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Multinational Corporations and Climate Change


At the turn of the 21st century, the global development agenda introduced the element of climate change and global warming. It was noted that economic activities and other human undertakings were affecting the environment negatively. Scientists believe that the toxics and other waste products released by industries are responsible for the climate change witnessed in the recent past. It is the responsibility of all stakeholders in the economic and political fronts to join hands with environmentalists in a bid to minimize the effects of climate fluctuations.

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The current essay revolves around this topic of climate change and economic activities. In the essay, the author focuses on MNCs and their role in environmental conservation. Multinational corporations should make financial and policy commitments to help cushion the environment from the negative effects of climate change. It is the moral obligation of these organizations to safeguard the surroundings. However, the companies should not be compelled to take part in the fight against climate change. On the contrary, they should be encouraged to engage in voluntary financial commitments. Legally binding commitments may not be supported by many organizations.

The firms should ensure that the environment is clean and safe. They can achieve this be promoting sustainable economic processes and exploitation of natural resources. The author of this paper will review two divergent opinions in relation to the moral responsibility of a company with respect to the environment. The first opinion is a proposal to have the company voluntarily commit some of its financial resources towards the fight against climate change. In the second instance, the idea is to have MNCs and other stakeholders agree to an internationally binding policy. The policy will define the firms’ financial contributions to support efforts geared towards mitigating climate change.

In both cases, the intention is to make sure that MNCs play an active role in the fight against climate fluctuations. The effects of these changes on the planet are quite severe. A number of stakeholders involved in this undertaking are identified. They include industrialists, policy makers, and environmentalists. The parties need to come up with a quick solution to address the problem. The proposals made in this essay are an attempt to address the issue. MNCs and other economic players have an integral role to play in the climate change discourse.

Legally Binding Commitment

Multinational corporations are important players in the global market. According to Singer (177), climate change, just like MNCs, is a global phenomenon. As such, those parties taking part in the menace have a moral responsibility to resolve the problem. Many people may question the motivation behind such moral duties. Such individuals should realize that multinational companies should be subjected to international laws. They should not be left to operate on their own free will. They should adhere to the laws meant to address the issue of climate change.

It is reasonable to assume that the element of moral obligation towards a clean and sustainable environment is in order. However, those against this position have raised a number of concerns. For example, they argue that it is not easy to resolve the legal issues surrounding this opinion. According to Singer (153), the difficulty lies in the creation of the said policy. In most cases, such legal issues are politically motivated. As a result, some countries appear to benefit from such legislations at the expense of others. The developed nations exploit these laws and use them to oppress the developing states. A case in point is the Kyoto protocol.

The agreement was signed in 1997. Singer (154) points out that Canada opted out of the deal. The country cited the severe fines associated with the legal framework as the major reason why it could not be party to it. On its part, the United States was in support of the agreement. However, the country is yet to ratify the treaty. Japan and Russia appear to be the only countries committed to the treaty. However, the two do not have binding targets, especially after the treaty was reviewed in 2012.

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The parties who are in favor of the Kyoto Protocol as a binding legal commitment should realize that the framework introduces the issue of the burden imposed on various countries with regards to financial commitments. The parties who drafted the law acknowledged that MNCs (through the countries within which they operate) have a moral (and financial) obligation in relation to environmental conservation. The process is helps in combating the challenges associated with climate change.

As already mentioned, MNCs avoid interfering politically on matters touching on climate change policies (Arnold and Bustos 117). The formulation of Kyoto Protocol and such other legally binding international laws involves lobbying, which is a highly political process. As such, MNCs are locked out of the process. What this means is that such protocols are not the way to go. A company might be willing to contribute towards the policy making process. However, political involvement may make this impossible.

An example of political lobbying is cited in an article by Snyder (par. 1). The scenario highlighted touches on TransCanada Corp. The company is believed to have spent more than $1 million lobbying for the Keystone Pipeline project. The organization wanted the US Congress to approve the project. However, environmentalists were against such a move. They were citing the risks posed by the project as far as global warming and climate change are concerned. In the article, Snyder (par. 1) depicts the company as acting in bad faith. The same is true when a company, such a contemporary MNC, is involved in lobbying. The consumers will get the impression that such a company does not want to take part in efforts to solve the climate change problem.

Another angle to the legally binding policy is the determination of where the actual responsibility lies. Arnold and Bustos (133) refute the argument advanced by Bowie (54) by suggesting that companies should bear full responsibility over environmental damage. Arnold and Bustos argue that forcing a company to make payments for historical damages brought about by other organizations goes against the element of fairness. Climate change is a gradual process. Over time, different companies might have wound up their operations. As a result, forcing companies to make financial contributions and disregarding previous players is not advisable.

Another restriction towards realizing a legal policy on the subject is the actual determination of the cause for global warming. Bowie (46) places the burden on industrial companies. On their part, Arnold and Bustos (38) introduce three other players. Arnold and Bustos point out that the consumers and producers are to blame. They argue that producers, including MNCs, are aware of the environmental impacts of toxic emissions. The consumer is also made aware of this fact. Considering that the consumer is the one who purchases the product, one can then argue that both parties are to blame.

From the arguments made in this section, it becomes evident that the legal requirement to have companies foot the financial contribution is hard to realize. In spite of the various benefits that would result from the process, it is not the right way to go. Arnold and Bustos (37) expand the scope of the groups responsible for climate change. By introducing consumers, it becomes difficult to come up with a framework where both producers and customers can be held legally accountable for phenomenon. The economic burden imposed on a country or a company would be too great to bear. However, the greater good of the environment should inform a company’s moral obligation.

