By Teodor Teofilov
A handful of transnational corporations have become a major force shaping the global intertwined system of people and planet, scientists say in a new report published on Sept. 16 in Nature Ecology & Evolution.
In this new study, an international team of researchers suggests that an elite team of dominant transnational corporations (TNCs) may have an exceptionally large influence over our planet and its inhabitants. TNCs are huge companies that do business in multiple countries such as Nestlé and many are richer than entire countries in the less developed world.
“The scale at which TNCs operate, and the speed and connectivity they galvanise across the world is unprecedented in history,” the researchers, led by environmental scientist Carl Folke from the Royal Swedish Academy of Sciences, explain. “TNCs have become a defining feature of the interconnected planet of people and nature, with humans as a hyper-dominant species in the biosphere affecting global patterns of ecological change.”
These observations are not new. The consolidation among corporations, where a small number of companies control a large market share of the overall output or sales for a product or services is well-known and a predictable feature of economic development.
According to a report from October 2018, titled “Superstars: The Dynamics of Firms, Sectors, and Cities Leading the Global Economy” by the McKinsey Global Institute, just 10 percent of the world’s public companies generate 80 percent of all profits. Firms with more than $1 billion in annual revenue account for nearly 60 percent of the total global revenue and 65 percent of the market capitalization.
This can also be seen in the environment, where according to a report published in July 2017 by the Carbon Disclosure Project, an organization that runs a global disclosure system that enables companies, cities, states and regions to measure and manage their environmental impacts, since 1988, just 100 companies have been responsible for 71 percent of the entire world’s industrial greenhouse gas emissions.
This is also evident in the tech sector, where giants like Google, Microsoft and Facebook enjoy a monopolistic dominance over search engines, operating systems, social media and more.
This reach even has an impact on our health with pharmaceutical companies that are immensely powerful spawning health crises on huge scales, such as the opioid epidemic in the US, where the Sackler family, the makers of OxyContin — the drug blamed for helping to spark the nation’s opioid crisis, are facing more than 2,000 lawsuits.
Earlier this year it came out that Exxon, an oil and gas giant, had expertly predicted the shape of the climate today 37 years ago — in 1982. Energy companies hold so much power that they can predict climate crises decades in advance.
Even science can’t escape corporations control. In 2015, a study led by Vincent Larivière from the University of Montreal in Canada, found that the market share of the world’s largest research publishing houses had skyrocketed since the 1970s and only five corporations control 50 percent of all the journal articles that are published.
“These large commercial publishers have huge sales, with profit margins of nearly 40 percent,” Larivière said in a press release. “While it’s true that publishers have historically played a vital role in the dissemination of scientific knowledge in the print era, it is questionable whether they are still necessary in today’s digital era.”
Even though TNCs have so much power and control in our world, it doesn’t necessarily mean that they can’t act with responsibility, the researchers say. They outline six trends that, if capitalized on, could see the current notion of “corporate social responsibility” evolve in a sustainability-focussed model of “corporate biosphere stewardship.”
If TNCs impose effective sustainability standards throughout their supply chain, they could influence both upstream and downstream market actors, including small and medium enterprises. For example, this happened when the world’s largest retailer, Walmart, committed to transitioning to Marine Stewardship Council certified seafood by 2011, which is thought to have catalysed other retailers and triggered a rapid increase in certification.
The study states that voluntary TNC sustainability commitments are essential and can translate into improvements. However, voluntary TNC commitments to sustainability of the past two decades haven’t been effective enough and governmental regulation over TNCs hasn’t been strong enough. This has to change.
“Understanding and acting upon the new dynamics of the Anthropocene is fundamental for human well-being, and TNCs clearly are part of it,” the authors write.
There is evidence that TNCs in fields such as agriculture, forestry, seafood, cement, minerals and fossil energy, of a shift happening toward corporate biosphere stewardship the study notes.
The researchers think that emerging features such as an “alignment of vision” across TNCs could suggest that new norms around sustainability are coming about. New global political agreements such as the Sustainable Development Goals, adopted by all United Nation Member States in 2015, are a great example of what the paper calls “mainstreaming sustainability.”
The researchers underline that better regulation of TNCs through clarified licences of how they can operate can lead the way to corporate biosphere stewardship. A good example of this is the French Corporate Duty of Vigilance Law that was adopted in 2017 and created a legal requirement for large companies with at least 5,000 employees in France or 10,000 employees worldwide, to identify and prevent abuses on human rights and the environment related to their activities and those of their subsidiaries, subcontractors and suppliers. This law applies to the entire global supply chain.
According to the researchers, the shifts in how the finance sector is moving away from funding unsustainable practices is a step in the right direction. They argue that recent moves in the United Kingdom toward making environment, society and governance considerations mandatory parts of fiduciary duty, represent an indication that change is accelerating.
Technological developments are dramatically improving transparency among and within TNCs, and throughout their supply chains, and this “radical transparency” is becoming more popular. It enhances the accountability of TNCs, while the engagement from the scientific community providing “evidence-based knowledge for action” is another way to help push companies toward sustainability agendas.
These trends are all a good indicator of the TNC landscape changing. Global economic development has given us prosperity on an unprecedented level, but it has also introduced inequality, all at the expense of our environment. The rising awareness of the finite capacity of our planet gives us hope for change.
However, this doesn;t mean that TNCs will turn around and change. It is clear to see now, that our planet is on the verge of an unprecedented manmade disaster, that humanity’s mismanagement of the energy sector alone has been catastrophically unsustainable, and that our consumption based model is flawed.
If change is to happen, TNCs will have to be a part of the solution. The researchers leave us with new reasons to be mildly optimistic about these mega-corporations.
“The global dominance of TNCs is a reality of the Anthropocene, when transformative change is urgently needed,” the researchers write. “Pioneering companies are learning to persist in their strategies by adapting and innovating in their core businesses, while shaping new strategies and business models that are better fit for the future.”
“Corporate biosphere stewardship provides a new business logic with the purpose of shepherding and safeguarding the resilience of the biosphere for human well-being. Combined with effective public policies and improved governmental regulations, this new purpose presents unprecedented opportunities and novel pathways for social innovations towards sustainable futures.”