Role of Corporate Accountability in Sustainable Development:
An Introduction

Eventually, in discussions on consumption and production patterns, environmental protection, the sustainability of local communities, and even the integrity of government policy-making, the subject of transnational corporations and their increasingly dominant influence comes up. NGOs are understandably concerned as governments -- particularly from "developed countries"-- claim they have "no new resources" to devote to sustainable development, and that we instead need to look to the leadership of business and industry. While there may be many businesses and even transnational Corporations (TNCs) sincerely attempting to be socially and environmentally responsible, the bottom line of business is to make a profit -- everything else is secondary.

Furthermore, the world is shamefully scarred by the conduct of corporations giving little priority to social responsibility, abusing local communities and ecosystems in their quest for market share and higher returns. A large number of NGOs have been acting from the premise that corporate accountability is an essential element of sustainable development, that ultimately corporations can only be responsible if they can be held accountable to the society which they should serve. One of the goals of the ToBI initiative is to give voice to the concerns and recommendations of these NGOs.

An NGO Independent Assessment for the 1997 UN Special Session

The strategic purpose of the NGO Taskforce on Business and Industry (ToBI, pronounced "Toby") is to highlight and document for the Commission on Sustainable Development (CSD) in April, and the United Nations General Assembly Special Session the widely shared conclusion among NGOs that governments and civil society need to make greater efforts to ensure corporate accountability. Many large corporations and small businesses are indeed making improvements in ecoefficiency and taking steps to become more socially and environmentally responsible. But they can only go so far. On the other side of the coin, many continue to put profits ahead of social and environmental well-being, believing themselves accountable only to their shareholders.

Originating this past year at the ANPED workshop on TNCs in Amsterdam, ToBI aims to take advantage of the UN Special Session this June to review progress on Agenda 21 (the agreement made by the world's governments at the 1992 Earth Summit in Rio). This historic UN session, and the preceding meetings of the CSD, are being led by the World Business Council on Sustainable Development, an entity championed by the International Chamber of Commerce to defend deregulation and free trade policies. The Council holds that corporations are becoming more socially responsible and can regulate their own conduct without government or civil society's oversight. Considering the many well-documented examples of corporate intransigence and irresponsibility, it is important now to consolidate these assessments into a single report conveying NGO recommendations on governments' responsibility to ensure corporate accountability.

Thus the NGO Taskforce on Business & Industry, composed of NGOs actively monitoring, researching, or organizing campaigns addressing issues of corporate conduct and accountability, will produce an Independent Assessment on the need for greater progress by governments to address corporate accountability issues. This Independent Assessment will be presented to the Commission on Sustainable Development this February as part of the United Nations 1997 Review of Progress on Agenda 21.

The Business of Business

Despite assurances by groups such as the World Business Council on Sustainable Development to "provide business leadership as a catalyst for change towards sustainable development," efforts to promote socially and environmentally responsible practices and accountability to the public through self-regulation and company-defined codes of conduct are generally considered by NGOs to be inadequate.

While progress has been made in many cases toward achieving greater ecoefficiency, we continue to see the disastrous consequences of unregulated corporate behavior:

• human rights violations of indigenous and poor people and the degradation of their environment (e.g., the case of Shell and the Ogoni in Nigeria, Texaco in Ecuador);

• the unabashed marketing and encouragement of greater consumption of pesticides, fertilizers, and fossil fuels;

• continued dumping of toxic wastes near poor communities; and

• the shameful trade in weapons, particularly land-mines.

Yet, the United Nations and a chorus of governments around the world continue to promote and sing the praises of corporate deregulation and the creative power of the free market to eradicate poverty and rescue the environment. At a time when corporate globalization is being treated as an inevitable reality, it is also the time for NGOs to coordinate our support for efforts to protect local communities and ecosystems threatened by this trend, and to make a strong case for government regulatory oversight and enforcement and strengthening of civil society mechanisms to protect the integrity and health of local communities and ecosystems, in both developed and developing countries.

Code of Conduct Revisited

In 1992, the UN Centre on Transnational Corporations prepared a proposed Code of Conduct for Transnational Corporations to be submitted to government delegates attending the UN Conference on Environment and Development in Rio. This Code of Conduct was the result of 13 years of work by the UN Centre on Transnational Corporations. However, before this document could be circulated it was withdrawn from the agenda. In the following year, the Centre was downsized and effectively removed from the playing field. Behind this incident was vigorous activity by the International Chamber of Commerce, arguing that there was no need for an independent Code of Conduct or regulatory oversight of TNCs, that the corporate sector could be trusted to voluntarily regulate itself in a socially and environmentally responsible manner.

Five years later, in June 1997, the UN General Assembly will review progress of the CSD and government and major group efforts to implement Agenda 21. This review is a critical moment and opportunity for NGOs to pool their knowledge and experience in order to evaluate and officially report on how far business and industry, particularly TNCs, have actually traveled on the path toward social and environmental responsibility.

As pointed out in the CSD's Guidelines for Major Group Input, the upcoming UN Special Session of the General Assembly to review progress on Agenda 21offers "an opportunity to:

1. take stock of achievements and failures in Agenda 21 implementation since 1992;

2. increase the level of world-wide political commitment to Agenda 21 objectives,

3. determine the priorities for the future in this area, and

4. assess the institutional mechanisms created for Agenda 21 follow up including the work of the CSD itself."

Without effective governmental and civil society mechanisms to ensure the accountability of business and industry to society, sustainable development has little chance for success. For business and industry, a major question is to what degree the bottom line of profitability and the upper line of responsibility can be maintained without the intervention or guidance by government regulations or civil society's active pressure. For the rest of and industry, including TNCs, that social and environmental responsibility and accountability is a prerequisite to staying in business.