What is a multinational? BBC Learning English

Summary

The video script explores the immense influence and power of multinational corporations, which often surpass the wealth of countries. It delves into how the internet and China's economic opening have fueled their growth, raising concerns about surveillance and corporate responsibility. The script discusses the challenges of enforcing laws on these entities, the evolving legal landscape to hold parent companies accountable, and the role of international law in setting minimum standards. It also highlights the importance of Corporate Social Responsibility (CSR) and the reliance on individual states to enforce norms, despite UN guidelines on business and human rights.

Takeaways

• 🌐 Multinational corporations are private companies that operate across multiple nations and can be wealthier than some countries, highlighting their significant influence and power globally.
• 📈 The growth of the internet and China's opening up to global investment have contributed to the rapid expansion and accumulation of wealth by these corporations.
• 🔍 These corporations have extensive knowledge about consumers, raising concerns about privacy and the potential abuse of this power.
• 🛡️ International law is evolving to establish minimum standards for multinational corporations, adapting from a national to a global perspective to regulate their operations.
• 🏛️ The complexity of multinational corporations makes law enforcement challenging due to their widespread operations across numerous jurisdictions.
• 👨‍⚖️ It is increasingly possible to hold parent companies accountable for the actions of their subsidiaries, provided there is evidence of control or responsibility from the headquarters.
• 📊 The law is adapting to make multinational corporations more accountable for their actions, which can influence their behavior towards better corporate social responsibility.
• 🏭 The Rana Plaza disaster in Bangladesh led to a swift legal agreement among international clothing manufacturers to improve safety standards, demonstrating the impact of CSR.
• 👮‍♂️ The responsibility for enforcing laws on multinational corporations lies with individual states, as there is no overarching international body to regulate these entities.
• 📜 Multinational corporations are primarily bound by the domestic laws of their states, and not necessarily by international human rights laws, which are designed for countries.
• 🌍 Jurisdictional laws vary by country, with each state deciding where and how it will take legal action against companies, sometimes in collaboration with other states.

Q & A

What is the influence of multinational corporations on our daily lives?

Multinational corporations influence and control our lives significantly, from the clothes we wear to the technology we use, often in ways we may not fully understand. They are shaped by laws designed to keep us safe.

How are multinational corporations defined in the script?

Multinational corporations are private companies that operate in many nations, often being wealthier than some countries, and they are getting richer.

What is the economic comparison of Nestlé to a country's GDP mentioned in the script?

Nestlé, a food and drinks maker known for brands like Kit Kats and Cheerios, was worth around 350 billion dollars in 2020, which is more than the economic output of Portugal.

How does the script describe the growth of multinational corporations in recent years?

The growth of the internet and the opening up of China have allowed companies to be based in one place but sell globally, leading to their growth and increased power.

What concerns are raised about multinational corporations knowing too much about us?

There are concerns about how these powerful international organizations use the data they collect about us, including what we buy and who our friends are, and the potential for abuse of this power.

How is the law adapting to the growth of multinational corporations?

The law has had to adapt from a nationally based system to a global one, with international law setting basic minimum standards that these companies must comply with.

What challenges does the complexity of multinational corporations pose to the enforcement of law?

The complexity and international spread of these companies make it difficult to enforce laws, as seen with one client having 748 companies in 47 different countries.

Can a parent company be held accountable for the actions of its subsidiaries?

It is becoming easier to hold a parent company accountable for the actions of its subsidiaries if there is evidence of a controlling influence from the headquarters or if they should be accountable in some way.

What is the significance of the Rana Plaza building collapse in Bangladesh for corporate social responsibility?

The Rana Plaza disaster led to the quick establishment of a legal agreement by international clothing manufacturers to improve safety in factories in Bangladesh, highlighting the role of Corporate Social Responsibility (CSR).

Who is responsible for enforcing the law on multinational companies according to the script?

The responsibility to police corporations lies with individual states, as there is no international body that regulates multinationals directly.

Do multinational corporations have to follow international human rights laws?

