The debate on capitalism continues! President Barack Obama’s State of the Union address focused on tax inequality as one basis for economic reform and David Cameron has called for ‘Moral Capitalism’. So this week I’m looking at a some more areas of possible action . Firstly let’s look at change that is happening via partnerships and constructive engagement with business.
As Abraham Lincoln said: “If you wish to win a man over to your ideas, first make him your friend.” Industry bodies are promoting corporate social responsibility (CSR). CSR Europe is the leading European business network for corporate social responsibility and Forum for the Future is a non-profit organisation working globally with business and government to create a sustainable future.
Climate change is a big corporate challenge and The Carbon Trust works with companies to reduce their carbon footprint. Environmental impact is a big sector for activity. Forestry certification is an independent, non-governmental, organisation established to promote the responsible management of the world’s forests.
The Roundtable on Sustainable Palm Oil promotes the growth and use of sustainable palm oil products through credible global standards and engagement of stakeholders like WWF. Biofuels are now a hugely controversial issue and organisations like Action Aid and others are campaigning on these concerns.
There are a range of Private Voluntary Initiatives, such The Kimberley Process involving governments, the World Diamond Council and NGOs to end the trade in conflict diamonds. The Extractive Industries Transparency Initiative sets a global standard for transparency in oil, gas and mining while the Ethical Trading Initiative is an alliance of companies, trade unions and voluntary organisations. working in partnership to improve the lives of poor and vulnerable workers.
The Fairtrade Foundation deals positively with business to help create s fairer trading system. These partnerships while many are far from full-proof or binding have helped create greater awareness and action.
This brings us to the final area of ensuring fairer practices by enshrining in regulation or systems of rules.
The UN calculated that 77,000 multinational companies have 770,000 affiliates and employ 62million people exporting goods and services worth $4trillion. They are very significant actors in trade and politics, and there are many hard fought international agreements to guide their practices.
There is a huge body of international law and treaties but it is often very difficult to ascertain the exact legal force or status of any singular agreement, although they may evolve over time into hard law.
They include The United Nations Global Compact the world’s largest voluntary corporate responsibility initiative offering a framework for businesses that are committed to aligning their operations and strategies with ten universally accepted principles. Others include the OECD Guidelines for Multinational Enterprises the Global Reporting Initiative and the ILO Declaration on Fundamental Principles and Rights at Work..
One of the most important recent frameworks has been drawn up by Professor John Ruggie, the United Nations Special Representative of the Secretary-General on the issue of human rights and transnational corporations who issued a final Report and Guiding Principles on Business and Human Rights in 2011.
This is currently a live issue as the UK government is seeking changes to the Legal Aid, Sentencing and Punishment of Offenders Bill. Professor Ruggie wrote to the government, expressing his concern on the position of legitimate claimants in civil actions alleging business-related human rights harms, particularly in cases involving large multinational enterprises. This issue is of great current concern to Amnesty and is the focus of Oxfam action.
While international negotiations such as WTO Doha Round set up to improve the trading prospects of developing countries, 10 years of work has failed to reach agreement. Others, including the long campaign to internationally regulate the arms trade which will hopefully reach fruition at the UN this July have offered more success. The UK, also acts as part of the EU, helps set key regulations in European environment policy, which aims to ensure sustainable development.
Sometimes this legislation can be controversial as in biofuels which set a binding minimum target for biofuels of 10% of vehicle fuel by 2020. Biofuels can be very environmentally destructive and divert land from food production.
There is huge debate and just recently Norman Baker, the Transport Minister in charge of biofuels at the Department for Transport, announced that he will be freezing the biofuel target at 5% by 2014.
There is also currently much debate on a new European law to force oil, gas, mining and forestry companies to publish the payments they make for every project in every country they operate. If you want to engage UK politicians on these issues a good place to start might be the All-Party Parliamentary Group on International Corporate Responsibility consisting of MPs who could be useful allies on these concerns. The UK Government also publicly consults on a range of issues. You can respond to these.
While financial services contribute £50bn to the UK national coffers every year and the sector makes up 10% of the economy, financial regulation or the lack of it has been at the heart of the economic crisis. There are many actions we can continue to take that will help reform and change the system.
A key area to tackle are tax havens that provide the ultimate source of strength for our global elites. The Tax Justice Network promotes tax justice and tax cooperation and resists tax avoidance, tax evasion and tax competition. The Organisation for Economic Co-operation and Development (OECD) said the reform could provide governments with up to $100bn (£62bn) in additional tax.
HM Revenue and Customs have failed to collect over £25bn in unresolved tax bills from major firms, according to the Public Accounts Committee. UK politicians have called for more action on tax justice. The Robin Hood Tax, a tiny tax on financial transactions although opposed by the UK Government, has also received huge global support
This survey across the possibilities to help create a ‘fairer capitalism’, taking in investment and consumer decisions, campaigning on bad practice, partnerships and regulation offer us many opportunities to create change. These all involve tackling the power relationships between the private sector, the state and the individual .
There is, however, one story at the heart of this, inequality. If we are to have an economic system that provides for human needs in a fair and environmentally sustainable way, equality is key.
Oxfam has just issued a report which highlights that inequality has risen across the G20 as economic growth fails to trickle down to poorest. I would like to assert that inequality is not just about the distribution of the benefits of an economy, but is a vital component of a system that ensures a successful economy.
Our model of growth which asserts that ‘the bigger the cake’ the more for everyone does not work, greater inequality undermines economic success. Inequality, including gender equality, is bad for everyone. This little video about the influential book on equality ‘The Spirit Level’ explains why this is. These arguments are explained more in the cost of inequality by Stewart Lansley.
These are some thoughts from me – back to you to continue the debate – it is not going away!
Roger James is a campaigner for Oxfam South West in Bristol