Rio+20: Where's the debate about corporate power?

A response to the proposal for a Convention on Corporate Sustainability Reporting

(2 pages)
May, 2012

Helena Paul

In the face of the multiple crises of biodiversity loss, ecosystem degradation and climate change plus economic turbulence and injustice, it is strange that there is so little discussion about controlling corporate power and exploitation in the run-up to Rio+20. There are proposals for increasing the participation of women, youth and communities in decision-making. There are calls to reduce land degradation and deforestation, promote sustainable production and consumption, increase energy and resource-use efficiency, and protect ecosystems. But there is almost nothing about tackling the corporations that are doing so much of the damage. There is also no visible discussion about the advertising and public relations activities that corporations use to promote consumption and drive forward the wasteful consumerist development model that generates corporate profits but that also threatens the wellbeing and even survival of present and future generations.

Work to control corporations blocked after first Earth Summit

In 1992, work to develop an international code of conduct on corporations was being carried out in the UN Centre on Transnational Corporations (UNCTC). There was, unsurprisingly, strong opposition to this initiative from business, and after the first Earth Summit, the UNCTC was merged into the UN Conference on Trade and Development (UNCTAD) in 1993, after which its activities ceased. For more detail see The EcoNexus briefing Calling the corporations to account.1 At the same time we started to hear the phrase "Corporate social responsibility" (CSR), which has since come to dominate much of the discourse. However, CSR is voluntary and is controlled by the corporations themselves. It is not monitored or verified by any independent body. It is therefore no substitute for a binding international instrument.

Corporate power and concentration have greatly increased since 1992

This increase means that we need a binding international instrument to control the corporations and their activities more urgently than ever. In 2011, ExxonMobil, Royal Dutch Shell, Walmart and BP all had bigger revenues than the gross national product (GNP) of Sweden, which was number 33 on the list of country GNP.2 The total number of countries listed is over 180. This means that the top four corporations have bigger revenues than the GNP of almost 150 different countries. They are headquartered in the US (ExxonMobil and Walmart) the Netherlands (Royal Dutch Shell) and the UK (BP). Small wonder then that many of the richest states are unwilling to take a stand against their corporate benefactors. Instead, the ongoing economic crisis, created by the failure to regulate the economic system, means that states are relying on corporations to provide the "economic growth" that we are endlessly told is the only way to address poverty and hunger ­ and escape that same economic crisis. Few point to the fact that endless economic growth on a finite planet is impossible, yet this is the contradiction at the heart of our dominant model of development.

Where are we in June 2012?

The Dialogue on a Convention on Corporate Social Responsibility and Accountability is a joint initiative of the Stakeholder Forum and Vitae Civilis.3 They say they are pushing for a Convention on Corporate Social Responsibility and Accountability at Rio+20. From the corporate side, we have a proposal for a Convention on Corporate Sustainability Reporting, presented by Aviva and the Corporate Sustainability Reporting Coalition, whose members are listed on pages 9-10 of the document (see below for reference). Aviva (a multinational insurance company headquartered in the UK) also features on the list of companies referred to above. On comparing its revenues with country GNP we find Aviva currently situated just above Sudan and South Sudan (country number 72) ­ and also above Kenya, Tanzania and Ghana and over one hundred more.4

Proposal for a convention on corporate sustainability reporting

In its briefing note II for the Earth Summit,5 Aviva says they believe that the voluntary approach to corporate reporting has not worked. They therefore propose a convention on corporate sustainability reporting: 'First, the Convention would be a commitment by UN member states to develop national regulations, formal codes or listing rules that encourage the integration of material sustainability issues within the annual report of all listed and large private companies. Second, in order to be flexible, it would establish an opt-out for those companies that elect not to prepare such a report: they would be required to explain their rationale to their shareholders, creditors and other stakeholders. In other words, corporate sustainability disclosure would be on a "report or explain" basis.' This proposal is extremely weak. First we have the use of the word "encourage", which makes it clear that states would not be invited to enforce compliance. Then, for the sake of "flexibility" we have an opt-out for those companies that prefer not to report. This provides no means for "stakeholders" to take action if they did not accept the rationale of the company for declining to report.

