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What is a multinational? BBC Learning English - YouTube
Channel: BBC Learning English
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Multinational corporations
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– from the clothes we wear,
to the technology we use,
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they influence
and control our lives
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in ways we possibly
don't even understand.
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We'll show you how the law shapes
their behaviour to keep us safe.
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In this first episode...
they're bigger than many countries,
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but what exactly is a
multinational corporation?
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With huge resources and growing
power, what keeps them in line?
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And... is the law keeping up as
these companies change themselves
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and the world around us?
[45]
Multinational corporations –
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private companies
which operate in many nations –
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can be richer
than some countries...
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and they're getting richer.
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Food and drinks maker Nestlé,
famous for Kit Kats and Cheerios,
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was worth around
350 billion dollars in 2020.
[66]
That's more than the economic
output of Portugal.
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Oil company Shell is worth
87 billion dollars –
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more than the Democratic
Republic of Congo.
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And Apple, whose products you might be
using now, is worth two trillion dollars.
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That puts its wealth ahead
of both Russia and Canada!
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How have companies
got so big recently?
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Well, in part the growth of the
internet means that a company
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can be based in one place,
but sell around the world.
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And that means it can grow
and become very powerful.
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Another aspect is China:
it has opened up in recent decades
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and so has been able to attract
investment from around the world,
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helping these companies
to grow bigger.
[115]
The world is changing. These powerful
international organisations
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can know what we buy,
who our friends are
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and virtually everything
else about us.
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Questions have already been raised
about how they're using this power.
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If they chose to abuse that
power and even break the law,
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what would stop them?
We spoke to lawyer Mark Stephens
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and asked how the law is changing
as multinationals get bigger.
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The law's had to adapt and change
from a nationally based system where,
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you know, a company would only
work in one country, where...
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to the modern day, where companies
will have multitudes of jurisdictions
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that they operate in
and therefore they need
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some kind of
almost global control
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and that's where
international law comes in,
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because it sets the standards –
the basic minimum standards –
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that they have to comply with.
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Mark thinks the law
needs to develop
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to set basic standards
for multinational corporations.
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Many laws were designed when
companies were in just one country.
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So, how effective is the law
in dealing with multinationals?
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I think the complexity of companies
today, on an internationalised basis,
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makes the law very difficult
to be enforced against them.
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So, I've got one client,
which has 748 companies
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in about 47 different countries,
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and so getting an oversight of that,
getting control of that
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from a legal and regulatory side,
can be very challenging.
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And that's the opportunity that
international law provides,
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because essentially it's
giving the minimum standards
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to which they need to operate.
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Companies are very complex
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so sometimes it's hard
to enforce the law
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when they are spread out
around the world.
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Can we punish a parent company
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for something it's responsible for
in another country?
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It's becoming easier to punish a...
a mother company –
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the holding company, if you will –
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for the actions of its subsidiaries.
But on the face of it,
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it's the subsidiary that
is going to be liable.
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It's only if you can show that
there was a controlling mind
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back at the headquarters, or that in
some way they should be accountable,
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that you can hold the
parent company to account.
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Lawyers are becoming
increasingly ingenious
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in the way in which they are visiting
accountability on the parent companies,
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and that's only got to be a good thing
because if they're accountable,
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they will behave better.
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It is becoming easier to
punish companies
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for wrongdoing in
different countries,
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and if they are accountable,
it will influence their behaviour.
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Of course, many companies do what's
right without being forced to,
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but it can take something shocking
happening to start change.
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In 2013, the Rana Plaza building
in Bangladesh collapsed,
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killing more than a thousand people.
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It was the worst of many such
incidents in the country.
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The following month, international
clothing manufacturers quickly
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made a legal agreement to improve
safety in factories in Bangladesh.
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This is what's known as Corporate
Social Responsibility or CSR.
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These are the practices or policies
that a business can implement
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that do good in the world.
Think charity, or volunteering,
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or the environment and it's
more than just about profit.
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But what about when companies
don't choose to behave?
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How can the law control
something that is so big?
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Ranjan Agarwal, a Canadian lawyer
who deals with big companies,
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explained who is responsible
for enforcing the law
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on multinational companies.
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In our system, around the world,
we seem to have accepted that
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the obligation or responsibility
to police corporations
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is with individual states.
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In international law,
there is no general rule
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that companies are
responsible for wrongful acts,
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even if they're committed
internationally or abroad.
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There are treaties,
multilateral treaties,
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that impose requirements
or obligations
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on countries,
but not on companies.
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There is no international body
that regulates multinationals.
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Instead, there are treaties
that impose obligations
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on countries, but not companies.
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So, do these companies
have to follow things
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like international human rights laws?
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For the most part, no.
In our system,
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we require companies to follow
the domestic laws of their states.
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Those domestic laws may align with
international human rights laws,
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or human rights norms – expectations
that we have as a community.
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There are a couple of exceptions,
where states...
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where – sorry – companies may be
governed by international treaties,
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but those are generally exceptions.
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Companies follow the domestic
laws of their states,
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but they don't necessarily have to
follow international human rights laws,
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which are designed for countries.
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How do people decide which
state's laws a company follows?
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For the most part,
people don't decide
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where the law's
going to be enforced.
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We require our governments –
sometimes working together –
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to establish rules.
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In essence, we have jurisdictional
laws across the world:
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each country gets to decide
where and how
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it's going to take
jurisdiction over companies.
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Sometimes it's where
the company operates –
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that is, where its headquarters is.
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Sometimes it's where the
company does business,
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but again we rely on uni...
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individual states to
make those decisions.
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Sometimes governments work
together to establish rules,
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but each country gets
to decide where
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and how it's going to take
legal action over companies.
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So, is international law fit for
purpose as these companies develop?
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I believe that international
law is moving to a place where
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companies may be held to account.
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For example, several years ago the
UN established guiding principles
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on business and human rights,
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which were intended
to create a global standard,
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to implement a framework
to prevent and address
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the risk of human rights
on business activity.
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But as long as we have
nation states,
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I believe that we will rely on individual
countries to enforce these norms.
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Even though the UN
established principles
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to guide businesses on human rights,
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we rely on individual countries
to enforce the law on companies.
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So, we've heard that the way
multinational corporations
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are spread around the world makes
them hard for the law to control.
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We also heard that the law is
changing to deal with that.
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But international laws will
always depend on countries
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to agree to follow them.
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