Corporate Social Responsibility, a concept that is widely regarded as a company’s efforts to improve and maintain the quality of livelihood of any society has been a center of focus for multinational corporations within their day-to-day operations and engagement in international trade. Earlier this year, Forbes reported that CEO of foods company KIND Snacks, Daniel Lybetzky has announced to make a difference by achieving mass distribution and making their company’s product healthier. Another example would be Microsoft’s strategy to come up with a partnership with a non-profit IT company NETHope, which aims to create IT related apprentices in Kenya. All these sorts of actions, at a glance, might indicate a sense of goodwill coming from multinational corporations in an attempt to actually achieve a better world and community. But in fact, several scholars have disputed this voluntary action and attributed this movement to the increasing demand by investors and employees for their own sake of sustainability, and most importantly, for the promotion and preservation of their public image through exhibiting their commitment in making a social impact.

However, it is quite rare that we see emerging multinationals from developing and underdeveloped countries engaging in these sort of movements. Start-up from these areas, I would like to assume, are mostly fighting for survivability to ensure their long lasting operations and their rise to the international market. Despite several startups actually engaging in CSR, Tarun Khanna, a professor at Harvard have pointed out that emerging MNCs need to be more attuned to social purposes, simply because in developing nations, governments often fail to provide effective means of a public good, and emphasizing the importance of a privately run sector entity to overcome these issues (Global Focus, 2015). With this argument in mind, it is also important to consider the importance of the sovereign of states and its changing landscapes thanks to globalization. In my other blog article, I have outlined that with globalization, there is an increasingly high risk of external shocks that could be experienced by many countries, which could turn out bad for developing/underdeveloped nations as they go through industrializing their economy. Governments are now required to pay more attention to the international realm and not just matters within their domestic border. With this, they would have to divide their attention to both sides of the fence and its diplomacy as well, which would make complete sense of why maintaining public good could be a difficult process nowadays.

Khanna further emphasized the possibility of acquiring a win-win situation for emerging MNCs. When an issue from a community is resolved through CSR, it would not only build a better livelihood for the people living in that particular community, but it also builds relations with these people which reduces the likelihood of protest coming from them and aggressive regulation from governments. Other than that, I would argue that companies should, in fact, realize the value they could put in for the company and the corporate benefits that would drive shareholder values and dividends. These days, I argue that public image and activity contributes to the forecast of its future prospect, and when companies indicate that they are engaging in positive activities through CSR, it would fuel up the positivity and trust they would have with many communities.

Additional sources:

Nov 12, 2015, Global Focus. “How Emerging Multinationals Are Embracing Social Responsibility.” Knowledge@Wharton, knowledge.wharton.upenn.edu/article/why-emerging-multinationals-are-embracing-social-responsibility/.

The Trudeau government has found itself in a very uncomfortable position which has led to the questioning of the Canadian government’s ideals. The SNC-Lavalin debacle has escalated to the point Prime Minister Trudeau has a record low Ipsos poll approval rating that comes in even worse than Donald Trump’s.[1]  A common occurrence that was blown out of proportion? Maybe. However, that does not make it any better. As a country that prides itself on the Rule of Law, there must be, and under the constitution is, a clear division between the legislative and legal branches.

To me, I think this case is the perfect example of the influence multinational corporations can have on legislative procedures. Gilpin’s discussion of the phenomenon that political and corporate leaders tend to share overlapping intersects and perspectives is genuinely demonstrated in this case. With a federal election approaching, SNC-Lavalin recognized that due to the mobile nature of their business, they could threaten to leave if the Canadian government did not interfere in the legal proceedings against SNC. Universally, it seems there is no doubt that multinational corporations are not afraid to exercise their power to coerce the government into doing their dirty work. It becomes increasingly evident that major corporations in Canada may have too much power and control over institutional outcomes.

Although unlikely, hopefully through regulatory means, a division between overbearing MNCs and their institutional access will be installed. Through means of preventing campaign finances or tough market, exit barriers can help mitigate against collusion.

[1]Kalvapalle, Rahul. “Trudeau Now Has a Lower Approval Rating than Trump, with Tories Way Ahead: Ipsos Poll.” Global News, 28 Mar. 2019, globalnews.ca/news/5103763/trudeau-approval-rating-snc-lavalin-budget/.

