Introduction
The assertion that the global corporate social responsibility (CSR) activities of many Multinational Corporations (MNCs) are failing to make a sufficient contribution towards Sustainable Development (SD) is true. Some people argue that the above statement is true because businesses’ social and environmental activities are often not connecting legitimately with the societies they operate in. ISO 26000:2010 was developed to help MNCs achieve sustainable development through a multi-tier reporting channel (United Nations, 2015; Hahn, 2013).
Financial performance and overall success in corporate institutions are among the most influential factors for investors seeking to pump their money into new opportunities (Whiteman et al., 2015, p. 307; WCED, 1987). Over the years, corporate have registered groundbreaking profits and losses, which depend on their management practices and policies. The performance of business cooperation is influenced by several factors, including leadership, research, and development, monopoly practices, community engagement, social responsibility, and strategic planning, to mention a few.
Today, global warming and climate change are big challenges facing the world. Experts agree that human activities mainly cause climate change, mainly focused on energy and transportation (Banerjee, 2008, p. 1541). Most companies depend on national power grids or fossil fuels to run their operations which contributes immensely to the emission of greenhouse gases. The companies contribute to national development and environmental conservation through the payment of taxes and social activities. However, it does not tally with the impact of their activities on the environment (Browne & Nuttall, 2013). The social contribution of MNCs begins with the ways they handle their employees, customers, and the host community. Communication and reporting among employees and management are key driving factors to the positive performance of an organization. Also, the nature of working conditions determines whether employees feel motivated or demotivated and significantly affects their output at the personal, team, and cooperate levels. Corporations have adopted multi-tier reporting strategies to assess their sustainability in different ways ( GRI, 2013; GRI, 2017). Financial reporting is the conventional way of measuring business performance and presents its pros and cons.
The Purpose of Cooperate Social Responsibility (CSR)
CSR was proposed several decades down the line and used to improve the company’s image before the general public. Due to the dynamic landscape of the current competitive markets, companies need to take approaches to improve their grip on their market share (Browne et al., 2015). As a result, companies adapt to work in a manner that adds value acceptable to the community ethics and environment preservation standards (ISO 2011; ISO 2013; ISO 2016). Thus, the company pays close attention to community needs and culture, human rights, and its immediate environment. Ethical practices give companies an upper hand over their rivals, helping them gain a more significant share of particular market segments. An ethical company performs better, grows more prominent, and gains more profits to achieve its business goals.
True Sustainability in The Corporate Sector
Scholars and market experts disagree on a single definition of suitability. However, they agree on the impact of corporate organizations on natural resources such as forests, wetlands, soil, water, and air. Usually, all companies rely on natural resources to produce their products. The dependence on natural resources is either direct or indirect but affects the ecological balance in one way or another. Mason and Simmons (2017, p. 77) note that sustainability is heavily cussed on environmental balance. Since the global population grows faster than regulators can put rehabilitative measures, natural resource acquisition and exploitation are significant challenges. Williams et al. (2017) argue that true sustainability is achievable but at a high cost. For instance, most technology companies own millions of computers that consume vast amounts of power generated from fossil fuels. The companies contribute to climate change by relying on fossil fuels to generate electric power for their operations (Bravo, 2014).
Multinational Corporations in Sustainable Development
Multinational corporations are not compatible with sustainable development, although the United Nations have provided international guidelines to achieve the latter. Usually, corporates are not designed to commit themselves to a place or community but rather the target financial and market gains. Although most MNCs have declared their commitment to reverse the environmental damage resulting from their actions, it is not achievable on most occasions. Even in cases where the damage is reversible, the corporations do not invest proportionate resources, time, incentives, or commitment to compensate affected communities. Cooperates make tough decisions such as downsizing or adopting new technologies without consulting with their employees or evaluating environmental impact (Carrel, 2016). Such decisions have a devastating impact on the environmental and economic stability of the given community.
MNCs have short-term goals that span across a few leadership cycles at the expense of future generations (Milne & Gray, 2013, p. 13). It implies the corporations’ plan and investment in individuals who see the investors’ vision and not sustainable development. However much harm the corporations pose to the environment and society in the future, they consider themselves sustainable as long as they are financially stable to lobby for laws and regulations (Polman, 2014).
