The phrase "corporate accountability" refers to measures which enable governments and the people they represent to hold corporations accountable for their deeds. Since the activities of business and industry, especially transnational corporations (TNCs), are at the root of many of the world's environment and development crises, we should expect to see governments and intergovernmental bodies strengthening corporate accountability measures as part of the follow up to Rio. Instead, during the years since Rio, the trend has been toward holding national governments accountable to TNCs, not the other way around.

Problem Statement

In the lead up to Rio, business leaders formed the Business Council for Sustainable Development to advise the United Nations Conference on Environment and Development. Their stated goal was to lead business toward environmentally sound sustainable development. They also worked with other business groupings, such as the International Chamber of Commerce, to make sure that UNCED did not impose any unwanted regulations on them. During the time that intergovernmental bodies have allowed corporations to define and co-opt the definition of sustainable development, big business has grown ever more powerful. A pattern of mergers and acquisitions has concentrated private wealth in fewer companies, while enforcement of US anti-trust laws has declined.

Private investment to developing countries now outstrips aid from business and governments, growing from 33% of capital flowing to developing countries in 1991 to 75% in 1996, according to the World Business Council for Sustainable Development (WBCSD). Liberalization of the world's economies has given more freedom to traditional corporations' trade and investment decisions. Of the world's 100 largest economic entities, 49 are nation-states and 51 are TNCs.

The public message of WBCSD and other groups has been that business now understands and supports the goals of sustainable development and environmental protection, and business will be the leaders achieving both. At the same time, they have been working to avoid regulations of their activities, and working against agreements in the very regimes that UNCED spawned, such as the Climate Convention. For example, in their book "Changing Course" and in other publications, the WBCSD has supported the idea of full cost environmental accounting. Its members, however, have opposed taxes and reductions in subsidies on environmentally harmful products. In the climate negotiations, major fossil fuel companies have lobbied against measures that would begin reversing rising greenhouse gas emissions. Some of the companies even justify this reluctance to change oil use patterns as part of sustainable development. Regarding toxic chemicals, industry has insisted that there be no bans or phase outs of toxic chemicals.

Behind the rhetoric and lobby activities of the corporations are two presumptions

• free markets are the best assurance of environmental protection.
• voluntary agreements of corporate responsibility are a central step to environmental protection. Unfortunately, many governments, and the CSD itself, seem now to have accepted these unfounded assumptions.

Since Rio, while stalling and obstructing international environmental agreements, transnational industry has been pushing -- very successfully -- a free trade and investment agenda which increases their power vis a vis national governments and reduces their accountability to national governments, communities and intergovernmental bodies. The Uruguay Round of GATT, the North American Free Trade Agreement and OECD Multilateral Agreement on Investment (under negotiation) are all examples.

The last five years has seen a growth in private sector power, and growth in rhetoric about corporate responsibility. Has industry acted more responsibly? Clearly there are some positive corporate initiatives, but they pale in comparison to what is needed to combat the problems. In most critical issues identified by Rio, industry continues to avoid the changes needed to reverse fundamental problems.

Some Key Facts

• In the chemical industry, PVC and other organochlorine based products continue to proliferate, spreading especially fast in Asia. Even substances and applications banned in the West are proliferating in the rapidly industrializing regions.
• Shell has been associated with a brutal crackdown against environmental and human rights activists in Nigeria, while even today its substandard operations continue.
• The oil industry continues to explore for new oil in ever expanding areas of the planet, while ignoring the threat to the climate and putting scant resources into solar energy. Mobil Corporation, in one of its weekly ads in the NY Times boasts that in 1997 it will spend 3.5 billion "to bring even more fossils to life."
• The gold industry is expanding at an unprecedented rate, using technologies which rely on toxic chemicals and generate massive quantities of toxic wastes, despite the fact that enough gold already exists to supply technological and jewelry needs.
• Monsanto and Novartis have introduced genetically engineered crops to the world market without allowing consumers the choice of whether to buy them. The U.S. government has agreed with the companies that consumers do not have a right to know whether their food is genetically engineered or not.

The last five years have proven beyond a doubt that voluntary measures of corporate responsibility - no matter how well intentioned - are not sufficient to move us toward environmentally sound, socially just development. The Earth Summit's renunciation of measures to hold corporations accountable to inter-governmental bodies was identified by many NGOs as one of its biggest failures. That failure has only intensified in the last five years.

To mention just a few examples:

• The UN closed down the Centre on Transnational Corporations and abandoned the 17-year effort to negotiate a Code of Conduct for TNCs
• Attempts to bring lawsuits against U.S. companies for damages outside the U.S. have consistently been thrown out of court
• The CSD has not dealt with the issue of corporate accountability at all.

Greenpeace's Involvement in the Issue

Just before the 1992 Earth Summit, we published the "Greenpeace Book on Greenwash," exposing the rhetoric and record of the BCSD and nine of its member corporations. Since then we have continued to give quarterly "Greenwash Awards" to companies which tout their environmental awareness while continuing to engage in destructive practices. More generally, many of our efforts to protect the environment are, at base, campaigns for corporate accountability. For over 20 years, Greenpeace has been known for its independence and willingness to take on even the most powerful corporations, to expose their role in environmental destruction, and to support governments' and communities' right to hold them accountable for their actions.

Solutions

UN General Assembly Special Session should reinvigorate the concept of corporate accountability by:

1. creating a subcommission on corporate accountability. The commission would hear complaints by citizens and governments against transnational corporations, with a view toward providing relief to the complainants
2. insisting that undemocratic institutions such as the World Trade Organization (WTO) be accountable to the UN, with the implications of their decisions subjected to regular environmental impact audits
3. insisting that all nations and communities have a right to protect the health and environment without legal override by trade agreements.

Relevant Reports

Greer and Bruno, "Greenwash: The Reality Behind Corporate Environmentalism," Third World Network, Penang and Apex Press, New York, 1996;

Josh Karliner, "The Corporate Planet: Ecology and Politics in the Age of Globalization," Sierra club Books, San Francisco, 1997;

Jeffrey Barber, "Minding Our Business: The Role of Corporate Accountability in Sustainable Development," Integrative Strategies Forum, Washington D.C., 1997.

Key Contacts

Greenpeace International
Kenny Bruno, tel: 1.212.966.4386, fax: 1.212.941.6203, e-mail: kbruno@igc.org

ANPED Working Group, Netherlands Committee for IUCN
Sander van Bennekom, tel: 31.20.626.1732, fax: 31.20.627.9349.