CH15 - Globalization and Business Responsibilities Flashcards
Globalization
process of decreasing constraints on the interactions among the nations and people of the world (money and goods flowing around the world)
economic globalization def
integration of fragmented markets into a global economy (expansion of trade networks around the world)
political globalization def
process by which world power relationships change, and there is a loss of sovereignty by the states
transnational corporations
operate in many countries around the world, and are aided by trade agreements between different countries (McDonalds, Shell, H&M)
social or cultural globalization
emergence of a worldwide culture system
arguments for globalization
- leads to the most efficient production of g&s from which all gain
- private corps and open markets provide better goods and services to society
- opportunities for employment and higher incomes are enhances in developing countries
- standard of living has increased in most developing countries
- transfer of capital, tech, intellectual property, and skilled labour occurs
- several stakeholders benefits (owners, consumers, supplier, employees)
arguments against globalization
- expansion of global corp is undesirable as decisions are based on profit-making or greed
- conspiracies exist between corps and govs resulting in any benefit being received by a few
- unemployment created in developed economies
- periodic financial crises in the developing economies
- destruction of local environments
- cultures of societies are lost or changed
- human rights violated (sweatshops)
- intellectual property rights no respected
- sovereignty of nations is undermined (WTO has too much influence)
World Trade Organization (WTO)
only global international organization dealing with the rules of trade between nations
3 major trade agreements signed by Canada
- North American Free Trade Agreement (NAFTA)
- Comprehensive Economic and Trade Agreement (CETA) - Can/Euro
- Comprehensive and Progressive Agreement for Trans-Pacific Trade Partnership (CPTPP) America/East-Asia
International Non-Governmental Organizations (INGOs)
groups that hold shared values and attitudes about the issues relating to globalization and advocate for changes to improve conditions in developing countries
- pressure on corps and gov
- often opposed to globalization and excessive influence of multinational corporations
- also reffered to as TNGOs (transnational) or TSMOs (transnational social movement orgs)
ex. Save the Children, Action against hunger, Oxford committee for famine relief
supranational institution
international org that transcends national boundaries where the member states share in decision-making on particular issues pertaining to the members
- usually viewed as economic agencies, but they can also have an impact on the social, ethical and environmental responsibilities of the corp
- INGOs often critical of such institutions as they promote globalization
ex. NAFTA, EU, Mercosur
5 important supranational institutions
- World Bank -> provides financial and technological assistance to developing countries
- International Monetary Fund (IMF) -> fosters financial stability, international trade, employment, and reduction of poverty
- International Labour Organization (ILO) -> seeks to promote social justice and internationally recognized human and labour rights
- World Trade Organization (WTO) -> coordinates agreements reducing trade barriers
- World Economic Forum (WEF) -> independent International institution for Public-Private cooperation
International Monetary Fund
-> works to achieve sustainable growth and prosperity for all of its 190 member countries:
- supports economic policies that promote financial stability and monetary cooperation
-> governed by and accountable to its member countries
How Canadian business is influenced by globalization
- pressure to forge international links
- must meet the challenges of global market restructuring as governments complete new trading agreements
- must attract more investment in plants that further process our natural resources
- must be competitive with those from other countries in order to also behave as responsible corporate citizens
- more direct investment abroad
global standards of conduct developed by international organizations
- caux round table: caux principles of business
- OECD “guidelines for multinational enterprises”
- Equator Principles (EPs)
- United Nations’ Principles for Responsible Investment (PRI)
- Global Reporting Initiative (GRI)
- Principles for Global Corporate Responsibility: Benchmarks for Measuring Business Performance
Caux round table: Caux principles of business
- principles cover responsibilities of all stakeholders, economic and social impact of business, business behaviour, respect for rules, support for multilateral trade, respect for the environment and avoidance of illicit operations
OECD “guidelines for multinational enterprises”
one of the oldest guidelines and has influenced corporate behaviour around the world
- clauses include disclosure, employment and industrial relations, environment, combatting bribery, consumer interests, science and technology, competition and taxation
Principles for Global Corporate Responsibility: Benchmarks for Measuring Business Performance
- comprehensive set of more than 100 principles, 129 criteria and 118 benchmarks to measure business’ social and environmental performance. developed by interfaith orgs from several countries
Equator Principles (EP)
system for determining, assessing, and managing environmental and social risk in projects; its is primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making
UN principles for responsible investment (PRI)
formulated in partnership with the UNEP finance initiative and the UN global compact and developed by an international group of institution investors.
- prompted as environmental, social and corporate governance (ESG) issues that can affect the performance of investment portfolios
United Nations Global Compact Network
developed by the World Economic Forum
- set of principles referred to as the Global Compact
- call to companies to align their strategies and operations with ten universal principles related to human rights, labour, environment and anti-corruption, and take actions that advance societal goals and the implementation of the SDGs.
Global Reporting Initiative (GRI) Standards
GRI guidelines cover all aspects of economic, social, and environmental reporting and apply to multinationals corporations
Challenges that confront Canadian Business as it participates in the global economy
- presence of corruption
- respect for human rights
- use of sweatshop production
- reduction of poverty
corruption def
abuse of entrusted power for private gain
-> corruption perception index - measures perceived level of public sector corruption in countries and territories around the world
bribery def
making questionable payments, or bribes, to government officials to influence their decisions
- several orgs monitor and measure bribery practices (e.g. OECD)
- Canada doing a poor job at enforcing bribery practices (has prosecuted and convicted only one case)
Least and most corrupt countries
according to CPI score (corruption perceptions index):
Least - Denmark, new Zealand, Finland, Singapore, Sweden
Most - North Korea, Yemen, South Sudan, Syria, Somalia
human rights def (+ 2 significant human rights codes)
fundamental rights and freedoms to which all individuals, groups, and societies are entitled
1. United Nations’ “Guiding Principles on Business and Human Rights”
2. “Voluntary Principles on Security and Human Rights”
Voluntary Principles on Security and Human Rights
- Risk Assessment: in a corp’s environment, risks associated with political, economic, social factors; potential for violence
- Interactions Between Companies and Public Security: corps have an interest in ensuring that actions taken by public security providers are consistent with the protection of human rights
- Interactions Between Companies and Private Security: the latter should act consistently with the law and international guidelines
sweatshop production and human rights abuses
issue with most retailers
- child labour
- low pay
- poor working conditions
- poor health and safety
- mistreatment of workers
“bottom of the pyramid”
corporations should not ignore - as potential customers - the segment of the world’s population living in poverty
-> empowers those at the bottom by providing new options for improving their state
-> commercial infrastructure necessary at the “bottom”
2 other business approaches to addressing globalization issue
fair trade => trading partnership with aims at sustainable development for excluded and disadvantaged producers
microfinance => provision of financial products, such as micro-credit, micro-insurance, and savings accounts, to persons living in areas of poverty without access to baking services
driver behind creating a favorable environment to engage the poor
- break out of mature market
- framework conditions in many developing countries are improving
- communications are faster and cheaper, making the world smaller place
- public expectations of corporations are changing
- new and better partners are available
- aid and investment are beginning to reinforce one another
