Environmental practices of big businesses
How large companies treat the natural world rests on one uncomfortable truth, which many people find deeply unfair. Under the right conditions, a firm can enlarge its profits, at least over the short run, precisely by harming ecosystems and the people who depend on them. Two familiar cases illustrate this: crews working an unregulated fishery where no catch limits apply, and international timber firms holding brief leases on tracts of tropical forest in regions where officials are easily bribed and landowners poorly informed. Whether clean firms or dirty ones come out ahead depends on the surrounding pressures. Where the state enforces its rules and where citizens pay attention, the environmentally responsible company can beat its careless rivals; where enforcement is lax and the public indifferent, the opposite usually holds.
Condemning a company for enriching itself at others' expense comes naturally to the rest of us. Yet condemnation by itself seldom changes anything. What it overlooks is that firms are not charitable bodies but enterprises built to turn a profit, and that any business owned by shareholders is bound to serve those owners by earning as much as the law allows. Under company law in many countries, directors who deliberately run a firm in a way that shrinks its profits can be held personally liable — a failure sometimes labelled a breach of their duty to shareholders. A well-known illustration is the carriage manufacturer Cornelius Haldane, whom his own shareholders took to court in 1921 after he lifted his employees' minimum wage far above the going rate; the judges accepted that his concern for his workforce was admirable, but ruled that the company had been set up to generate returns for its investors, not to serve as a charity.
There is a further thing our finger-pointing misses: in the end it is the public that creates the very conditions under which a firm can profit from wrecking the environment, so the public shares the blame. Over the long term the power lies with ordinary people — acting for themselves or through the politicians they elect — to strip destructive practices of their profitability and to outlaw them, while making genuinely sustainable choices pay.
One route is the courtroom: people can sue firms that have harmed them, as they did following the Kestrel Bay tanker catastrophe, when more than 30,000 cubic metres of crude oil escaped along a northern coastline. But there are quieter levers too. Shoppers can favour goods that have been harvested responsibly; workers at firms with poor records can be shamed into complaining to their own managers; voters can push for public contracts to go to companies with sound environmental histories; and they can lean on governments to write, and then actually enforce, laws that require good practice.
Large firms, in turn, can bring formidable pressure to bear on suppliers who might otherwise shrug off the disapproval of the public or the state. Consider what happened when people grew alarmed about an illness that could pass to humans through contaminated meat. The national food-safety authority responded by ordering processors to drop the practices that let the infection spread — yet for five years the processing firms refused, insisting the changes were simply too costly. The picture changed overnight once a nationwide restaurant chain, watching sales of its products collapse, issued exactly the same demand: within weeks the processors fell into line. The lesson for the public is to work out which points in the supply chain actually respond to pressure — restaurant chains or jewellery retailers, say, rather than the processors of meat or the miners who dig out gold.
Some readers will be dismayed, even angry, that I lay ultimate responsibility for harmful corporate behaviour at the public's own door. I would add something equally unwelcome: the public must also accept that goods may have to cost more wherever sound environmental practice adds to their price. Such a position can look as though it brushes aside the conviction that companies ought to behave ethically even when doing so eats into their profits. My answer is that human history points the other way. In every politically complex society, regulation has emerged for a reason: people found that moral expectations had not only to be spelled out plainly but also to be backed by enforcement.
For me, the finding that the public holds the ultimate say over even the mightiest corporations is a source of encouragement and hope, not gloom. It is not a verdict on who is virtuous and who is selfish, who wears the white hat and who the black. History shows that businesses have shifted course whenever the public began to want something different — rewarding the conduct that people approved of and making life awkward for the conduct they rejected. My prediction is that the pattern will hold: as before, it will be shifts in public attitude, more than anything else, that push companies to change how they treat the environment.
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Question 1 - 5
Choose the correct letter, A-J.
Big businesses
Many major firms are ready to harm people and the environment in the pursuit of profit, seemingly guided by no 1.Drop or Select. Where 2.Drop or Select from the authorities is weak and where the general public shows little 3.Drop or Select, the outcome can be environmental harm — for example 4.Drop or Select, or the loss of 5.Drop or Select.
List of options
overfishing
oversight
subsidies
forests
scruples
wildlife
flooding
interest
employee backing
pollution