Under the current global economic system, it would be impossible to achieve sustainability because of the reliance on fossil fuels and the influence of massive energy companies. Companies must govern themselves and embrace corporate social responsibility fully if the world has any chance of cutting emissions to the levels laid out in the most recent IPCC report. According to the report, there are about 12 years left for emissions to be cut by at least 50% across the board before the damage done to the global ecosystem is irreversible.

In order to reach this goal companies and specifically energy giants operating around the world must focus on the long term ramifications of resource extraction and make major shifts in how they operate. They must work with governments and figure out how to shift the economy away from fossil fuels without causing too much damage to their bottom line. This has been difficult and emissions have remained steady or risen in many places because governments and corporations alike are interested in the economic value of fossil fuels rather than looking further down the line at effects of carbon emissions.

The approval of the Kinder Morgan Pipeline and the Dakota Keystone Pipeline show that even though governments are aware of the risks, they are still willing to put unsustainable energy sources above economic losses. If governments continue to act in the interests of energy companies and energy companies fail to regulate themselves, the world has a very low chance of cutting emissions to the necessary level.

MNCs operating within the energy sector must engage with environmental NGOs and take into account the wishes of civil society. In order to save the environment from irreversible damage corporations must work with all aspects of society and come to solutions that do not include the construction of new pipelines or other methods of fossil fuel extraction. That being said, governments must also make compromises and provide economic and scientific aid to those corporations whose bottom line is dependent on the use and sale of oil and other fossil fuels.

Naming and shaming can only make so much of an impact and in order to create a tangible change and significant reduction in global emissions, MNCs and domestic governing bodies must work with civil society. There has to be an effort by the companies involved, the governments reaping economic benefits and the people looking for change. MNCs are political actors and they have a large influence over how the global economy operates and how it evolves to fit the times.

IPCC, 2018: Summary for Policymakers. In: Global warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [V. Masson-Delmotte, P. Zhai, H. O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J. B. R. Matthews, Y. Chen, X. Zhou, M. I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, T. Waterfield (eds.)]. World Meteorological Organization, Geneva, Switzerland, 32 pp.

Nord, James. “South Dakota Panel Endorses Bills Aimed at Possible Keystone XL Pipeline Protests.” Global News, 7 Mar. 2019, globalnews.ca/news/5029630/south-dakota-panel-pipeline-protest-bill-keystone/.

Ruggie, John Gerard. Just Business: Multinational Corporations and Human Rights. First edition. New York: W. W. Norton & Company, 2013

As the world has become more and more globalized, so too have multinational corporations. They are loyal to themselves as companies rather than to the countries that play home or host to them. MNCs have the ability to operate in their own self interest and have continuously become less reliant on national ties and affiliations. Nowhere is this more clear than in the behavior of corporations following the Brexit Referendum.

The uncertainty of what will happen to the UK when they leave and if they will leave with or without a deal with the EU has caused hundreds of companies to relocate. As a no-deal Brexit becomes more probable and the deadline to withdraw from the EU looms closer, companies continue to leave the UK in favor of locations with more certainty. This is one of the driving forces of MNC decision making when it comes to Brexit. There is no certainty about what kind of trade deal the UK will get or if they will get one at all which has made companies reevaluate their operation there. Even if there was a comprehensive trade deal lined up with the EU, companies are unwilling to take on the potential costs of basing their operations outside of the EU. Moving operations out of British borders is a cost many companies with rather incur than staying in the UK and waiting to see how Brexit plays out.

Although it’s not quite the same, this pattern of MNC behavior follows the logic of the Ownership, Location, Internalization Theory. Companies foresee raised costs in Great Britain and so they have chosen to move their operations to another location. By moving, they can avoid the long term costs of operating in Europe but outside of the EU and give themselves greater certainty in the wake of Brexit.

Even when the deadline was far off and the thought of a no-deal Brexit was far from likely, companies were fleeing the UK and setting up operations throughout the EU. One of the most popular destinations for these companies has been the Netherlands. Rather than wait and see how the final result plays out, MNCs have strategically acted in their own interests and at the cost of the British economy. Not only are companies such as Sony and Barclays deciding to move their headquarters out of the UK, many are moving manufacturing operations elsewhere as well. This will result in a significant loss of British jobs and a blow to the national economy. However, in the globalized world, this is not an issue for MNCs. They would rather see their own operations running smoothly than be responsible for the economic well-being of just one country. Remaining in the UK means taking a risk that they could lose access to the EU market and the behavior of MNCs has shown that that is not a risk many are willing to take.