For the most part, multinational corporations are required to follow the domestic laws of their states, which may align with international human rights laws, but they are not necessarily governed by international human rights laws designed for countries.

How does the script suggest international law is evolving in relation to multinational corporations?

International law is moving towards holding companies accountable, as seen with the UN's guiding principles on business and human rights, but enforcement still relies on individual countries.

Outlines

00:00

🌐 The Influence and Regulation of Multinational Corporations

This paragraph delves into the pervasive influence of multinational corporations on our daily lives, highlighting their immense wealth and power, which can surpass that of some countries. It discusses the challenges of regulating these entities as they continue to grow and evolve, with the law struggling to keep pace. The script introduces the concept of international law as a means to establish minimum standards for these corporations. It also touches on the complexity of enforcing laws on companies with operations spread across numerous jurisdictions, and the evolving legal strategies to hold parent companies accountable for the actions of their subsidiaries. The narrative is set against the backdrop of the 2013 Rana Plaza disaster, which underscored the need for better corporate social responsibility and safety standards.

05:05

📜 Corporate Social Responsibility and International Law

The second paragraph explores the concept of Corporate Social Responsibility (CSR), which refers to the positive practices and policies that businesses can adopt to contribute to societal welfare beyond profit-making. It examines the role of international law in controlling multinational corporations, noting the absence of a universal legal framework to directly hold companies accountable for their actions. The paragraph discusses the reliance on individual states to enforce laws and the complexities of jurisdictional laws that determine where and how legal action can be taken against companies. It also addresses the UN's guiding principles on business and human rights, which aim to establish a global standard for companies to prevent and address human rights risks. The paragraph concludes by emphasizing the ongoing dependence on individual countries to enforce these norms, despite the existence of international guidelines.

Keywords

💡Multinational Corporations

Multinational corporations are businesses that operate in multiple countries and have significant influence over global markets and economies. They are central to the video's theme as they are portrayed as entities that are larger and more powerful than some nations, raising questions about their accountability and the effectiveness of laws in regulating them. Examples from the script include companies like Nestlé, Shell, and Apple, whose market values surpass the GDP of certain countries.

💡Law

In the context of the video, 'law' refers to the set of rules and regulations that govern the behavior of multinational corporations and ensure the safety and rights of individuals. The video discusses how the law is evolving to adapt to the complexities of these corporations and the challenges in enforcing it across different jurisdictions. The script mentions international law as a tool to set basic minimum standards for multinational operations.

💡International Law

International law in the video is depicted as a set of legal principles and standards that apply globally and are meant to regulate the conduct of multinational corporations. It is highlighted as a developing field that is becoming more relevant as companies expand across borders. The script discusses the role of international law in providing a framework for holding corporations accountable for their actions worldwide.

💡Economic Output

Economic output, or Gross Domestic Product (GDP), is the total value of goods and services produced by a country. The video uses the term to compare the market values of multinational corporations with the economies of certain nations, emphasizing the immense wealth and power these companies possess. For instance, Nestlé's worth is compared to that of Portugal.

💡Internet Growth

The growth of the internet is mentioned as a factor contributing to the expansion and power of multinational corporations. It has enabled companies to be based in one location while selling their products globally, thereby increasing their size and influence. The script illustrates this with the example of how the internet has facilitated the growth of companies like Apple.

💡China's Opening Up

The script refers to China's opening up as a significant factor in the growth of multinational corporations. By attracting investment from around the world, China has played a role in the expansion of these companies. This is an example of how global economic policies can influence the development and reach of multinational corporations.

💡Corporate Social Responsibility (CSR)

CSR is the concept of businesses implementing practices and policies that have a positive impact on society, beyond just profit-making. The video discusses CSR in the context of the Rana Plaza incident, which led to international clothing manufacturers making a legal agreement to improve safety in Bangladeshi factories. This demonstrates how CSR can be a response to corporate wrongdoing and a way to improve corporate behavior.

💡Accountability

Accountability in the video is the ability to hold multinational corporations responsible for their actions, especially when they operate across multiple jurisdictions. The script discusses the challenges of making parent companies accountable for the actions of their subsidiaries and the evolving legal strategies to achieve this, which is crucial for influencing corporate behavior.

