=======================Electronic Edition========================
RACHEL’S HAZARDOUS WASTE NEWS #397
—July 7, 1994—
News and resources for environmental justice.
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THE CORPORATION–PART 2: ASSESSING BUSINESS IMPACTS
Many of us know in our minds, or feel in our hearts, that the
products and materials we use in our daily lives are helping to
destroy the natural world and may be manufactured under working
conditions that are dubious at best. Yet we don’t have the
information we would need to make ethical choices.
And the problem is growing worse. As “free trade” laws allow
corporations to move more freely across international borders,
information about the impacts of corporate activities is becoming
more difficult to get. A large corporation can affect people and
the environment in dozens of countries simultaneously. Most of
these impacts are hidden, even from the managers of the
corporations involved because they buy from suppliers or brokers
who, in turn, buy from others. The ultimate impacts remain
hidden from the consumer and, too often, from corporate managers
themselves.
Take the case of Procter and Gamble, which distributes
Citrus Hill orange juice. [1] The oranges come from Florida farms
and are picked largely by itinerant workers. However, P&G
neither operates the farms nor buys directly from the farmers.
Instead the oranges are purchased from a broker who serves as a
go-between and who, unlike P&G, operates outside of public view.
P&G has no direct knowledge of the environmental or worker
conditions at these farms. Yet a CBS-TV investigative report
reveals that working conditions at some of the orange groves are
little better than indentured servitude. Migrant workers live
on the farms in abysmal conditions, without even a bare minimum
of comfort, sanitation or dignity. Yet, in return for room and
board they must pay their employer an amount in excess of their
salaries! In a vicious circle, each worker becomes deeper in
debt to the landlords, some of whom refuse to return the
workers’ “green cards” until the debt is paid off. The
arrangement is patently illegal, as are the living and working
conditions, yet local authorities appear to wink at the
situation.
Overseas, the situation is often worse. NEWSWEEK has revealed
that Chinese prisoners, including political prisoners, are forced
to manufacture items for export, including a well-known brand of
running shoes, flashlights, and the boxes for Seagram’s wine
coolers. Other journalists have asserted that clothing is
manufactured for Wal-Mart in sweat shops in Bangladesh by
children as young as nine.
There is absolutely nothing remarkable about these stories; human
suffering and environmental damage are an integral part of
millions of commercial activities around the globe, activities
that make possible much of the material comfort of modern life.
For the most part these activities are conveniently ignored. The
important issues of business are cost, convenience, and market
share; international commerce rarely cares to know more than
this, and turns a blind eye to horrendous violations of human
rights, worker safety, and environmental protection.
In the case of business activities outside the U.S., our
government has no jurisdiction. Even in the case of domestic
business, government regulation has only limited effect.
Experience in the United States has demonstrated time and again
that the best adjunct to government oversight is active
involvement of the public. The initial strategy for oversight
–government watches industry –is greatly strengthened by a more
recent strategy: the public keeps an eye on government watching
industry, or confronts corporate abuses directly at the local
level.
But the public cannot express concerns about problems that are
invisible. Only the social and environmental impacts that see
the light of day can be assessed by a public that cares about
such things. Information is the key to involvement; an informed
citizenry is best able to exercise responsibility for the state
of the world we live in.
David Sarokin, director of the Public Data Project in Washington,
D.C., has proposed a new vehicle for learning about the social
and environmental impacts of corporate practices. His idea is
based on two existing practices: the annual report filed by
publicly held companies, and the environmental impact statement.
Public corporations in the U.S. already prepare an annual report
to tell the public about their financial status. These reports
are designed to condense multitudes of data down to a manageable
size, to present information of value to both a lay audience and
to financial professionals, to provide uniformity of information
in a very non-uniform world, and to cover domestic as well as
overseas operations.
Some economic activities must prepare environmental impact
statements to assess the consequences of proposed actions (a dam,
or a highway, for example), explore means of mitigating any
serious impacts that are identified, and examine alternative
actions.
The corporate annual report, combined with the environmental
impact statement, is the ideal model for providing social and
environmental information to the public about the impacts of
business, Sarokin says.
Sarokin proposes a Social Environmental Impact Statement (or
SEIS), which would be a periodic report prepared by the largest
corporations operating in the U.S., would be freely accessible to
the public, and would provide perspective on the environmental
impacts of corporate operations, as well as the social impacts on
workers and communities. These impacts would be assessed over the
entire life-cycle of the corporation’s products, from the moment
