REGULATION AND ACCOUNTABILITY

As a consequence of the paradigms of free trade, there has been a growing trend to reduce and remove more and more regulations that governments have over corporations, to grant them increased rights and powers. Large and influential corporations are able to play cash-strapped governments off against each other, gaining tax concessions and pushing down social and environmental standards around the world, while at the same time removing the authority of states to impose controls over their behaviour, activities and operations. The lack of an effective framework of regulation and accountability is one of the main roadblocks to sustainable development.

International rules governing investments and economic activity remain very weak at the international level compared to the rules that exist within the framework of the national state. Today, in the era of increasing globalisation of capital and cross-border operation of all major corporations, concerned citizens are again raising the issue of international norms and rules.

Globalisation has also weakened regulation at the national level, through a combination of investor pressure, new international trade rules and weakened government tax bases. It appears that the rise of the economic ideology of neoliberalism has enshrined deregulation as a universal principle of rationality and prosperity with regulation often being seen as "repression". Various transnational corporations (TNCs) maintain substantially lower environmental standards in poor countries than in their home nations, e.g. in North America or Europe. It has to be noted that there are exceptions, companies that "export" their (maybe voluntary) adopted standards e.g. from their European origins to local affiliates in developing countries - as a consequence of a more responsible corporate culture or raised consumer's awareness and concern in the countries where the company's products are to be sold.

Many critics of corporate globalisation favour a return to stronger national regulation whereas pro-business voices insist that formal global rules would endanger the globalised economy, and suggest at most loose voluntary corporate codes of conduct. Most NGOs argue, that effective codes would need to be transparent and accountable, with their enforcement (or non-enforcement) not being an internal corporate concern. Today, such voluntary codes are often vague statements of principle that do not provide reliable guidelines for behaviour in concrete situations, in particular when action implicitly imposed by the code would threaten profits.

PRESSURE FOR COPORATE ACCOUNTABILITY AT PREPCOMM II

At the WSSD preparatory meeting PrepComm II, NGOs, trade unions and other major groups made strong calls for the United Nations to develop binding global laws to govern the behaviour of multi-national corporations. On the other side of the political balancing act in the United Nations, many governments, e.g. the USA, and obviously the business sector are saying that voluntary agreements are the best way to promote economic growth thus foster sustainable development. Refer to the right for further reading on this.