What Do World Bank and Multinational Corporations Do to the Environment - Essay Example

This is an era of globalization. The people of the world who are watching You Tube from Mac Book Pro, googling, wearing the Nike shoes, and are drinking coffee in the Starbucks are representing the globalization. These multinational corporations like Google, Nike, Coca-Cola, and Starbucks, earn more than billions of dollars a day from the regular transactions of their goods and services. With the development of globalization, human beings have been able to possess multiple things to enjoy life further. In this era, almost all economies are interconnected and mutually dependent on each other. Therefore, people have established IFIs (International Financial Institutions) in order to efficiently monitor and control the economies of world. As a result of those effects, the world looks healthy and the earth appears to be harmonious under the name of globalization. However, multinational corporations and IFIs, for example, World Bank and International Monetary Fund, have significantly created severe environmental problems in the world. The three similar ways they have used are the following: They look for good business, They pretend to be environmentally friendly and earn profit twice over, and They share the partnerships with non-profit organizations to improve their image and to earn more profit although they severely destroy the environment. IFIs like World Bank and IMF (International Monetary Fund) and multinational corporations have caused environmental problems, especially while providing incentive to commercialization within the Third World. They both would like maximizing their profit at the same time they minimize costs in the Third World. Ironically, World Bank and IMF are looking for profit from the poor countries and they implemented ‘Structure Adjustment’ under the veil of globalization and economic development. As a result of that, they have corrupted the framework of other nations which desperately need the money to govern the their states. For transparency, one needs to express what the ‘structure adjustment’ is. This is the program that World Bank and IMF enforce when they lend the money in order to promote economies of poor countries. However, despite this plausible effort, World Bank and IMF push the governments of poor countries to reorganize their structures of economies suiting the institution’s appetite. Off course, they are operating this program to ensure they get full return of the loan and interest. This project caused serious environmental problems to Third world. For example, as reported in “The IMF-Funding Deforestation” written by Tockman, ‘Structure Adjustments’ is harmful to forests of poor countries in four ways. First, the institutions are forcing the poor nations, such as Cameroon, Russia, and Indonesia, to reduce environmental funds under the ‘Structure Adjustment.’ Therefore, illegal logging and mining have prevailed upon the protected area. Second, the IMF promotes poor countries to have export-oriented markets rather than being dependant on their domestic industry. That is because IMF thinks the former is more effective and profitable to yield return to these nations. However, without any actual progress in environment of poor countries, these attempts created severe deforestation since major goods for export promotion were the forest product, agriculture, and mining. Hence, forests were evaporated in the way of cutting down, liquidation, and pollution led by the mining and ranching. Next, the IMF encourages the countries to open the economies towards investment from other nations, which need more natural resources. This, off course, gives more resources and raw materials for their final products and they will earn more profit from this advantage. Thus, wildlife has been significantly ruined and the indiscriminate mining, gas and oil development, and logging activities indirectly provoked by foreign investors have affected societies dependent upon the forest. Lastly, as explained in the above three ways, the Structure Adjustment eventually gives rise to much lower living standard than before. Even though foreign investors established the corporations in the poor country unexpected unemployment has increased. As a result, the poor economy loses stability and ultimately remains poor. Devaluation of the currency and even reduction of the social service take place. All the attempts that IMF used are actually making developing countries much poorer. Furthermore, local people are kicked out of their home since corporations are built without any consideration of society. Then, local people turn to the forest for resources, like woods and fruits, deforesting their wildlife. In a word, IFIs cleverly manipulate economies of poor nations to satisfy their desires, using ‘Structure Adjustment.’