Domestic Governments, MNCs and Carbon Emissions

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


MNCs: The Aftermath of Brexit

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.