Sustainable Development - a Global Challenge Need for Change

State Sovereignty

Sustainable Development

Challenges for Businesses

The Role of MNCs in Sustainable Development

The Global Compact

Initiatives outside the Global Compact

What is International Sustainable Development Law (ISDL)?

International Environmental Law and its Impact on Australia

Sustainable Development: A Global Challenge

For many years, sustainable development has been one of the controversial issues faced by world leaders and citizens (Parmetier, 2002). The issue pervades both private and public sectors, and is the major focus of many International Organizations (IOs), mainly the United Nations (UN) and many Non-governmental Organizations (NGOs). However, there is little agreement across the globe about a solid definition of the concept of sustainable development. In addition, to further complicate the issue, another concept has recently s emerged on the international scene: globalization.

Globalization can best be defined as an increasing economic interconnection throughout the world, which influences cultural, political, social, and legal factors (Parmetier, 2002). While globalization is a very different concept than sustainable development, the two ideas have much in common, including a shared scope of shareholders. Multinational Corporations (MNCs) are central shareholders and active parties in the current movement of globalization, and their actions have a key influence over sustainable development, whether good or bad.

Kofi Annan said at the Davos World Economic Forum on January 31, 1999 (Parmetier, 2002): "Globalization is a fact of life, but I believe we have underestimated its fragility. The problem is this: The spread of Markets outspaces the abilities of societies and their political systems to adjust to them, let alone guide the course they take. History teaches us that such an imbalance between the economic, social and political worlds can never be sustained for long" (Rodrik).

This speech preceded the introduction of a new UN initiative, known as Global Compact (GC), which aims to develop private-public dialogues and partnerships by connecting private companies, mainly MNCs, with the UN (Parmetier, 2002). The GC is an open, non-binding initiative that aims "to advance responsible corporate citizenship so that business can be part of the solution to the challenges of globalization" and to build a more sustainable global economy.

However, the GC has been harshly criticized by NGOs for compromising the UN image by linking it with controversial and often "shady" MNCs, and to be too weak an instrument to deal with the development challenges that face the world.

In a globalized environment where the notion of sovereign states is increasingly breaking down, MNCs have emerged as the dominant global power (Parmetier, 2002). This paper is based on the hypothesis that individual states measures are inadequate resources to correctly regulate international business. In addition, it seems that international binding measures are impossible, as there is no central authority with the legal power of enacting such regulations. Finally, this paper aims to show that MNCs are a key part of globalization and therefore should have both the means and the influence to transform sustainable development from a lofty platitude to meaningful implementation.

This paper will present a case study of initiatives and measures that seek to develop the contribution of MNCs to international social and environmental issues, and to development policies and actions.

Need for Change

In 2002, the Earth Dialogues provided an open and neutral forum where all parties to the globalization and sustainable development debates could share their views and visions and develop solutions together. Five key areas of consensus emerged (Lyon, 2002):

Ethics - There is an urgent need to change the world's priorities, to correct the forces that promote material wealth over global welfare and justice, and to reinforce the fundamental values that make up the basis of human civilization all over the world- compassion and respect for one another and the natural environment, tolerance and solidarity, and the pursuit of peace.

The Rule of Law - These universal values must be translated into fair and enforceable legal instruments that prioritize sustainable development. Essential principles, including the polluter-pays and precautionary principles, should be fully recognized by international and national laws and regulate the activities of all sectors.

Sovereignty - The changing nature of the state, and the increase in influence of the private sector and civil society, is one of the greatest shifts of recent decades. The political landscape is more complex, with multiple, and often conflicting, power bases that must be integrated and cooperative. Many of the most serious problems faced today, including climate change, epidemics and terrorism,...

Sovereignty over the world's common resources lies with individuals; the decisions they make and the resources they use, and those made and used on their behalf by governments, must consider the rest of the world, as well as future generations. The concept of being a Citizen of the World is now reality, and every person and company must be aware and considerate o of their global responsibilities.
Security - There may never be true security in the world while inequality and injustice are so universally evident. The goals of poverty eradication and protecting our environment must be linked with the promotion of peace and security. The tragedy of the recent U.S. terrorist attacks demonstrated that everyone's personal security is at risk, and that no one can afford to ignore the suffering and frustration of others; this realization should fortify our resolve to achieve sustainable development, rather than distract us from it.

Action -Time is essential. Action is urgently needed, and to make it possible will require: "a strong ethical framework; political courage on the part of world leaders; reform of the current systems of global governance and financial regulation; increased and better targeted official development assistance; and heightened individual awareness and commitment worldwide."

State Sovereignty

According to Dhanapala (2001): "An essential link between globalization and the nation state is the concept of sovereignty, a term dating back several centuries, well before the nation-state system was established in 1648. Originally intended in reference to the establishment of order within a state, sovereignty has since been interpreted by some as a legal quality that places the state above the authority of all external laws. Yet whenever a state exercises its sovereign right to sign a treaty, it is also wilfully limiting that right by the very act of undertaking an international legal obligation. States are also bound by other rules, such as customary international law. With these formal legal limitations, sovereignty stubbornly persists even in an age of globalization -- and is manifested in such functions as the coining of money, the gathering of taxes, the promulgation of domestic law, the conduct of foreign policy, the regulation of commerce, and the maintenance of domestic order. These are all functions that are reserved exclusively to the state."

States have recently discovered that their interests are better advanced within a broader system of binding rules than without this type of system (Dhanapala, 2001). Rules serve to define rights, including property rights, as well as duties. Exactly what these rights and obligations are depends on a variety of circumstances: political, economic, cultural, and technological. Today, globalization is having a profound effect upon national and international rules -- it is, for example, influencing the norms that govern world commerce, transportation, environmental protection, and more.

The increased flows of commerce across borders has many benefits, including greater profits, jobs, efficiencies of scale, lowered unit costs, and more goods and services available for everyone to buy (Dhanapala, 2001).

One important question stems from the issues brought about by globalization: Is it possible to motivate structures of the state that have for centuries have sought to maximize the interest of specific local nationalities, to implement instead policies that serve the global common good (Dhanapala, 2001)? Even if it were possible to place an enlightened leader at the head of every government on Earth, that would be no guarantee that the complex machinery of the state would respond to this new responsibility.

According to Dhanapala (2001): "Global values simply cannot be imposed upon states from without. They must be embraced by states from within. The state is a neutral administrative structure that can be used for purposes both good and bad. It is neither inherently nor inevitably the enemy of globalization."

Globalization involves much more than simply expanding markets (Dhanapala, 2001). In presenting his Millennium Report to the General Assembly a year ago, Secretary-General Kofi Annan made the following statement: "To make a success of this great upheaval, we must learn how to govern better, and -- above all how to govern better together. We need to make our States stronger and more effective at the national level. And we need to get them working together on global issues, all pulling their weight and having their say."

He identified the following as needed for a sound international system (Dhanapala, 2001): "Ultimately, national action is the determining factor. If there is a single idea that embodies the sum total of national action, that idea is good goverance."

The heart of good governance is popular participation, transparency, and public accountability (Dhanapala, 2001). Strong laws to protect the environment, for instance, are forged as a result of a…