Business and Finance

Multinationals: Power and Responsibility

With power comes responsibility. Photo: RaghuP/flickr

Operating outside the legal jurisdiction of their home state, some multinationals violate human rights or damage the environment in ways that are illegal in their own countries: selling elsewhere what can’t be sold at home.

Swiss agribusiness firm Syngenta’s code of conduct commits it to acting in accordance with “the highest standards of ethics and integrity.” Yet it also sells the highly toxic herbicide Paraquat – forbidden in Switzerland for more than two decades – to developing countries. The consequences are grave: Plantation workers are suffering from skin diseases, poisoning or blindness, and are at greater risk of developing skin cancer or Parkinson’s disease.

Sadly, Syngenta is just one of many examples. The progression of globalization has led to an immense expansion of multinational corporations around the world. As our alternative map of South America highlighted, corporations these days are often bigger economic entities than states themselves. Multi- and trans-national corporations are on the winning side of globalization – but doesn’t power also bring responsibilities along with it? What about the environment and rights of unskilled workers in developing countries?

Business ethicists have tried to address these issues with the concept of corporate social responsibility (CSR). CSR stresses corporate self-regulation and is a voluntary commitment on the part of companies to contribute to sustainable economic, environmental and social development. Such codes of conduct have added to an increased awareness about the responsibilities of firms in doing business – and helped broaden consumer understanding about the implications of their purchase choice.

Business and Finance

Corporate Influence on the Global Economy

How influential are multinational corporations in today’s global economy? One way of answering the question would be to analyze the nature and extent of corporate influence in mainstream media, on governments and public policy, and on international institutions and agreements – such as at the World Economic Forum in Davos. Today, however, we  take a simpler, but nonetheless revealing, approach: comparing the economic size of corporations with the size of national economies.

The map below pairs South American countries (measured in terms of aggregate GDP) with equivalently sized corporations (measured in terms of annual revenue). Hover your mouse over a country to see how the figures compare (view large map).

If Paraguay, Guyana, Bolivia or Suriname were corporations, they wouldn’t make Fortune’s list of the Global 500.  Indeed, the GDP of those four countries combined is smaller than the annual revenue of Vinci – a construction company you’ve probably never heard of (unless you’re French).

Brazil is the only South American country whose economy clearly outsizes any of the world’s corporations. With a GDP of 2.1 trillion, its economy is roughly five times the size of Wal-Mart, the world’s largest corporation. Wal-Mart’s revenue in 2011 (~421 billion) falls between the GDPs of Saudi Arabia and Norway respectively – and exceeds the  GDPs of the next 170 countries. Maybe the G20 should consider inviting CEO Mike Duke to their next summit.