Stone, Jon. “Dutch Government Says over 250 Companies in Talks about Relocating to Netherlands Because of Brexit.” The Independent, Independent Digital News and Media, 24 Jan. 2019, www.independent.co.uk/news/uk/politics/brexit-netherlands-sony-company-relocating-ema-trade-investment-eu-a8742756.html.

The surge of globalization has without a doubt paved ways for international enterprises to flourish and grow. Globalization has created new possibilities for firms to operate and control higher numbers of assets beyond their country of origin and acquire further market share by capturing potential consumers through tapping on untouched markets for new demand, which would certainly define their competitive advantage and sustainability of its future forecast. In a reflective journal article “Big Business and State”, scholar Susan Strange has underlined that the concept of economic power nowadays has evolved, and has begun to undermine the political power of the state – as an economic power is without any borders and/or limit, and thus a global phenomenon while political power and its jurisdiction are limited to the nation’s borders. And because of this, according to Peter Evans, there are many scholars who began to believe that international enterprises such as Amazon, Apple, and Nokia have undermined the power of the ‘sovereign’ hold by many states and governments.  With this, international enterprises and their substantial economic power seems to have changed the degree of importance of governments and their fundamental purpose as a ‘sovereign’

When we talk about globalization, the phenomena of international free trade becomes relevant. It goes without saying that firms engaging in international trade would benefit by achieving specialization and an increase in their competitive advantages relative with other enterprises. But with that being said, I would like to think that despite the advantage gained by some people through international trade, the movement of the phenomena itself could, in fact, induce too much pressure and constraint on governments and firms who lack the resources and competitiveness when compared to big states such as the USA and China. While some countries might be advantaging as economic powers are providing jobs and income to certain people from multiple demographics of countries, some are just not capable. As a result of international trade, deregulation would usually commence for many reasons (Gebelhoff, 2016). One would be to attract FDI to acquire growth and to provide employment to the people, and second, driven by the possibility to acquire world market shares, countries deregulate its market laws to promote the likability of domesticated firms to ‘freely’ conduct their business without much supervision. But ultimately, what would usually occur is that this would leave much of its workforce and industries unprotected and placed in a position high in volatility of markets, and risk of their individual freedom.

As a result of this, governments face a dilemma in understanding its new role as a sovereign. I would like to argue, that despite the capabilities of economic powers to eclipse the sovereign of the state, it shouldn’t undermine the responsibilities and power of the state to maintain the functionality of its domestic market that is filled with the infant and domestic industries, the protection of private and individual property, and most importantly individual freedom as it comprises as an important aspect for economic growth. With that in mind, I would say that it is important for the government to maintain its function as a sovereign to protect its constituents from external shocks and economic forces, should they choose to engage in the international market. An ideology that best describes the governments’ role in conjunction with a strong economic background is Ordoliberalism. An example of this ideology taking place would be Germany, where they have shaped economy based on policies stemmed from an ideology that acknowledges the importance of a sovereign state to maintain the efficiency and competitiveness of economic powers by keeping a check on competition and market shares of its firms within multiple industries to avoid any of them acquiring too much power. An example of such would be their policy of the German Competition Act, which prohibits cartels and the concentration of power. And it is with their responsibility that governments supervise the limits of the ordering principles of the mechanism of its free market and the relation of individuals and firms according to their business of ethics and cooperation in their respective societies.

International enterprises undermining the sovereignty of states is an overstatement. The function and purpose of states remain with only a change of higher responsibility and awareness to protect the people and firms who aren’t engaged in trade in the international market.

Additional sources:

Gebelhoff, Robert. “Are Multinational Corporations Undermining Freedom in Poor Countries?” The Washington Post, WP Company, 13 Sept. 2016, www.washingtonpost.com/news/in-theory/wp/2016/09/13/are-multinational-corporations-undermining-freedom-in-poor-countries/?utm_term=.a8fe8108e6f4.

Patagonia cares about the world. This seems like a big and broad statement to make about a company but Patagonia puts their money where their mouth is and they’re not shy or quiet about it. I want to talk about how Patagonia is doing CSR right.