(이 예들 다 사이테이션해야하나?) Additionally, multinational corporations are using the strategy, known as ‘Race to the Bottom’, in order to reach their goal which can simply be defined as money as a motivator. Recently, developed countries have shown the decrease in the level of deforestation while developing countries are suffering due to the forest shrinkage. We can figure out why this is happening. This happens because rich nations’ industries have moved to poor countries. G20 with its membership of developed nations of the world actually seek the place to dump pollutants and toxics, avoiding the strict set of laws and costly solutions for disposing chemicals. As a matter of the fact, the multinational corporation moved their operations to the poor nations, seeking for the more profitable conditions, which will help their company prosper. For instance, corporations in chlorine industry, such as Dow, Solvay and ICI, have moved their facilities into Brazil, India, and China, undergoing increased pressure on discharging organic compounds (Karliner 1994). Obviously, the production of chlorine produces other chemicals that are considered as most harmful wastes. Underdeveloped countries mentioned above are even suffering because of the brutal competitions among them. To get an attention from the multinational corporation, they need to improve their infrastructure and implement the policies suggested by the institutions. The poor nations finally can get contracts with corporations and they get what they need, for instance, infrastructures and jobs (더필요). However, even though it seems that poor nations can earn many benefits from corporations, this circumstance actually gives rise to unreasonable result, which is defined by ‘race to the bottom.’ Under race to the bottom, corporations have a significant control on the poor nations. With increasing competition between the poor nations, lower standard of living is met. In this competition, the poor nations offer considerable benefits like tax holiday, lower wages, environmental regulations, and prohibition of labor union. Each of these offers created to win the competition have made environmental problems in the developing countries. The environmental problems can be seen in three phenomena, which contribute towards efforts to attract multinational corporations. First of all, lower tax and tax holiday are the things that cause the environmental problem. To attract multinational corporations the poor nations have no other option but offer advantage of taxes to the corporation. Off course, corporations choose the country, which offers the least tax regulation. The nation gains the new technology from corporation, and the nation expects the economy to boom. It seems like they both win here. However, as a result of decreased tax, the poor nation usually confronts the problem of supporting social services, such as, building a school, health care services, and even environmental service. When the poor nations need to make decision where they cut off the social service, they obviously choose the cost of environmental service to be reduced. Next, due to the lower or no environmental regulation, it is definitely easy to expect that the environment is going to be destroyed by companies’ inconsiderate behaviors. They actually cut down the forest, dump the chemical and waste to a river, which local people use to do their chores, drink, and take a shower. The companies, however, are not going to spend their money to take care of the environment. Thirdly, corporation holds a strong control on the labors. To make more profit, the companies make the laborers work for extended hours, having an ability to prohibit the union. The laborers work in the poor condition of amenities for long time. Furthermore, workers even get $3.75 per day (toxic empire). Resulted from poor care of the workers, the workers are likely to ignore the appropriate steps for eliminating the wastes because they do not even have any chances to take care of themselves in that condition. In addition, workers become more hesitant to say what bad things the corporations do to them and environment because the laborers are afraid of being harmed by the corporations, which already established powerful relationships with politicians. In short, corporations use the strategy, ‘race to the bottom’, to yield the best result and profit from the poor country where they build the facilities. To do that, they optimize their market, and minimize the expenditure on things that directly relates to environmental problems. However, we must not forget that they have caused another problem, transferring facilities into poor nations. It gave rise to increased unemployment rate in U.S.A since all the job opportunities in manufacturing are getting outsourced into developing countries. Second, IMF, World Bank, and multinational corporations are confusing the world, acting as if they are “environmentally friendly”. Furthermore, they make double profits by green image while they are no doubt destroying the environment of poor countries. IMF and World Bank have established “New Environmentalism” and have achieved the double profits, presenting themselves as environmentally friendly organizations. Popularizing ‘New environmentalism’, they are using another program called GEF (Global Environmental Facility) as an answer to the critics of World Bank. This program seems to be very environmentally friendly because it grants funds to poor countries in order to help their projects and programs, which intend to protect the environment. The funds are used mostly to build the national park in poor countries. The funds can also be spent on bringing the green technologies, supporting sustainable farming, and offering environmental education programs. Doing so, IMF and World Bank get the green image from the world. However, in the meantime, the IFIs do not stop using ‘Structure Adjustment’ while lending large amount of money to poor countries. As a result, they can improve their image as green and gain more profits under GEF and Structure Adjustment respectively. For instance, World Bank built the national