041a12ca1.
Yates, Andrew. “Why Building A Pipeline on Indigenous Land Is Complicated Even If You Own It.” HuffPost Canada, HuffPost Canada, 5 July 2018, www.huffingtonpost.ca/2018/06/29/building-trans-mountain-pipeline-indigenous-land-complicated_a_23471203/.