The concept of demography in multinational corporations is democracy. Usually, the organizations create specific communities that respond to the company. Simplex communication is mistaken for real dialogue between the company, its workers, and host communities, discouraging the participation of stakeholders in company operations (Scherer & Palazzo, 2010). Minority groups are highly segregated and incorporate dialogues, if they happen at all, limiting the chances for sustainable development (Schwartz & Tiling, 2009, p. 289; Summit, 1992). It becomes difficult for minorities to air their grievances or report on any issues affecting or associated with its operations.
Financial equity is an essential part of sustainable development, but it is not embraced in most multinational corporations. There is a huge and consonantly growing gap between employee and CEO salaries. For instance, in 1980, CEOs of the largest environmentally polluting companies were paid 41 times an average employee’s salary. The figure grew to 149 by 1993, while the toxic levels produced or caused by corporations grew 230 times (Leung et al., 2009,p. 85). By any definition, MNCs do not sufficiently contribute to sustainable development. The financial policies and disparities challenge sustainability in all dimensions (Unruh, 2014). Most plants emit toxic waste in their neighborhoods, affecting the ecological balance (Kanagaraj et al., 2015, p. 5). Corporations that do not dump their waste in their surroundings, like technology companies, consume much energy generated from fossil fuels.
It is unfortunate to note that MNCs are not dedicated to fighting poverty. Experts argue that poverty will fade away with economic growth but do not explain how (Dicken, 2015). Since the end of the second world war, there has been positive economic growth, accompanied by an increase in poverty levels. At the same time, the MNCs have automated their processes, killing millions of jobs worldwide (Shehu & Abba, 2019). The employees who previously helped the jobs can no longer provide for their families, resulting in increased poverty (Vermeulen et al., 2018, p. 16). Although automation increases productivity, it does not embrace true sustainability, inducing poverty among the masses (Carbonero et al., 2020). There is no substantive argument on whether the positive impacts of automation outweigh its disadvantages.
Most MNCs are dominant market players and engage in non-competitive behavior, inhibiting the growth and development of startups. They compete unfairly in market control, acquisition of raw materials, and the supply chain at large. Most of the MNCs do not focus on necessities but rather acquire excessive resources. The behavior among the already established organizations is contrary to social and environmental sustainability. Although it propels the companies to achieve their financial goals and obligations, the social and environmental impacts are devastating, inhibiting their ability to achieve true sustainability.
There is a significant conflict between community and markets which demands that MNCs must focus on one. Markets call for zealous investors and a dynamic workforce targeting work incentives, competition, redundancies, and money (Adkins, 1999, p. 119). on the other hand, community economies are focused on the welfare of all, job security, corporation, and common goal. MNCs prefer market economies that have more cons than community economies (Marglin, 2008). The desires of corporations are contrary to the ideal standards for truly sustainable development, which is primarily fueled by their activities.
Most greedy MNCs do not benefit local communities are they ship away all the profits. Although the corporations invest in infrastructural development such as schools, roads, bridges, hospitals, and electricity, the end profits are spent in other areas (Meadows et al.,1992).On most occasions, there is the little or negative net impact of MNC investments on the local communities. It implies that the resourcefulness of the given area does not benefit the host community, contrary to sustainable development.
Conclusion
in conclusion, the global corporate social responsibility (CSR) activities of many Multinational Corporations (MNCs) are failing to make sufficient contributions toward Sustainable Development (SD). As discussed, the corporate structure, goals, activities, and practices focus more on their finances than social and environmental sustainability. Even in cases where the corporate is determined to cancel out the environmental impacts of its activities, the commitment or investment can not match the damage already done. The greed for money makes most organizations design demographic communities which respond to the organization, killing the need and room for dialogue. Lastly, MNCs leave little or no profit for the local communities after importing skilled labor, promoting poverty.
Reference List
Adkins, L., 1999. Community and economy: A retraditionalization of gender?. Theory, culture & society, 16(1), pp.119-139.
