influence at least a quarter of all production activities in the world, they are responsible for 70 per cent of the international trade in goods and 80 per cent of the total amount of land cultivated for export crops. <10>
Perhaps more important than the omnipotence of the transnational corporations is their active involvement in environmentally sensitive areas of industry, including mining, the chemical industry, heavy metals, wood/paper, agro-business and the petroleum industry. And much of the production is concentrated within a limited number of corporations.
CFC's, one of the most important contributors
to the hole in the ozone layer, are almost exclusively produced by large
chemical concerns - most of which are transnational corporations. E.I.
DuPont de Nemours and Co. alone was, until very recently, responsible
for 25 per cent of the total world production of CFC's. The Treaty
of Montreal agreed to slowly bring their production to a halt. (See
also Chapter 7 of this book.)
The pesticide industry is strongly concentrated
within a number of large transnational corporations. The 20 largest pesticide
corporations control 94 per cent of the world market. There is also a high
concentration of transnationals producing the various sub-groups of pesticides.
In the aluminium industry, the 20 largest corporations
control 90 per cent of the - highly polluting - world bauxite production.
Consequently, transnational corporations are also
responsible for a large number of environmental problems and not only those
caused by industrial activities.
The share of transnational corporations in the total production (through human activities) of greenhouse-gases <11>
(We refer here to emissions which transnational corporations can influence, through their own or governmental measures.)
Before we can estimate the degree of involvement, responsibility and liability of transnational corporations, we have to define what we mean by transnational corporations, and what we define as being influenced by them.
Liability is an important aspect of the relationship between the parent company and its subsidiaries. Most countries grant businesses a limited liability status. Under limited liability, shareholders are not personally liable for company debts, and the parent company is liable for the contractual obligations of the subsidiary only if the subsidiary is a fully integrated part of the corporation. OECD-memberstates recognize the liability of the parent company for the obligations of its subsidiaries. They do not recognize the corporation's general liability for environmental or other damage caused by its subsidiaries. There are many other forms of responsibility in which liability should be recognized. The parent company should be seen as liable for the damage caused by its subsidiary if, for example, it did not exercise sufficient control over the subsidiary or did not supervise it adequately, if it did not warn it of known risks, or supplied the subsidiary with defective parts or products.
An equally prevalent but wider definition of transnational
corporations looks at who controls what. This fits in more closely with
the present trend of less direct ownership and more contracting out of
segments of production, using a network of businesses for various forms
of
cooperation. The transnational corporation is seen as a central
organization controlling production in a number of countries.
According to this definition, transnational corporations
are characterized not by the relationship of ownership, but by control
over production. They control numerous business activities without actually
investing in them. Such companies are practically, but not formally, subsidiaries.
If the transnational uses nationally operating subcontractors, these also
become, according to this definition, part of the
transnational.
The effect of the subcontractors' activities on the environment bear per
definition on the environmental practice of the transnational as a
whole.
If we define transnationals in this way, the question
of whether national companies cause less pollution than transnational corporations
becomes unimportant. Both transnational corporations and local producers
are involved in polluting and risky activities, but it is the transnationals
who exercise control.
The specific way in which a transnational controls
an operative can be various. Whatever the form, the relationship of control
implicates the transnational corporation in more environmental problems
than the size or involvement of the company-specific activities would suggest.
In this study we define transnational corporations as the sum of corporately controlled industries and services. We will discuss this in more detail in the following paragraph on key positions in the production column.
Twenty large corporations dominate the
world's aluminium industry, among them Alcoa, Alcan, Reynolds,
Maxxam, Péchiney,
Norsk Hydro, VIAG/VAW, Alusuisse, RTZ,
INI and EFIM. These transnationals owe their tremendous economic power
to the vertical integration of their production chain. The corporation
is not, however, equally visible in every link of the chain.
The large corporations own concessions on no
more than 30 to 40 per cent of the known world bauxite reserves. In
absolute terms, however, the largest concerns, including Alcoa and Alcan,
have very sizeable reserves. They can decide for themselves whether, and
to what extent, they will mine these concessions. The bauxite reserves
of these corporations are found in the countries with the largest bauxite
supplies, including Australia, Guinea, Guyana and Brazil. They combine
operations in a variety of ways with smaller aluminium companies, forming
mining consortia. As a result, the aluminium corporations are able to negotiate
very positive mining terms in each of these countries.
The corporations can not only decide for themselves
when and where they mine their own bauxite concessions, but also have a
large hand in the next link of the global supply chain: the production
of alumina. Eighteen corporations own almost 90 per cent of the western
world's alumina production. These same eighteen corporations are involved
in bauxite mining.
With this scale of alumina factories and concentrated
ownership, the corporation knows with every new mine it opens exactly who
will buy the bauxite and how much they will buy. Conversely, in opening
a new alumina factory or expanding the capacity of an old one, the corporation
always knows which bauxite it will be processing.
A mere 20 corporations control almost three quarters
of the world's aluminium production. Most of them are actively involved
in bauxite mining and alumina production. From the late seventies and throughout
the eighties, more and more smelters were constructed in Third World countries,
while investments increased in Australia and Canada. Brazil, Venezuela
and Indonesia became the most important countries for new investment, together
with the Middle East, Qatar and Bahrain. The price paid for electricity
is one of the most important determinants in the choice of where to situate
a smelter. Most of the production of these smelters is for export to traditional
user areas - the United States, Europe and Japan. The smelting capacity,
particularly in these export countries, will continue to grow.
The first step towards manufacturing the final
product - casting (alloys), moulding, extrusion and rolling - is almost
entirely in the hands of corporations which have their own smelting capacity.
In the second stage of manufacturing, from semi-manufactured
product to manufactured product, the aluminium producing corporations are
strongly represented only in certain business segments. The corporations
are actively involved in a number of existing, highly valuable applications,
such as specialized extrusion of profile mouldings, the production of aluminium
plate for drinking cans, construction materials, etc. The corporations
are also actively involved in new applications, such as ceramic
products, aluminium-synthetic composite materials, and alloys. Market growth
in this sector is primarily determined by the technological development
of the products. The corporations invest tremendous amounts in research
and development, and promoting the applications of the new products.
Because transnational corporations have powerful economic positions in polluting and high-risk production areas within production chains, they are important on two accounts. They are a link between economic development and underdevelopment, and between economic and ecological problems. Transnational corporations embody, as it were, in their worldwide activities, an important part of the relationship between development, underdevelopment and ecology. In other words, between wealth, poverty and environmental problems.
It will be clear that sustainable development has everything to do with the doings of international concerns. Without transnational enterprises there will be no sustainable development. That seems unquestionable. The controversy over their role concentrates on the question of whether the corporations are willing and able to take their own responsibility or whether they should be forced into acceptable environmental behaviour. Many aspects of the international activities of the corporations influence sustainable development. One of the subjects of discussion is the freedom of the international concerns in their choice of location of (environmentally polluting) investments and the international movement in the environmental problem which will result. The following chapter will deal with this in more detail.
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