The Limits of Transnational Arrangements in Sustainability Governance: The Supposed Role and Responsibility of Multinational Corporations

 Transnational Politics

The Limits of Transnational Arrangements in Sustainability Governance: The Supposed Role and Responsibility of Multinational Corporations

   

I. Introduction

The role and (moral) responsibility of multinational corporations should be the most powerful in transnational governance arrangements of global sustainability. I believe so because these business actors are often argued to be more powerful in global governance than state-actors (Dür et al.,2015). Many corporations are now wealthier than states (Belinchón and Moynihan,2018). These phenomena are often argued under the name of ‘financialization’, whereby economic interests and actors among others are increasingly involved in states’ economic operations (Epstein in Wang,2015). With such power comes the same level of responsibility, that should be taken seriously by these non-state actors who – as of today – only tend to ‘play’ with the agreements and logos of global sustainability governance. A good example of this is the phenomenon of the ‘lowest hanging fruit or greenwashing (Gerasimchuk,2017; Delmas and Burbano,2011).

 

This essay will critically assess the limitations of transnational arrangements in sustainability governance, in order to shed a light on the power of multinational corporations, who do not yet have the responsibility equal to their influence on policy-making. We will do so by analysing the contemporary status quo of global corporate-power, before we reflect it on the analysis of their responsibility in transnational sustainability governance: their practices of greenwashing.

 

II. Corporate Actors ‘at’ the Table 

Corporate actors are increasingly argued to be more powerful actors in global policy-making than state-actors (Dür et al.,2015). States have become reliant on business actors’ presence in their territory (that contributes to their economy) and also, on their products.

For example, in China, the state is dependent on companies like China Mobile, to access certain services (such as mobile services), and there is proof that this case is not unique (Wójcik and Camilleri,2015). In addition, developing countries are running a ‘race to the bottom’ in their policy-making in order to grab the attention of foreign investment. This economic interest overrules Human Rights in states’ policy-making, for example. States cannot afford losing a business that means them income (Forde,2018). In addition, businesses are also effectively lobbying policy-making in the West as well (Dür et al.,2015). 

 

It is reasonable to argue that non-state multinational corporate actors also have a role on the transnational level of politics: international politics mostly operate through state-actors’ collaboration, therefore, they are similarly influenced on their transnational- like on their domestic level of decision-making (Abidin,2016). This is why Dauvergne and Lister argue that there is a need for bringing these business actors on board in decision-making, yet they remain cautious and highlight many dangers of doing so. Although, they admit multinational corporations are too powerful to be disregarded (2012).

 

III. Lack of Corporate Responsibility and the Limits of Transnational Arrangements in Sustainability Governance

Since the formulation of the Paris Agreement in 2015, it has become understood that transnational arrangements are overly blurred and leave much room for corporate actors to be able to represent themselves as ‘green’ companies with limited or no effort behind (Dimitrov,2016; Keohane and Oppenheimer,2016). They often bypass criteria and state-enforcement by setting up their own standards and labels under their own terms and conditions (Auld et al.,2008; Auld,2014). Doing so, they are ‘greenwashing’ themselves by labelling their products as sustainable (Delmas and Burbano,2011). Therefore, the lack of their accountability and consequently, their responsibility clearly comes through their greenwashing practices.

 

On another note, the ISEAL Alliance, for example, is well-known for its umbrella-operation, working closely with standard-setter third-parties (whose standards and labels multinational companies then sign up for) (ISEAL Alliance,2020). Yet, ISEAL is only an advisory-body with no actual power and influence on what the product of a particular standard-setter they collaborate with will be (Loconto and Fouilleux,2013). Similarly, the aforementioned greenwashing can be practiced by non-state business actors due to the weakness of transnational arrangements: no signatory can be held to account for not complying with the agreement it has signed (Auld,2015).  Therefore, the limits of transnational arrangements in sustainability governance can be found in its indirect, weak position (like ISEAL’s advisory position) and its lack of enforcement.

 

IV. Conclusions

This paper has critically assessed the effectiveness of transnational arrangements in sustainability governance in relation to the role and lacking responsibility of multinational corporations. We have found that – although, multinational business actors are powerful in shaping policy-makers’ decision both, domestically and internationally – they are not formally involved in the process which leads to their lack of accountability and therefore, responsibility.

Through the example of greenwashing and the advisory role of the ‘most advanced’ umbrella organisation in global sustainability governance, the ISEAL Alliance, we have also uncovered how multinational business actors, instead of taking the responsibility, ‘play’ with the standards and labels that transnational arrangements and third parties set for them (citing needed). Therefore, there is room for future research on how to cover the gap between private and public transnational sustainability governance (Abbott,2012).

