An age of diluted responsibility

The key issue is that we have global corporations and finance, but no global governance. Add numerous tax havens, virtual money, multi-layered financial markets and high frequency trading, and the result is that the links between financial allocation decisions and the impact on the economy, society and the environment, all of which heavily impact human rights, are diluted. 

The Amazon forest is being destroyed. Precious wood is being cut down, generating fortunes for local companies, but mostly for international commodity traders. The thinned forest is then burned to allow for a few soya harvests thriving on the incorporated potash. The fragilized soil is then left to cattle ranchers, and the huge meat export industry. The destructive process also allows the expansion of illegal mining, and systematic murder of indigenous populations. And the cycle continues, a huge fire arc from the south up.  

The convergent interests of precious wood extraction, soya concerns, meat industry and mining generate a cluster of power that gives them majority in Congress, which passed a law exempting them from export taxes, and drastically reduced environment and human rights protection. Glencore, Cargill, BlackRock and other traders take what they can, and distant institutional or individual investors only look at how much the shares are paying. Should the final consumers of products in supermarkets check what they are buying, or should we blame the importing countries, or the traders, or those who invest their savings in those companies, or those who cut down and burn the forest? It is a system, hugely profitable, deeply destructive, and legal. 

Irresponsibility is not only overlooked, it is rewarded. Take Vale S.A., the largest iron ore and nickel producer in the world. Its subsidiary Samarco generates huge profits, exporting iron ore it does not have to produce, a natural resource, but underinvestment in the dams containing polluted residues lead to a huge ecological and human disaster. Brazil has excellent expertise in dam-building, but the Samarco executives pay and bonuses depend on how much they transfer to shareholders, leading to a complicity chain that links them to banks and traders, not to the social issues. BHP Billiton, the Anglo-Australian co-owner, participates in the profits, not in the disaster. Shares are easy to move. As John Ruggie writes, “directors are rarely expressly required to consider nonshareholders’ interests.”(1)

We do have ESG discussions, but money belongs to another world. The Economist presents an important figure: “The share of American multinationals’ foreign profits booked in tax havens has risen from 30% two decades ago to about 60% today.”(2) If you do not have information on the money flows, there is no way you can map responsibility. The world GDP is equivalent to US$3,800 per month per four-member family, enough to ensure a dignified life for all, even with a very moderate reduction of inequality. Some 900 million go hungry in the world, a quarter of them children, while we produce more than a kilo of grain per person per day, not to speak of other food products. We do not lack resources, we lack social and political organization. The corporate 15% global tax on profits considered for 2023 may put the lights on. But for all the efforts undertaken by John Ruggie and so many others, and the importance of the Guiding Principles, we are still in the dark.

Notes

1.  John Gerard Ruggie – Just Business: Multinational Corporations and Human Rights – Norton, New York, 2013, page 133 – https://dowbor.org/2013/10/john-gerard-ruggie-just-business-multinational-corporations-and-human-rights-w-w-norton-new-york-ouctober-2013-3p.html
2. Economist, June 2, 2021 – Twilight of Tax Havens – https://www.economist.com/finance-and-economics/2021/06/01/twilight-of-the-tax-haven