💡Parent Company

A parent company, also known as a holding company, is the entity that owns and controls subsidiaries. The video discusses the complexities of holding parent companies accountable for the actions of their subsidiaries, especially when those actions result in harm or legal violations. The script provides the example of how lawyers are becoming more adept at establishing accountability for parent companies.

💡Subsidiary

A subsidiary is a company that is owned and controlled by another company, known as the parent company. The video script mentions subsidiaries in the context of legal accountability, noting that while subsidiaries are typically liable for their actions, it is possible to hold the parent company accountable if there is evidence of control or accountability from the headquarters.

💡Jurisdiction

Jurisdiction refers to the legal authority of a country or state to govern and enforce laws within a certain area or over certain entities. The video discusses how the jurisdiction of laws over multinational corporations can be complex due to their global operations. The script explains that each country decides where and how it will take jurisdiction over companies, which can be based on where the company operates or does business.

Highlights

Multinational corporations have a significant influence on our lives, with some being wealthier than certain countries.

The growth of the internet allows companies to be based in one place but sell globally, contributing to their power and size.

China's opening up to global investment has helped multinationals grow larger.

These corporations can know intimate details about consumers, raising questions about the responsible use of this power.

Lawyer Mark Stephens discusses the need for the law to adapt to the changing nature of multinational corporations.

International law sets basic minimum standards for multinational corporations to comply with.

The complexity of multinational corporations makes law enforcement challenging due to their global operations.

It is becoming easier to hold parent companies accountable for the actions of their subsidiaries.

Lawyers are finding innovative ways to hold parent companies responsible for subsidiaries' wrongdoings.

Accountability can influence the behavior of multinational corporations for the better.

The Rana Plaza disaster in Bangladesh led to a legal agreement for improved safety in factories, demonstrating Corporate Social Responsibility (CSR).

CSR involves practices or policies that contribute positively to the world beyond profit.

Canadian lawyer Ranjan Agarwal explains that the responsibility to enforce laws on multinationals lies with individual states.

There is no international body that regulates multinational corporations; instead, treaties impose obligations on countries.

Multinational corporations are generally not required to follow international human rights laws, which are designed for countries.

Jurisdictional laws determine where and how a country can take legal action over companies.

The UN has established guiding principles on business and human rights to create a global standard, but enforcement relies on individual countries.

International law is evolving to hold companies accountable, but it still depends on nation-states to enforce norms.

Transcripts

Multinational corporations

– from the clothes we wear, to the technology we use,

they influence and control our lives

in ways we possibly don't even understand.

We'll show you how the law shapes their behaviour to keep us safe.

In this first episode... they're bigger than many countries,

but what exactly is a multinational corporation?

With huge resources and growing power, what keeps them in line?

And... is the law keeping up as these companies change themselves

and the world around us?

Multinational corporations –

private companies which operate in many nations –

can be richer than some countries...

and they're getting richer.

Food and drinks maker Nestlé, famous for Kit Kats and Cheerios,

was worth around 350 billion dollars in 2020.

That's more than the economic output of Portugal.

Oil company Shell is worth 87 billion dollars –

more than the Democratic Republic of Congo.

And Apple, whose products you might be using now, is worth two trillion dollars.

That puts its wealth ahead of both Russia and Canada!

How have companies got so big recently?

Well, in part the growth of the internet means that a company

can be based in one place, but sell around the world.

And that means it can grow and become very powerful.

Another aspect is China: it has opened up in recent decades

and so has been able to attract investment from around the world,

helping these companies to grow bigger.

The world is changing. These powerful international organisations

can know what we buy, who our friends are

and virtually everything else about us.

Questions have already been raised about how they're using this power.

If they chose to abuse that power and even break the law,

what would stop them? We spoke to lawyer Mark Stephens

and asked how the law is changing as multinationals get bigger.

The law's had to adapt and change from a nationally based system where,

you know, a company would only work in one country, where...

to the modern day, where companies will have multitudes of jurisdictions

that they operate in and therefore they need

some kind of almost global control

and that's where international law comes in,

because it sets the standards – the basic minimum standards –

that they have to comply with.

