Transnational Corporations – Benefactors of Western Life or Vicious Exploiters?

Students from the University of Bristol Business School have been investigating the role Transnational Corporations play within global supply chains. Here, one of the students of our International Human Resource Management module, Stephen Angelo Savvanis-Nasiotis , explains their findings.

The Human Costs of Consumerism

Transnational Corporations are everywhere, from the clothes you wear to the device you’re using to read this, but you’ve likely heard discourse surrounding their amoral conduct in developing countries like Vietnam, Cambodia, Sierra Leone, etc ranging from allegations of environmental devastation to child labour. Despite these acts being condemned, Apple remains the largest company in the world by selling iPhones made in sweatshops containing cobalt mined by a 14-year-old in the DRC.

This is the reality of modern consumer culture and globalisation. TNCs are simply profiting as much as possible using our demand for a
set of goods and a globalised supply chain allowing them to lower costs through developing countries’ labour market conditions. The
populations of these countries bear the brunt of human rights abuses and decent work deficits directly or indirectly caused by TNCs.

However, modern consumers are pushing back, Capgemini found 77% of people were more likely to buy from brands with a pledge to uphold greater social and environmental responsibility. Companies recognise this, and their Corporate Social Responsibility policy, or CSR, reflects this, but has this translated to their real-world impacts? Not really.

The majority of TNCs are simply not in the public eye, any direct human rights abuses reported about Apple or Nike’s conduct are adversely impacting their bottom lines at a greater rate since modern consumers care more and more about social responsibility. But most TNCs are lesser known, further down the supply chain, and don’t sell directly to individuals meaning unethical conduct endures due to lack of incentive to change it even if their CSR says they shouldn’t exist.

Out of Sight out of Mind

In the early stages of our project concerning the discovery of decent work deficits in the industries of developing countries, our team found that well-known TNCs like Nike and Apple had faced legal repercussions concerning their factories’ working conditions and addressed these issues publicly. TNCs were actively attempting to change their policies, so why had no real improvements in working conditions been reported? We looked at companies that operated “behind the scenes” and found the biggest company you’ve never heard of.

Glencore is one of the largest producers of natural resources and Tesla’s chief cobalt supplier, a mineral present in every battery in every car they make. It has also been called the “worst of the worst” by London Mining Network and “A hot contender” for the worst corporation award due to its endemic corruption, impoverishment of millions, and “alleged” usage of child labour. Glencore’s conduct is so deplorable that past MPs have called for the creation of “an index of evil” to accurately measure it. Despite this, Glencore has only ever faced legal repercussions for its corruption. Instead, Glencore shifts the blame, denies, and flatly ignores the human costs its conduct has incurred, particularly within the Democratic Republic of the Congo.

Smoke and Mirrors

The challenge of our project was to reconcile the clear violations of national and international labour laws being committed within the cobalt mining industry in the DRC, the world’s chief exporter of the mineral, and Glencore’s supposed commitment to ILO conventions. Our research showed Glencore’s main defence to allegations of child labour, dangerous working conditions, illegally low wages, and environmental destruction is to muddy the waters. Glencore’s basic business practice requires the acquisition of mining permits to excavate cobalt and run the mines, as such they must comply with Congolese mining law to ensure the safety of locals and workers. Glencore simply does not, as evidenced by the deaths of 43 artisanal miners in June 2019, Glencore’s mine was not secure enough to prevent their entrance and the conditions of the mines themselves warrant “strategic litigation”. Glencore has not faced legal repercussions for the event and only recognised 3 deaths within their mines in 2019.

Further, Glencore seems to use its CSR policy only as a means of virtue signalling. Their 2021 Modern Slavery statement boasts Glencore subsidiary KCC provided educational summer camps to Congolese children to deter them from artisanal child mining, these camps are too expensive for most children to attend. It claims that it stands against child labour in all forms, but 35,000 children work in DRC cobalt mines many are “killed/ injured on sites they [Glencore] own daily” according to CBC.

We concluded from the dissonance of written vs actual practices within Glencore’s operations that, in the absence of an appeal to the bottom
line, TNCs have no reason to enact meaningful change. A strong CSR policy is insufficient to prevent rampant exploitation in opaque supply
chains where it can be done with little consequence.

Follow the Money

Glencore is far from the only company that says one thing and does another, even within the DRC, the Gertler Group has had similar accusations of human rights abuses levelled against it. Globalisation and the subsequent interconnectivity of supply chains have created blind spots wherein workers may be exploited discretely for a TNC to maximise profits. Therefore, the best method to combat exploitation in developing countries, with less robust legal enforcement, is also appealing to their profit incentive.

For future students undertaking similar research projects, the companies you have heard of are more likely to be the ones who have publicly enacted some form of change due to consumer pushback. However, the true damage to communities is from obscure companies within supply chains that don’t interact directly with the average Western consumer whose violations of ILO conventions are unabated.

The International Human Resource Management module teaches the critical difficulties in navigating the legal, cultural, and economic intricacies of global supply chains as well as the differences in resource management practices implemented by companies that shape our modern views on the workplace.

Find out more about undergraduate study at the University of Bristol Business School

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