materials are extracted from the earth to their ultimate disposal
by the end consumer.
The key feature of the SEIS is that it casts a broad net well
beyond the activities under the corporation’s direct control.
The impacts considered in the SEIS include those stemming from
the multitudes of suppliers that make a company’s activities
possible, as well as considering the fate of company products
after they are sold.
Impacts that should be considered in an SEIS, Sarokin says,
include the impacts of extracting, transporting, and transforming
raw materials, and of the production, testing, use, and disposal
of consumer products. Consideration would be given to impacts on
the environment and the health of ecosystems, as well as animal,
worker, and community well being.
Governments have no authority to influence economic activities
that take place outside their own borders. Nor do they have the
authority to directly collect information from foreign sources.
But a government CAN insist that its domestic businesses make it
their business to be aware of the consequences of their
activities, and of alternatives to those activities, and to make
such information public. What the power of government cannot
directly mandate, the power of the marketplace can bring into
being. Especially at a time when the size and stature of
multinational corporations rivals that of individual countries,
it is both necessary and fair to require this kind of reporting
from these corporations.
Sarokin suggests that SEIS reports initially be required of the
250 to 300 largest U.S. corporations with total annual sales of
about $4 trillion [a trillion is a million million]. As the SEIS
program matures, somewhat smaller companies could be brought into
the program.
A government agency would run the program, called the SEIS Review
Board. The Board would have two responsibilities: (1) to
identify companies that have failed to submit a required SEIS;
and (2) to review SEIS reports that have been submitted. The
review board would classify SEISs into 2 categories: satisfactory
and not satisfactory. A company that earned a “satisfactory”
rating would have 5 years before it had to submit an updated
SEIS. A company earning an “unsatisfactory” rating would have
one year to re-submit its report. Sarokin proposes no penalties
for a company that fails to submit a report. If public pressure
(negative publicity, shareholder dissatisfaction, consumer
response) doesn’t build up to sufficient levels to bring a
renegade company into line, the program won’t be worth anything
anyway, Sarokin believes. Without public involvement and
concern, the SEIS would have little point. The driving force
behind the SEIS is the casting of light on impacts that were
previously invisible. A senior official of the company would
sign the SEIS, saying, in effect, “I have reviewed the operations
of my company from top to bottom, and have identified the key
social and environmental impacts of our business, steps we are
taking to mitigate these impacts, and alternatives we have
considered.” This is a positive statement of corporate awareness,
which is very different from the conventional stance, which might
be summarized as, “We weren’t aware that our shoes are made by
Chinese prisoners, that our toys are made by eleven-year-old
girls who dropped out of school, that our suppliers are
apartheid/unsafe/polluters/clear-cutters/dolphin-killers/baby
seal-clubbers/union busters” or whatever the state of affairs
might be. The SEIS greatly reduces the viability of the corporate
explanation, “We didn’t know.”
The CEO has great incentive to produce a thorough and credible
SEIS. The report will be scrutinized by company employees,
stockholders, organized labor, groups representing particular
social causes, domestic and foreign governments, and the media.
Should a company employee, or a journalist, uncover a serious
impact that was omitted, it raises the specter of the CEO being,
at best, incompetent, or, at worst, participating in a cover-up.
Furthermore, the CEO has a great incentive to go beyond merely
reporting impacts to actively mitigating them. Few companies
will be willing to reveal that they contribute to the
clear-cutting of tropical rain forests, pollution of coral reefs,
or the poisoning of farm workers without taking dramatic steps to
better their practices and the practices of their suppliers and
customers.
Sarokin sums up, “Business decisions have long been guided by
the invisible hand of economics, responding to prices, supplies
and consumer preferences. But the guiding hand was soulless,
unaware of and uncaring about the consequences of business
activity. The SEIS creates a new conscience in the marketplace,
an invisible heart, if you will, to insure that the hand of
economics is unclenched, so that it can go about its business
with a gentle touch.”
GET: David Sarokin, A PROPOSAL TO CREATE A CORPORATE SOCIALENVIRONMENTAL IMPACT STATEMENT (Washington, D.C.: The Public
Data Project [3734 Appleton St., N.W., Washington, DC 20016;
phone (202) 363-5856], 1994). Without direct attribution, we
have quoted or paraphrased long sections of Sarokin’s report in
our text.
                
                
                
                
    
–Peter Montague
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[1] After going to press with the paper edition of RHWN
#397, we learned that P&G stopped distributing Citrus Hill juice in 1992.
Descriptor terms: free trade; corporations; environmental impact
statements; occupational safety and health; citrus hill; procter
& gamble; fl; china; wal-mart; bangladesh; social environmental
impact statement; seis; consumers; consumer products;
alternatives analysis; public data project; david sarokin;