The role of corporations and multi-national business in sustainable development is much contested, with opinion polarised since the Brundtland Commission in 1983.
The Declaration of the United Nations Conference on Human Development in Stockholm in 1972 contained a reference to the role of business in its preamble, calling for ‘the acceptance of responsibilities by citizens, communities and by enterprises and institutions at every level, all sharing equitably in common efforts’.
Subsequently, the Brundtland Commission, convened by the UN in 1983 and chaired by Norwegian prime minister Gro Harlem Brundtland, set out to respond to a new generation of environmental problems such as climate change and deforestation, and combined the twin aims of environmental protection and poverty reduction into a single formula: sustainable development. The impact of international trade upon the environment was explicitly recognised in the Brundtland Report published in 1987, but primary responsibility for averting environmental degradation was ascribed to nation-states rather than corporations.
Regulation of corporations was again notable by its absence on the agenda of the 1992 UN Conference on Sustainable Development; although a chapter was prepared by the UN Centre on Transnational Corporations, it did not make its way into the final negotiations. The proposed chapter, entitled ‘Transnational Corporations and Sustainable Development,' called for governments and international organisations to ‘address in future environmental instruments the rights and responsibilities of transnational corporations,' and ‘establish or strengthen a regulatory environment supportive of sustainable development.’
However, the role of corporations in sustainable development was explicitly tackled in Principle 16 of the 1992 Rio Declaration through its commitment to the polluter pays principle, consisting in the idea that ‘national authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment.’
Meanwhile, Agenda 21 featured a Chapter entitled ‘Strengthening the Role of Business and Industry,’ which provided a framework for corporate social responsibility and acknowledged the importance for governments of encouraging improved corporate environmental management. Agenda 21 recognised that sustainable development could only be achieved with the cooperation of business.
Yet despite these steps and the emergence of a dialogue between governments, NGOs and civil society there was a growing realisation that businesses’ externalisation of environmental and social costs was becoming increasingly harmful. Calls for responsible investment and sustainablility reporting grew louder, while events such as the Exxon Valdes oil spill spurred the debate further.
An attempt was made to secure a convention on corporate accountability at the World Summit on Sustainable Development (WSSD) in 2002. In the Johannesburg Plan of Implementation it was agreed that the international community should ‘promote corporate responsibility and accountability and the exchange of best practices in the context of sustainable development,’ while the final text of the summit cited the duty of the private sector to ‘contribute to the evolution of equitable and sustainable communities and societies’ in the context of a ‘transparent and stable regulatory environment’.
The intervening period has seen rapid growth in sustainability reporting and sustainability indexes, while the rise in sustainable investments, the uptake of sustainability initiatives such as the Global Reporting Initiative and the UN Global Compact, the development of the ISO 26000 standard on social responsibility and private sector initiatives such as the Principles for Responsible Investment demonstrate a greater commitment on the part of corporations to sustainability.
Civil society organisations, the labour movement and social movements from across the world have been calling on businesses to act accountably and take responsibility for the social, economic and environmental impacts of their activities, and the debate continues to gain scale as it receives more coverage in the mainstream media and new societal expectations take shape.
Moreover, the recent banking and financial crisis has provided fresh impetus to debates around the role of corporations in delivering societal benefits. There are calls for the deregulation of the preceding decades to be reversed and for control over corporate entities to be strengthened.
The activities of corporations have a huge effect upon the environment, and their support is essential if governments are to achieve the sustainability goals agreed upon at international conventions and implementing environmental agreements. In the context of market liberalisation, foreign direct investment and growing trans-boundary issues, multinational corporations and the private sector in general are likely to exercise ever increasing influence over economic, environmental and social processes.
The upcoming 2012 UN Conference on Sustainable Development and nearly 30 years of the Brundtland Commission has provided a new opportunity for dialogue on the need for a convention on corporate social responsibility. Stakeholders from across the world have begun to engage on the issue and have recognised the role such a convention could have in delivering sustainability through national regulation.