Author: dr. Rado Bohinc

Multinational enterprises account today half of global exports, one-third of global production (world GDP) and one-fourth of global employment. Advocates of multinationals say they create high-paying jobs and technologically advanced goods in countries that otherwise would not have access to such opportunities or goods. On the other hand, critics say multinationals have undue political influence over governments, exploit developing nations, and create job losses in their own home countries[1]. »… multinational enterprises (MNE) face a variety of legal, social and regulatory settings. In this context, some enterprises may be tempted to neglect appropriate standards and principles of conduct in an attempt to gain undue competitive advantage[2]…«, neglecting responsible business conduct and gaining undue tax avoidance and disregarding of environmental and social rules.

Notorious examples of human and environmental devaluation are, for example, Nestle using cocoa harvested by slave labour, or Pfizer keeping its HIV/AIDS-related drugs out of the hands of the world’s poor, who need them the most. Wal-Mart pushed its suppliers to go lower and lower on their wholesale prices, until they’re so squeezed that they barely have two pennies to rub together at the end of the day. In 2001, ExxonMobil was the target of a lawsuit by a human rights group that accused the company of actively abetting human rights abuses including torture, rape and killings in Indonesia. In Richmond, California, toxic pollutants from Chevron’s refinery in the city have infiltrated people’s homes. Dow Chemical (along with Monsanto) will never escape the shadow of Agent Orange, the chemical used by the U.S. military during the Vietnam War during the ‘Herbicidal Warfare’ program, which lead to 400,000 deaths and disabilities and 500,000 children born with birth defects[3]. MNE activity rapidly grew in recent decades!

The number of parent MNE (OECD) was 7000 in 1970, 38000 in 2000 and 82000 in 2010. Number of affiliates was 240 000 in 2014.

Given their economic strength multinationals could make a significant contribution to achieving the UN Millennium Goals on Sustainable Development (reducing inequality, decent work and respect for human rights), but the truth is exactly the opposite. This is not only a crisis of the economic system that generates infinite inequalities among the people and nations, but is primarily a crisis of modern political democracy.

The reason for the poor implementation of the CSR concept in companies’ day-to-day and strategic business behaviour is the fact that CSR is just a recommendation and a “wishful” orientation. An EU Directive should be enacted in order to redefine director’s duties and responsibilities in corporate legislations, adding directors’ duty “to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders”, as one of the directors’ corporate duties.

8 richest people had in 2017 assets that are equal in value to the remaining half of humanity (3.6 billion people) (Oxfam (2017)). The richest 10% in OECD countries is owned by half of all households, while the lower 40% owns only 3%. The top 1% owns 19%.  Income inequality (nowadays far greater than at any one time in the past) also affects equality of opportunities: education, access to modern technologies, health, culture, employment opportunities (welfare) is constantly increasing^[. Precarious employment is becoming more and more evidently the accompanying social phenomenon (massive violation of labour legislation) of modern capitalism.

Social responsibility is the way of governance (societal and corporate) that takes into consideration social consequences of governance decision as equally important as environmental and economic ones. Social responsibility is the responsibility for the social consequences of governance. The world permanent cyclical economic crisis calls for a thorough conceptual rethinking of how to reshape the existing global and societal and corporate governance foundations, systems and tools based, on legislative frameworks, which have dominated over the last decades .

The EC has never proposed measures using employee financial participation (EFP), as a vehicle to reduce income inequalities. The EC has also never prepared legally binding (compulsory) rules for the implementation of EFP on equal basis (standards) for all member states. Despite some successful cases in the EU, we could easily conclude that in fact, in the EU, we donot have a leveraged buyout trust-like mechanism, like they have in the USA.