Proposed Convention now in the Rio+20 draft

However, the idea of a Convention on Corporate Sustainability Reporting has been picked up in the current draft of the document that is supposed to emerge as the common position of "heads of state and government" entitled "The Future we want". At the point of writing in early June 2012, it can be found in the two versions of paragraph 41 (see below for text). Even though to this observer at least, it seems that such a Convention would change nothing, the draft reveals that there is still major disagreement about including even such a weak proposal in the government statement. Worse still, there is no alternative proposal.

Where does that leave the debate about regulating corporate power?

At present, serious debate on international regulation of corporations appears to have been effectively marginalised. 20 years on, proposals are far weaker than those for a draft code of conduct or the civil society positions that were set out in 1992, as reflected for example in the Treaty on Transnational Corporations: Democratic Regulation of their Conduct 19926. The Aviva proposal would leave power firmly in the hands of the corporations. It would do nothing to address issues of corporate concentration or national and international monopolies and cartels. It would not help to redress the injustice and imbalance of power that make it so difficult for people and communities to claim redress for damage done by corporations. Just two examples of the obstacles and the injustice involved are the Bhopal disaster7 The proposed Convention on Corporate Sustainability Reporting would not help to address any of these, nor would it help to construct mechanisms whereby people could seek redress and actually see justice done.

We must take action

We need a strong, independent, binding, global instrument to regulate corporate power. We need to take decisions about their role, size, powers, privileges, structures and rights and the changes required to properly balance the rights of the corporate legal person with those of natural persons (people). We need to evaluate the influence of corporate lobbying, advertising and public relations campaigns. We should discuss what kind of business entities ­ and what kind of development model - we want. Without these changes, we have little hope of addressing the multiple crises that face current and future generations. Political will among governments is lacking. Some would say that the UN itself is now too much captured by corporate interests to be able to perform this task. Others would reply that if the UN system completely loses credibility, this would help corporate interests and those of their client governments far more than the peoples of the world. Part of the process of people reclaiming the UN could be the revival, updating and strengthening of the UNCTC and the completion of the work on an International Code of Conduct on Transnational Corporations.

Extract from a draft of the proposed Rio+20 statement, 31.5.2012: para 41 proposals

41. We acknowledge the importance of [having policy approaches on ­Switzerland; US delete] corporate sustainability reporting [and ­Switzerland delete; US retain], [which ­Switzerland; US delete] encourage[s ­ Switzerland; US delete] public and private companies [and ­Switzerland; US delete], [where appropriate ­EU delete; US retain] [to consider integrating sustainability information into their reporting cycle ­ G77][, [including / require ­ Switzerland; US retain][all ­US delete] listed and large [public ­Switzerland delete; US retain] [and private ­ EU; US delete] companies[, -EU, US] to integrate sustainability information into their reporting cycle [or explain why if they do not ­EU; US delete], building on the experience of already existing national and international reporting frameworks [such as the Global Reporting Initiative ­ Switzerland; US delete]. We recognize the need for global best practices on sustainability reporting [and to this effect we resolve to start a process to develop a transparent global system on corporate sustainability reporting ­Norway, Mexico; US delete] [taking into account the needs of developing countries in this regard ­ Mexico; US delete] ­G77, US delete]. [In this regard, we call upon the UN Secretary-General to launch a process involving interested Governments and all relevant stakeholders aimed at developing a global framework to promote best practices and facilitating action at national level for the integration of sustainability reporting, building upon the experience of already existing national and international reporting frameworks, such as the Global Reporting Initiative, and examining options for capacity building measures for developing countries.-EU; US delete; Japan reserves] (Japan proposes deletion of EU and Switzerland proposals) 41. alt We acknowledge the importance of corporate sustainability reporting and encourage companies, where appropriate, especially publicly listed and large companies, to integrate sustainability information into their reporting cycle. We recognize the need for global best practices on sustainability reporting, and in this regard, we encourage industry, interested governments, as well as relevant stakeholders, [to launch a process] with the support of the UN system, to develop model for best practice and facilitate action for the integration of sustainability reporting, building upon the experiences of already existing national and international reporting frameworks, such as the Global Reporting Initiative, and examine options for capacity building measures for developing countries.