park in the northern Congo under GEF, while they are still cutting down trees in southern Congo to pay back loan from the World Bank. Therefore, it can be said that World Bank and IMF are confusing people by their activities. In reality, they are establishing the national parks because they want to increase future prospects of logging. Hence, developing countries need to pay double loans: environmental loan and the structural adjustment loan. Unsurprisingly, the IFIs are selling conventional and green goods as they make double profits and improve their image respectively. On the other hand, Multinational Corporations have several steps of being green and getting more profits. The first step is confusing people about the environmental problem, such as global warming. For example, the front group is the organization, which corporations hire to promote their interests and profits. ‘The Heartland Institute’ is the front group even though it sounds environmentally friendly. These kinds of organizations try to argue that global warming is not a threat and CO2 is not a cause of global warming. Through the advertisement or campaign, they cast the doubt on ongoing global warming. Another organization that works with corporation is the ‘Think Tank’. The ‘Think Tank’ is a little different from the fake organization mentioned above. This private organization actually hires expertise to perform the research, workout the problems, and inform what they have found. Because of the considerable number of scientists they worked with, this organization appears to be very objective and trustworthy. However, Think Tank also tries to confuse us to achieve their clients’ interests, reporting that the global warming is not real. As a matter of the fact, multinational corporations fund them to create uncertainty. The other strategy corporation uses is ‘Green Washing’ which advertises their goods as green products. Under green marketing, they emphasize that consumers can participate in the movements to protect the environment, by purchasing their green products. Indeed, this is the strategy that makes us buy more automobiles. However, as we all know, the actual way to fix the environmental problems is that we need to reduce the purchase of automobiles. For example, Ford Motors begins to sell the new hybrid cars as green products even though the energy efficiency is almost same as conventional cars. Since consumers do not know what they are really doing to the environment by purchasing hybrid cars, the Ford Motors could get not only double profits but also green image because they are selling both green and conventional products. As same as GEF, Green marketing is nothing more than one of the ways to get both double profits and green image, while they are still ruining the environment. Lastly, IFIs and multinational corporations work with NGOs (non-governmental organizations) to get good images, and increase the profits under the partnerships with them. Cooperation with NGOs has been popularized among IFIs, multinational corporations, and environmentally friendly NGOs. IFIs have reached their goals via cooperation with environmentally friendly NGOs. For example, Greenpeace is the biggest NGOs, which IFIs work with. By means of partnerships, it is enough for IFIs to give the world the feeling that they care for the environment. This partnership is beneficial for both IFIs and NGOs because the former gets green image without doubt, and latter gets lots of money as a reward of partnerships. The partnership normally appears to be very efficient and reasonable but this partnership could even be very dangerous if there is no serious consideration for the cooperation (The Swoosh, the Shell and the Olive Branch, Bruno and Karliner). Furthermore, multinational corporations have attained their goals under ‘United Nations Global Compact.’ It seems that corporations have caught two pigeons with one bean. To be specific, the corporations engrave ‘UN mark’ as if they do take care of the environment, even though they still severely contaminate the environment. With the aid of UN mark, they can be seen as guardians for human rights, labor, and the environment. Therefore, the corporations get benefits since consumers are likely to buy more products of the corporations engaged in Global Compact. In fact, many corporations act as if they are environmentally friendly companies. For example, Disney might describes itself as a provider of educational value, in spite of many debatable issues, and oil companies hold the key to sustainability (Bruno & Karliner). Under protection from the Global Compact, the corporations have even less regulations that ever before, resulting from absence of strict monitoring system. Even horribly, corporations have become freer from the monitoring since NGOs now engage in Global Compact. In conclusion, World Bank, IMF, and multinational corporations have given rise to environmental problems in Third nations through their commercial interests, pretension to be environment friendly and partnerships with NGOs for double material benefits. It is so important for us to realize that the issues around the third world are not negligible because the polluted environment in the poor nations is going to definitely affect the global environment. Therefore, we should find out long-term solutions to the problems rather than short-term. These serious problems are actually happening around us and we all have to take care of the concerned issues. Read More