Voluntary Financial Commitments

According to Arnold and Bustos (103), MNCs are aware of the problems associated with climate change. Most of the companies have come up with internal policies to deal with this issue. Multinational managers agree that there is need to respond in a timely manner to the challenges brought about by environmental changes. The companies have realized that they stand to benefit if climate change is effectively managed. As a result of these apparent initiatives, MNCs should make voluntary contributions in efforts to fight the menace.

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According to Arnold and Bustos (103), MNCs have expressed their goodwill and willingness to participate in the fight against this problem. The goodwill is evident in the companies’ intent to obey the variously laws put in place and their response to the suggestions made by consumers in relation to climate change. In addition, most of the companies have resolved to remain neutral with regards to the debates surrounding this phenomenon.

For example, the organizations avoid interfering politically in such discussions. They support conferences and other forums used to discuss this problem. It is important to note that voluntary financial responsibility is a moral obligation. It is borrowed from the principles of fairness. According to Singer (4), companies have a role to play in environmental conservation campaigns. The reason is that their activities contribute significantly to the problem..

Multinationals, just like any other companies, are involved in processes that give off toxic emissions to the environment. The toxic fumes, in turn, contribute to climate change. However, the effects of this change are mostly felt by countries that did not contribute to the problem. In such cases, Singer (184) argues that a company has a moral responsibility to fix what it has spoiled. As such, a financial contribution towards a kitty to help cushion such countries is necessary. Such a voluntary action can be sourced from Frankena’s scale of duties. Under such circumstances, a company is expected to contribute to the society to solve problems (Bowie 3).

One would pose a question as to why the action should not be anchored in law to ensure that multinationals are legally bound to make contributions towards combating climate change. In that regard, Arnold and Bustos (5) make the suggestion that such a law would require the involvement of democratic countries. However, the two argue that there are 38% sovereign states which are not democracies. As such states that engage in a binding agreement with them are not reflecting the wishes of the people. In such cases a company with goodwill, such as an MNC, might be willing to make contributions towards helping to combat the effects of climate change. However, the absence of a compelling law to make trade-offs will prevent the company from fulfilling their moral obligation.

Another motivating factor behind the need for voluntary contribution is the role played by consumers. According to Arnold and Bustos (5), the consumer’s preferences are supposed to be informed by factual details with regard to climate change. Unfortunately, most consumers do not have this kind of information at their disposal. Since, companies have an accurate account of their impacts towards the climate change issue, it would be prudent that their moral obligation be informed by that information rather than rely on customer preferences which are not well informed. An MNC can therefore take advantage of the information at their disposal to make voluntary contributions as suggested.

The moral obligation to contribute, financially, towards the climate change cause is informed by the element of harm to others. Arnold and Bustos (6) argue that harm to the environment affects the consumer, producer, non-consumers and generations to come. A company should not be comfortable with such kind of harm being done to the society. It is therefore a moral obligation to minimize and subsequently prevent this kind of harm. The best approach to such a situation would be for a company to take initiative in response to the climate change situation. Making financial contributions voluntariy is one way of taking initiatives.

The benefits of this voluntary action are bountiful. According to Bowie (83) a company is expected to produce products that are safe to their consumers and the environment at large. For instance, the production of cars should be informed by their safety. However, Bowie (83) introduces the aspects of unavoidable deaths due to accidents. In such cases the manufacturer is not at fault. Rather the onus shifts to the consumer. That notwithstanding, the manufacturer should always consider the safer option for their consumers.

In an article, Hopper (par. 3) makes a case on the safety of the Canadian oils in favor of the off-shore oils depended upon by the United States. The US, in this case, has a moral responsibility to provide safe products to their citizens. It would be an example of initiative by the government to ensure that the consumers’ safety concerns are factored in while importing crude oil. The same benefit is realized through the voluntary financial commitments. MNC stands to attract more loyal customers who will want to associate with a company that has the safety of its customers and the environment with regard to climate change.

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In conclusion, this paper supports the general idea that MNC has a moral obligation to preserve the global environment. A legal framework would be hard to realize as epitomized by Arnold and Bustos (38) despite the huge benefits. For that matter, the preferred moral obligation would be for a company to take personal initiative. In this regard, MNC should form a consultative forum with environmentalists to come up with ways to combat climate change. The same should be matched up by financial commitments on the part of the company. Such a move would endear MNC not just to its customers but to other potential clients keen on environmental conservation. Global climate change is a process that affects everyone. By taking personal initiatives, industry players will be providing the much needed solutions.

Works Cited

Arnold, Denis and Keith Bustos. “Business Ethics and Global Climate Change.” Business & Professional Ethics Journal 24.1/2 (2005): 103-130. Print.

Bowie, Norman. Business Ethics in the 21st Century, New York: Springer, 2013. Print.

Hopper, Tristin 2014, Sorry but would you Like to buy our Oil? Canada ad Blitz Hits Washington D.C. Web.

Singer, Peter. “One Atmosphere.” Climate Ethics: Essential Readings. Ed. Stephen Gardiner, Jamieson Dale and Henry Shue. Oxford: Oxford University Press, 2010. 181-199. Print.

Snyder, Jim 2014, TransCanada Spent US $ 1.05 Million Lobbying the US on Keystone Last Year. 

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