 

Bibliography

Abidin, S. Z. (2016) International Organisations E-International Relations [online] Available at: https://www.e-ir.info/2016/12/30/international-organisations/ (accessed on 19/10/2020)

Abbott, K. W. (2012) ‘Engaging the Public and the Private in Global Sustainability Governance’ International Affairs88(3) JSTOR [online] pp. 543-564. Available at: http://www.jstor.org/stable/23255550 (accessed on 20/10/2020)

Auld, G., Gulbrandsen, L.H. and McDermott, C.L. (2008) ‘Certification schemes and the impacts on forests and forestry’ Annual Review of Environment and Resources 33(1) Annual Reviews [online] pp. 187-211 Available at: https://doiorg.proxy.uba.uva.nl:2443/10.1146/annurev.environ.33.013007.103754 (accessed on 07/09/2020)

Auld, G. (2014) Constructing Private Governance: The Rise and Evolution of Forest, Coffee, and Fisheries Certification EBSCOhost [online] pp. 53-111 Available at: https://searchebscohostcom.proxy.uba.uva.nl:2443/login.aspx?direct=true&db=e000xww&AN=861318&site=ehost-live&scope=site (accessed on 07/09/2020)

Auld, G. (2015) ‘Policymaking: Certification as Governance’ in Bearfield, D. A. andDubnick, M. J. (eds.) Encyclopedia of Public Administration and Public Policy 3rd ed. ResearchGate [online] Available at: https://www.researchgate.net/publication/284003768_Policymaking_Certification_as_Governance (accessed on 07/09/2020)

Belinchón, F. and Moynihan, Q. (2018) ‘25 giant companies that are bigger than entire countries’ Business Insider[online] Available at: https://www.businessinsider.com/25-giant-companies-that-earn-more-than-entire-countries-2018-7?international=true&r= US&IR=T(accessed on 20/10/2020)

Hanegraaff, M. (2020) Transnational Politics lecture University of Amsterdam 28/09/2020

Dauvergne, P. and Lister, J.  (2012) ‘Big brand sustainability: Governance prospects and environmental limits’ Global Environmental Change 22(1) ScienceDirect [online] Available at: https://doi.org/10.1016/j.gloenvcha.2011.10.007 (accessed on 26/09/2020)

Delmas, M. and Burbano, V. C. (2011) ‘The Drivers of Greenwashing’ California Management Review (54) Semantic Scholars [online] pp. 64-87 Available at: https://www.semanticscholar.org/paper/The-Drivers-of-Greenwashing-Delmas-Burbano/6227402c88f2e54e34f5a5708b168d0987fe5e1c (accessed on 02/10/2020)

Dimitrov, R. S. (2016) ‘The Paris Agreement on Climate Change: Behind Closed Doors’ Global Environmental Politics16(3) MIT Press Journals [online] pp. 1-11 Available at: https://doi.org/10.1162/GLEP_a_0036 (accessed on 07/09/2020)

Dür, A., Bernhagen, P. and Marshall, D. (2015) ‘Interest Group Success in the European Union: When (and Why) Does Business Lose?’ Comparative Political Studies 48(8) SAGE journals [online] pp. 951–983 Available at: https://doi-org.proxy.uba.uva.nl:2443/10.1177/0010414014565890 (accessed on 26/09/2020)

Forde, S. (2018) Human Rights and Wrongs in a Globalised World seminar University of York on 26/10/2018

Gerasimchuk, I. (2017) A Low-Hanging Fruit for Financing and Implementing SDGs: End Fossil Fuel SubsidiesInternational Institute for Sustainable Development [online] Available at: https://www.iisd.org/articles/low-hanging-fruit-financing-and-implementing-sdgs-endfossil-fuel-subsidies (accessed on 04/10/2020)

ISEAL Alliance (2020) Our Mission ISEAL Alliance [online] Available at: https://www.isealalliance.org/about-iseal/our-mission (accessed on 05/10/2020)

Keohane, R.O. and Oppenheimer, M. (2016) ‘Paris: Beyond the Climate Dead End through Pledge and Review?’ Politics and Governance 4(3) Cogitatio [online] pp. 142-151 Available at: https://www.cogitatiopress.com/politicsandgovernance/article/view/634 (accessed on 05/10/2020)

Loconto, A. and Fouilleux, E. (2013) ‘Politics of private regulation: ISEAL and the shaping of transnational sustainability governance’ Regulation & Governance 8(2) Wiley Online Library [online] Available at: https://doi.org/10.1111/rego.12028 (accessed on 04/10/2020)

Wang, Y. (2015) ‘The rise of the ‘shareholding state’: financialization of economic management in China’ Socio-Economic Review 13(3) Oxford Academic [online] pp. 603–625 Available at: https://doi-org.proxy.uba.uva.nl:2443/10.1093/ser/mwv016 (accessed on 26/09/2020)

Wójcik, D. and Camilleri, J. (2015) ‘“Capitalist tools in socialist hands”? China Mobile in global financial networks’ Transactions of the Institute of British Geographers 40(4) EBSCOhost pp. 464–478 Available at: https://web-a-ebscohost-com.proxy.uba.uva.nl:2443/ehost/detail/detail?vid=0&sid=201a0a01-1394-46f9-9ce6-d0b9674ea71c%40sessionmgr4007&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#AN=109463111&db=aph(accessed on 26/09/2020)