When I was in high school, everyone was wearing Toms, those shoes that pledged that for every pair you bought, they’d donate a pair to a developing country. I think that was good enough for people to hop onto the bandwagon as it was a thing that they could feel good about. Since the shoes were basically flats and whereas the quality of the shoe wasn’t bad, it’s clear, just by looking at them, the shoes weren’t meant to last. But you feel good about buying another pair because they’ll give a pair to a developing country! And the cycle continues ad infintum.

I had this teacher in high school who made a comment about the shoes that stuck with me. He said something along the lines of, ‘How do we know they even want the shoes? What if there’s a shoemaker in that town that can no longer work?’ This feels very Teach-A-Man-To-Fish but it got me thinking. Did they even want these shoes that wouldn’t last? How much research did they do on the terrain and whether these shoes would even be suitable? Did the people even want the shoes? How much overall waste would this be creating? I remember hearing about how thrift stores would just send unwanted clothing/electronics to Africa and no one there needed them and it was just a redistribution of waste in the end.

So what does Patagonia do differently? They literally tell people not to buy their products. And that increases their sales. This backwards logic is defended with the idea that people should only buy what they need to prevent potential waste. Along with this, they’ll buy back and resell your clothes after they repair it. they make sure their factories are living up to human rights standards. They’re very vocal about their actions. And my personal favorite, they’ll go so far as to sue the president for destroying national monuments.

The best part about this, for me, is that they have a CEO that actually cares about these things, instead of a mandated appointed committee that does the bare minimum to qualify for a CSR nod. So, Patagonia is doing what they can and the world is better for it.

https://www.patagonia.com/corporate-responsibility.html

http://time.com/5052617/patagonia-ceo-suing-donald-trump/

Since his installment as the President of the United States, Donald Trump has been at the very center of widespread media coverage due to his countless controversial outbursts on social media. One such outburst, earlier this year regarding the production of Apple products has attracted the watchful eyes of many political thinkers due to his realist undertone. The POTUS stated that “Apple makes their product in China. I told Tim Cook, who’s a friend of mine … ‘Make your products in the United States'” pointing a finger at CEO Tim Cook for undermining the economic benefits of the US. Subsequently, Trump stated that China was the biggest beneficiary of Apple’s production profits, taking away jobs from Americans and pawning them off to a much cheaper and foreign labor force that does nothing to fuel the American GDP.

Arguably one of the most debated topics in the world of multinational corporations, how do MNCs affect the existence and effectiveness of states? Many scholars throughout the course of political science often find themselves scattered in terms of their alignment with regards to this debate. While Liberals would state that MNCs are in fact strictly beneficial, offering jobs, catalyzing sustainable economic development, and helping the process of globalization along, Marxists and Realists would state otherwise. Marxists believing that while these multinational corporations may in fact be beneficial, there is an extent to which the benefit can be widely accepted; give MNCs too much freedom and power and Marxists would begin to see the owners/managers of these MNCs as a transnational class of elites that practically rule the world through fiscal methods. Realists on another front would state the plain negatives, claiming that these MNCs are undermining the absolute power of state sovereignty.

I wouldn’t be able to argue for which one of these schools of thought is right or wrong, but in terms of which school of thought expresses a fairly balanced perspective in terms of this debate, I’d have to hand it to the Marxists. I’ve always felt that liberal thinking on this matter, while positive and optimistic of the world we live in, sees too much of it through rose-tinted glasses, too much MNC involvement in a state can lead to economic dependencies as seen in Brazil during the 2002 re-elections. Some realists are a little bit too radical for me in terms of state-oriented thinking… Yes, I believe that state sovereignty is most definitely a structure that must be upheld and enforced on a global scale, but it is undeniable that the operation of MNCs does promote the idea of international cohesion and communication. The fact that humanity has gone over 70 years without a world war is not a coincidence, in fact, I’d assert that the fact that humanity has not plunged into a global-scale conflict most definitely has to do with the surge in development of international relations and MNCs do play a major role in that.

To conclude my thoughts regarding this debate of state power vs. MNC power, I’d like to reinstate the fact that while MNCs can bring job opportunities, technology, educational aspects, and most importantly, economic benefit to a host country, their level of involvement in host states must be considered by governments. Too much of a good thing can sometimes lead a vicious cycle of economic dependency in certain regions of the world, world leaders must take into account the premise that money can exit just as fast as it enters an economy.

