In Fortune magazine’s 2007 list of the world’s 100 largest economies, 37 of them were corporations. While states still monopolise the top 29 spots, corporations are virtually on parity with countries further down.
Their presence in the top 100 has actually decreased by 10 since 2005, but this doesn’t mean corporations are getting smaller: far from it. The big are instead getting bigger.
The highest-ranked company in 2005, Wal-Mart, was valued at $288 billion. 2 years on, Exxon leads the pack at a staggering $340 billion. It can boast of having a worth greater than that of most states including Israel and Ireland.
One thing is clear: the conglomerates are now extremely powerful. But what about their role and responsibility in tackling climate change?
One of the biggest hindrances in pressing corporations to act on climate change is their advantage of global spatial dynamism. They have bases across many parts of the world and come under the jurisdiction of numerous states meaning that laws imposed by one country will tend to have an effect on just a small sector of a company.
Multi-state agreements to impose uniform regulations are the ideal solution to overcome this issue; yet with so many countries desperate to attract corporate investment, agreements that impose investment-deterring international regulations are hard to reach.
Let’s not forget either that corporations are also very mobile. This mobility is found in the modern rise of the brand over structure, in which distributing manufacturing and transportation contracts to third parties takes precedence over building factories and a cargo fleet – allowing for corporations to focus on advertising their brand image and enables them to easily move commitments from one area to another by simply cancelling a third-party contract and setting up another.
With the power of mobility, corporations are able to play states off against one another to ensure the most financially beneficial conditions. Under these competitive circumstances, developing states clamouring for overseas investment are unlikely to harm their prospects by introducing environmentally-friendly laws restricting the activities of corporations.
In more developed states, the climate of more stringent regulations that presides allows for greater accountability. Despite this, as most large corporations have the polluting sector of their business – namely manufacturing – located in developing states, the scope of governments to affect change is limited.
They can impose regulations that have a knock-on effect down the supply chain, for example demanding that any wooden products entering their area of jurisdiction are sourced from sustainable forests.
Still, the power of the corporations can force governments to limit the restrictions they introduce; for instance, by threatening to relocate jobs overseas, corporations bully politicians into favouritism.
The salient question is: how can corporations be forced to change when they hold so much power? Few CEOs must feel as though they have a moral obligation, or far greater progress would have been made by now.
Only economic pressure can achieve anything: consumer activism is key. As customers increasingly campaign for more environmentally-friendly products and supply chains, corporations are seeing the potential of the green market.
In the same vein, corporations don’t want to risk losing customers through the increasing amount of bad press directed at environmentally-damaging companies.
Another source of change is in climate accountability. Corporations are becoming increasingly worried that they could be sued for causing environmental damage in the same way that tobacco companies have been sued for causing ill-health. For BP, Shell, and Exxon that together account for 13% of global greenhouse gas emissions, this is a big concern and is prompting the search for greener technologies.
The solution may be successfully linking energy security to reducing climate change. Currently, it is still less viable to use renewable energy as opposed to fossil fuels.
As consumer demands change, climate accountability becomes an issue; as fossil fuel prices continue to rise, there will soon be a cross-over point when environmentally friendly policies make business as well as common sense and become the new security.
Consumers are too often lulled into thinking that corporations are reducing carbon emissions. BP, for instance, markets its brand as being ‘Beyond Petroleum’; in reality just 1% of its portfolio is constituted of renewable energy – enough to ensure it is ready to act when a sea-change occurs, but not enough to live up to its optimistic slogan.
Governments will only have the power to act when voters begin to regard green issues as urgent, and corporations will only change if the consumers force them to.
It is down to public action to instigate change. The economic viability of green policies and technology can be reached sooner if we campaign for them. Let’s hope that the forces of change will strengthen with time – or else the future remains uncertain.By Ben Williams.