Bobby Banerjee, S., 2008. Necrocapitalism. Organization Studies, 29(12), pp.1541-1563.
Browne, J. and Nuttall, R. (2013) ‘Beyond Corporate Social Responsibility: Integrated External Engagement.’
Browne, J. and Nuttall, R., 2013. Beyond corporate social responsibility: Integrated external engagement. McKinsey & Company, pp.1-11.
Carbonero, F., Ernst, E. and Weber, E., 2020. Robots worldwide: The impact of automation on employment and trade.
Carrel, A. (2016), Is your social license expiring, three imperatives for executives in Australia, Ernst and Young, Australia
Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press, USA.
Dicken, P., 2007. Global shift: Mapping the changing contours of the world economy. SAGE Publications Ltd.
GRI (2013) G4 Sustainability Reporting Guidelines, Global Reporting Initiative, Amsterdam
GRI (2017) ‘GRI Standards.’6-11-17
Hahn, R., 2013. ISO 26000 and the standardization of strategic management processes for sustainability and corporate social responsibility. Business Strategy and the Environment, 22(7), pp.442-455.
ISO (2011), Social Responsibility, ISO 26000 tells it like it is, ISO Focus+,2(3) March 2011.
ISO (2014), GRI G4 Guidelines and ISO26000: 2010 How to use the GRI4 Guidelines and ISO26000 in conjunction.
ISO (2016) ‘Discovering ISO26000.’ 5-11-16. Web.
Kanagaraj, J., Senthilvelan, T., Panda, R.C. and Kavitha, S., 2015. Eco-friendly waste management strategies for greener environment towards sustainable development in leather industry: a comprehensive review. Journal of Cleaner Production, 89, pp.1-17.
Leung, K., Zhu, Y. and Ge, C., 2009. Compensation disparity between locals and expatriates: Moderating the effects of perceived injustice in foreign multinationals in China. Journal of World Business, 44(1), pp.85-93.
Marglin, S.A., 2008. The dismal science: How thinking like an economist undermines community. Harvard University Press.
Mason, C. And Simmons, J. (2014), Embedding Corporate Social Responsibility in Corporate Governance: A Stakeholder Systems Approach, Journal of Business Ethics 119:77-86, Meadows.
Meadows, D.H., Meadows, D.L., Randers, J. and Behrens, W.W., 1972. The Limits to Growth. New American Library. New York.
Milne, M.J. and Gray, R., 2013. W (h) ither ecology? The triple bottom line, the global reporting initiative, and corporate sustainability reporting. Journal of business ethics, 118(1), pp.13-29.
Polman, P., 2014. Business, society, and the future of capitalism. McKinsey Quarterly
Scherer, A.G. and Palazzo, G., 2011. The new political role of business in a globalized world: A review of a new perspective on CSR and its implications for the firm, governance, and democracy. Journal of management studies, 48(4), pp.899-931.
Schwartz, B. and Tilling, K., 2009. ‘ISO‐lating’corporate social responsibility in the organizational context: a dissenting interpretation of ISO 26000. Corporate Social Responsibility and Environmental Management, 16(5), pp.289-299.
Shehu, N. and Abba, N., 2019. The Role Of Automation And Robotics In Builtings For Sustainable Development. work, 6(2).
Summit, E. (1992) Agenda 21. The United Nations programme for action from Rio.
United Nations (2015) ‘Transforming our world: the 2030 Agenda for Sustainable Development.’ 22-11-17
Unruh, G. (2014) ‘Leading the Sustainability Insurgency.’ 6-6-16.
Vermeulen, B., Kesselhut, J., Pyka, A. and Saviotti, P.P., 2018. The impact of automation on employment: just the usual structural change?. Sustainability, 10(5), p.16-61.
WCED, U. (1987), Our common future. World Commission on Environment and Development, Oxford University Press.
Whiteman, G., Walker, B. and Perego, P., 2013. Planetary boundaries: Ecological foundations for corporate sustainability. Journal of management studies, 50(2), pp.307-336.