Sources

Younge, Gary. “Who’s in Control – Nation States or Global Corporations? | Gary Younge.” The Guardian, Guardian News and Media, 2 June 2014, www.theguardian.com/commentisfree/2014/jun/02/control-nation-states-corporations-autonomy-neoliberalism.

One Canadian MNC has dominated international headlines for months, reigniting a conversation on MNC-government relations. SNC-Lavalin, based in Quebec, came under investigation for bribery, regarding recent pursuits of new contracts in Libya. To those even somewhat familiar with SNC, this was relatively unsurprising, as the company had previously been convicted for bribes regarding domestic contracts in cities like Montreal, and has long held an infamous reputation for its questionable business practices. The company, like many other Canadian corporations, survived with relative impunity thanks to its importance as a major employer and economic stimulant. In the case of recent allegations, if convicted, SNC would have been barred from bidding on Canadian government contracts; costing the corporation approximately $10 billion in lost revenue and likely leading to a disastrous end to all Canadian operations.  The corporation quickly mobilized lobbying efforts, resulting in the introduction of the “Deferred Prosecution Agreement” in the last omnibus spending bill, allowing companies like SNC-Lavalin to pay fines, rather than to bar their contracts if convicted. However, much to the dismay of SNC, Canadian prosecutors investigating the company, withdrew SNC’s right to the DPA, under the approval of the Minister of Justice at the time, Jody Wilson-Raybould. However, soon after, Wilson-Raybould was dismissed from her position and accused the Trudeau government of placing excessive pressure on her to give SNC the DPA. Trudeau, despite repeated denials, likely had a vested interest in seeing SNC live through its crisis. SNC is a powerful multinational, providing more thousands of Canadian jobs, most of which exist in Trudeau’s very own riding, and its closure would almost certainly have an impact on Trudeau’s political status.  As the situation continues to unfold, with it come new investigations and a severe PR storm for the Trudeau government to weather, uncomfortably close to the next election.

MNC’s like SNC that can leverage their economic power undoubtedly pose a significant threat to the integrity of government and justice. There is no question that the government and judicial system are separate, and any attempt of the government to place pressure on judicial integrity on behalf of an MNC is troubling. The controversy is a textbook example of the amount of power MNC’s hold today over states and government and the amount of influence attained through lobbying efforts. It is a reminder of the interwoven fabric of government and domestic multinationals, and the unfortunate domino effect created when issues arise in either end of such relationships. It is easy for the skeptics among us to dismiss the scandal as “characteristically bureaucratic” and simply an inevitable by-product of the establishment. Yet, each time such scandals are unraveled in the public eye, a valuable opportunity arises, a chance for Canadians to engage and advocate for change. One can be hopeful that SNC-Lavalin and Trudeau’s misfortune will bring much needed change to the climate of corruption and government favoritism. However, if history is to repeat itself, SNC-Lavalin will likely only live on as a sound-byte used by those vying to replace Justin Trudeau in this falls election.

Works Cited:

Austen, Ian. “The Strange Story Behind the SNC-Lavalin Affair.” The New York Times, The New York Times, 16 Feb. 2019, www.nytimes.com/2019/02/15/world/canada/snc-lavalin-justin-trudeau.html.

Seglins, Dave. “SNC-Lavalin Insider’s Bribery Allegations Spark Probe by Crown Agency That Loaned the Firm Billions | CBC News.” CBCnews, CBC/Radio Canada, 3 Apr. 2019, www.cbc.ca/news/canada/snc-lavalin-export-development-canada-loans-1.5079922.

Seglins, Dave. “SNC-Lavalin Insider’s Bribery Allegations Spark Probe by Crown Agency That Loaned the Firm Billions | CBC News.” CBCnews, CBC/Radio Canada, 3 Apr. 2019, www.cbc.ca/news/canada/snc-lavalin-export-development-canada-loans-1.5079922.

“Why Justin Trudeau Is in Trouble.” The Economist, The Economist Newspaper, 5 Mar. 2019, www.economist.com/the-economist-explains/2019/03/05/why-justin-trudeau-is-in-trouble.