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Reproduced with permission from
the United Nations Research Institute for Social Development

Transnational Corporations: Impediments or Catalysts of Social Development?
Limits to Corporate Social Responsibility

While there are very few "socially responsible corporations", there do exist a few exceptions. Ben & Jerry's is one of the most famous examples. This company buys the Brazil nuts for its Rainforest Crunch ice cream from peoples living in the Amazon rain forest. These buying policies are designed to demonstrate the economic viability of environmentally sustainable practices and to reduce the financial incentives for inhabitants to clear cut the forest.143 Esprit is another prominent exception. This clothing company, for example, supports a cottage industry in impoverished West Virginia where they employ 30 Appalachian women knitting sweaters from organic wool, and Esprit pays these women three times what other farmers are earning for their wool.144

Even the few socially responsible corporations, however, occasionally engage in harmful activities. For example, despite its good reputation and its impressive sourcing guidelines, Levi Strauss still operated a plant in Mexico called Maquillas Internacionales where company employees knew terrible working conditions existed.145 Although Esprit has received numerous awards for its corporate responsibility, the United States Department of Justice raided one of its subcontractor's factories last year in San Francisco where the employees were owed 127,000 dollars in wages, were paid below the minimum wage and received no overtime pay.146

Relying upon these examples, some critics of TNCs contend that no "socially responsible corporations" truly exist. However, such criticism seems misguided and extreme. Supervising every aspect of a multinational enterprise is obviously quite difficult. While Esprit and Levi Strauss might not be perfect, they can still be considered "socially responsible corporations".

These improprieties, however, demonstrate that transnational corporations — even the most socially responsible ones — cannot always be expected to unilaterally promote social development. It must not be forgotten that "corporations exist to pursue their own profit maximization, not the collective aspirations of society. They are commanded by a hierarchy of managers, not by democratic deliberation." 147

The profit-making telos of transnational corporations will usually compel them to subjugate all other issues to the pursuit of money — even if it means sometimes breaking the law. In a study of Fortune 500 companies, from 1975 to 1984, 62 per cent were involved in one or more "significant illegalities", 42 per cent in two or more and 15 per cent in five or more.148 If large corporations cannot be expected to obey the law, they can hardly be expected to foster social development and social integration. As Indonesian labour organizer, Fauzi Abdullah, aptly described the activities of Reebok, a company that has recently established subcontracting guidelines as well as an international human rights award:

"Don't confuse human rights with marketing. Reebok isn't the worst company here, but that doesn't mean they're good guys... Their main purpose is to exploit low wages here. They're not looking for ways to help the people who make their shoes."149

143 43. Scott and Rothman, 1992, p. 55.

144 44. Udesky, 1994, p. 665.

145 45. Ibid., p. 666.

146 46. Ibid., p. 665. The Department of Justice also raided subcontractor manufacturers making clothes for The Gap, Banana Republic and Ralph Lauren (ibid, p. 667).

147 47. Greider, 1992, p. 331.

148 48. Ibid., p. 352.

149 49. Zuckoff, 1994a.


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