Mark thinks the law needs to develop

to set basic standards for multinational corporations.

Many laws were designed when companies were in just one country.

So, how effective is the law in dealing with multinationals?

I think the complexity of companies today, on an internationalised basis,

makes the law very difficult to be enforced against them.

So, I've got one client, which has 748 companies

in about 47 different countries,

and so getting an oversight of that, getting control of that

from a legal and regulatory side, can be very challenging.

And that's the opportunity that international law provides,

because essentially it's giving the minimum standards

to which they need to operate.

Companies are very complex

so sometimes it's hard to enforce the law

when they are spread out around the world.

Can we punish a parent company

for something it's responsible for in another country?

It's becoming easier to punish a... a mother company –

the holding company, if you will –

for the actions of its subsidiaries. But on the face of it,

it's the subsidiary that is going to be liable.

It's only if you can show that there was a controlling mind

back at the headquarters, or that in some way they should be accountable,

that you can hold the parent company to account.

Lawyers are becoming increasingly ingenious

in the way in which they are visiting accountability on the parent companies,

and that's only got to be a good thing because if they're accountable,

they will behave better.

It is becoming easier to punish companies

for wrongdoing in different countries,

and if they are accountable, it will influence their behaviour.

Of course, many companies do what's right without being forced to,

but it can take something shocking happening to start change.

In 2013, the Rana Plaza building in Bangladesh collapsed,

killing more than a thousand people.

It was the worst of many such incidents in the country.

The following month, international clothing manufacturers quickly

made a legal agreement to improve safety in factories in Bangladesh.

This is what's known as Corporate Social Responsibility or CSR.

These are the practices or policies that a business can implement

that do good in the world. Think charity, or volunteering,

or the environment and it's more than just about profit.

But what about when companies don't choose to behave?

How can the law control something that is so big?

Ranjan Agarwal, a Canadian lawyer who deals with big companies,

explained who is responsible for enforcing the law

on multinational companies.

In our system, around the world, we seem to have accepted that

the obligation or responsibility to police corporations

is with individual states.

In international law, there is no general rule

that companies are responsible for wrongful acts,

even if they're committed internationally or abroad.

There are treaties, multilateral treaties,

that impose requirements or obligations

on countries, but not on companies.

There is no international body that regulates multinationals.

Instead, there are treaties that impose obligations

on countries, but not companies.

So, do these companies have to follow things

like international human rights laws?

For the most part, no. In our system,

we require companies to follow the domestic laws of their states.

Those domestic laws may align with international human rights laws,

or human rights norms – expectations that we have as a community.

There are a couple of exceptions, where states...

where – sorry – companies may be governed by international treaties,

but those are generally exceptions.

Companies follow the domestic laws of their states,

but they don't necessarily have to follow international human rights laws,

which are designed for countries.

How do people decide which state's laws a company follows?

For the most part, people don't decide

where the law's going to be enforced.

We require our governments – sometimes working together –

to establish rules.

In essence, we have jurisdictional laws across the world:

each country gets to decide where and how

it's going to take jurisdiction over companies.

Sometimes it's where the company operates –

that is, where its headquarters is.

Sometimes it's where the company does business,

but again we rely on uni...

individual states to make those decisions.

Sometimes governments work together to establish rules,

but each country gets to decide where

and how it's going to take legal action over companies.

So, is international law fit for purpose as these companies develop?

I believe that international law is moving to a place where

companies may be held to account.

For example, several years ago the UN established guiding principles

on business and human rights,

which were intended to create a global standard,

to implement a framework to prevent and address

the risk of human rights on business activity.

But as long as we have nation states,

I believe that we will rely on individual countries to enforce these norms.

Even though the UN established principles

to guide businesses on human rights,

we rely on individual countries to enforce the law on companies.

So, we've heard that the way multinational corporations

are spread around the world makes them hard for the law to control.

We also heard that the law is changing to deal with that.

But international laws will always depend on countries

to agree to follow them.