Making Corporations Accountable for their Actions by Voluntary and Involuntary Means

Why Corporations Must be Made Accountable for Their Actions

Throughout the history of the modern corporations, there have been cases where corporations have literally and figuratively gotten off with murder and wanton destruction and exploitation of the natural environment.

Indeed, the 20th century is littered with examples of how rapacious corporations have both extracted resources from the natural environment without paying heed to laws and regulations as well as have caused disasters and accidents that resulted in the loss of life and money.

For instance, the Union Carbide Plant Accident in Bhopal in India and the activities of the Coca-Cola Corporation worldwide come to mind when we discuss how corporations have not only flouted norms but worse, have actually caused loss of human lives and resources.

While the corporations did not directly cause some of these incidents and accidents, there are some cases in which cost-cutting and less attention paid to industrial safety and norms of business have happened.

Thus, it can be said that corporations over the decades have both harmed and destroyed the environment as well as the human habitations around them and hence, there is a need for the wider stakeholders including regulators, activists, and civil society to bring the corporations to task and make them accountable for their actions.

Making Corporations Accountable by Forced Compliance

Having said that, it is not always easy for such stakeholders to make the corporations accountable for their actions. For instance, in all the examples of industrial accidents and disasters, there are clear cases of how gross negligence and outright flouting of norms have gone unpunished, and hence, it can be said that there has to be more action by all stakeholders if they are serious about sustaining and nurturing the ecosystems and habitats.

Indeed, given the fact that corporations have deep pockets and often hire the best lawyers and lobbyists, it is a difficult asks for poorly funded activists and sparsely staffed regulators to take the fight and the battles against the corporations to their logical end and ensure that corporations are made accountable for their actions.

Moreover, such tasks become impossible when governments pass laws and regulations that are pro-business and friendly to corporations thereby closing the judicial route to dispute resolution and other aspects that close the door on any well-meaning efforts to make the corporations accountable for their actions.

This is the reality that the wider stakeholders have to contend with whenever they confront Big Businesses.

Voluntary Compliance is the Way to Go

However, it is also not the case that all corporations get away with violations and flouting of norms and indeed, there are many of them who do follow the norms and laws whereby they ensure that they voluntarily comply with such norms.

Further, many corporations go the extra mile in ensuring that they not only comply with the norms but also do more than that by proclaiming a voluntary code of conduct that is more in tune with their consciences and conscientiousness.

Indeed, such voluntary compliance might be the best bet for everyone since it reduces or eliminates the need for oversight and repeated monitoring of the activities of the corporations.

Moreover, such voluntary compliance also raises the stakes for other corporations to follow suit so that they too can catch up with the industry leaders in compliance.

Indeed, it is also the case that the media and the regulators as well as the activists give credit where it is due and ensure that corporations that follow the norms get their due coverage in the press and are recognized for their contributions and efforts. All said and done, voluntary compliance is the way to go as far as making corporations accountable is concerned.

Mass Mobilization and Organized Resistance can be Tried

On the other hand, for those corporations that flout norms and rules, the best way out for the regulators and the activists would be to ensure that they are brought to task for their actions. While this is easier said than done, it is also the case that the power of many can help in this regard wherein mass mobilization and large-scale massing of people that are opposed to such activities can force the corporations to mend their ways.

Indeed, the power of the media is such that they can make change happen if they set their minds to it.

Further, there has to be pressure on the legislators and the governments as well through well-meaning efforts to ensure that corporations do not get away with their activities. All said and done; it is the duty of all stakeholders to keep up their efforts and sustain the momentum both in the regulatory domains as well as in the public sphere.

Thus, the way to go would be for activists and regulators to up the ante against corporations to ensure that they are appropriately punished for their actions.

Conclusion

Lastly, there are some worrying trends as far as the United States is concerned, and these relate to the way in which the Trump Administration is rolling back many of the regulations that govern the corporations and activities.

Thus, more than ever, there is an urgent need to ensure that people mobilize against such actions and the point that not doing so would imperil humanity itself needs to be understood.

To conclude, the time is now for action against unethical and unlawful actions of corporations, and in this respect, business leaders who are conscientious and socially conscious have an important role to play along with civil society.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


Corporate Governance