What is a multinational? BBC Learning English — Transcript

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1. 0:01Multinational corporations
2. 0:03– from the clothes we wear, to the technology we use,
3. 0:07they influence and control our lives
4. 0:10in ways we possibly don't even understand.
5. 0:13We'll show you how the law shapes their behaviour to keep us safe.
6. 0:19In this first episode... they're bigger than many countries,
7. 0:24but what exactly is a multinational corporation?
8. 0:28With huge resources and growing power, what keeps them in line?
9. 0:33And... is the law keeping up as these companies change themselves
10. 0:38and the world around us?
11. 0:45Multinational corporations –
12. 0:47private companies which operate in many nations –
13. 0:51can be richer than some countries...
14. 0:54and they're getting richer.
15. 0:57Food and drinks maker Nestlé, famous for Kit Kats and Cheerios,
16. 1:01was worth around 350 billion dollars in 2020.
17. 1:06That's more than the economic output of Portugal.
18. 1:10Oil company Shell is worth 87 billion dollars –
19. 1:15more than the Democratic Republic of Congo.
20. 1:18And Apple, whose products you might be using now, is worth two trillion dollars.
21. 1:25That puts its wealth ahead of both Russia and Canada!
22. 1:30How have companies got so big recently?
23. 1:34Well, in part the growth of the internet means that a company
24. 1:37can be based in one place, but sell around the world.
25. 1:40And that means it can grow and become very powerful.
26. 1:44Another aspect is China: it has opened up in recent decades
27. 1:48and so has been able to attract investment from around the world,
28. 1:53helping these companies to grow bigger.
29. 1:55The world is changing. These powerful international organisations
30. 1:59can know what we buy, who our friends are
31. 2:02and virtually everything else about us.
32. 2:06Questions have already been raised about how they're using this power.
33. 2:11If they chose to abuse that power and even break the law,
34. 2:15what would stop them? We spoke to lawyer Mark Stephens
35. 2:19and asked how the law is changing as multinationals get bigger.
36. 2:24The law's had to adapt and change from a nationally based system where,
37. 2:30you know, a company would only work in one country, where...
38. 2:34to the modern day, where companies will have multitudes of jurisdictions
39. 2:39that they operate in and therefore they need
40. 2:42some kind of almost global control
41. 2:45and that's where international law comes in,
42. 2:48because it sets the standards – the basic minimum standards –
43. 2:52that they have to comply with.
44. 2:53Mark thinks the law needs to develop
45. 2:55to set basic standards for multinational corporations.
46. 3:00Many laws were designed when companies were in just one country.
47. 3:05So, how effective is the law in dealing with multinationals?
48. 3:10I think the complexity of companies today, on an internationalised basis,
49. 3:14makes the law very difficult to be enforced against them.
50. 3:18So, I've got one client, which has 748 companies
51. 3:24in about 47 different countries,
52. 3:26and so getting an oversight of that, getting control of that
53. 3:30from a legal and regulatory side, can be very challenging.
54. 3:34And that's the opportunity that international law provides,
55. 3:38because essentially it's giving the minimum standards
56. 3:41to which they need to operate.
57. 3:44Companies are very complex
58. 3:46so sometimes it's hard to enforce the law
59. 3:49when they are spread out around the world.
60. 3:51Can we punish a parent company
61. 3:54for something it's responsible for in another country?
62. 3:58It's becoming easier to punish a... a mother company –
63. 4:02the holding company, if you will –
64. 4:05for the actions of its subsidiaries. But on the face of it,
65. 4:08it's the subsidiary that is going to be liable.
66. 4:11It's only if you can show that there was a controlling mind
67. 4:15back at the headquarters, or that in some way they should be accountable,
68. 4:19that you can hold the parent company to account.
69. 4:25Lawyers are becoming increasingly ingenious
70. 4:29in the way in which they are visiting accountability on the parent companies,
71. 4:34and that's only got to be a good thing because if they're accountable,
72. 4:38they will behave better.
73. 4:40It is becoming easier to punish companies
74. 4:43for wrongdoing in different countries,
75. 4:45and if they are accountable, it will influence their behaviour.
76. 4:50Of course, many companies do what's right without being forced to,
77. 4:54but it can take something shocking happening to start change.
78. 4:59In 2013, the Rana Plaza building in Bangladesh collapsed,
79. 5:04killing more than a thousand people.
80. 5:07It was the worst of many such incidents in the country.
81. 5:12The following month, international clothing manufacturers quickly
82. 5:16made a legal agreement to improve safety in factories in Bangladesh.
83. 5:21This is what's known as Corporate Social Responsibility or CSR.
84. 5:25These are the practices or policies that a business can implement
85. 5:28that do good in the world. Think charity, or volunteering,
86. 5:32or the environment and it's more than just about profit.
87. 5:35But what about when companies don't choose to behave?
88. 5:39How can the law control something that is so big?
89. 5:43Ranjan Agarwal, a Canadian lawyer who deals with big companies,
90. 5:47explained who is responsible for enforcing the law
91. 5:50on multinational companies.
92. 5:53In our system, around the world, we seem to have accepted that
93. 5:57the obligation or responsibility to police corporations
94. 6:03is with individual states.
95. 6:06In international law, there is no general rule
96. 6:10that companies are responsible for wrongful acts,
97. 6:16even if they're committed internationally or abroad.
98. 6:20There are treaties, multilateral treaties,
99. 6:24that impose requirements or obligations
100. 6:28on countries, but not on companies.
101. 6:32There is no international body that regulates multinationals.
102. 6:36Instead, there are treaties that impose obligations
103. 6:40on countries, but not companies.
104. 6:43So, do these companies have to follow things
105. 6:46like international human rights laws?
106. 6:50For the most part, no. In our system,
107. 6:53we require companies to follow the domestic laws of their states.
108. 6:59Those domestic laws may align with international human rights laws,
109. 7:06or human rights norms – expectations that we have as a community.
110. 7:11There are a couple of exceptions, where states...
111. 7:16where – sorry – companies may be governed by international treaties,
112. 7:21but those are generally exceptions.
113. 7:24Companies follow the domestic laws of their states,
114. 7:27but they don't necessarily have to follow international human rights laws,
115. 7:32which are designed for countries.
116. 7:35How do people decide which state's laws a company follows?
117. 7:40For the most part, people don't decide
118. 7:44where the law's going to be enforced.
119. 7:47We require our governments – sometimes working together –
120. 7:52to establish rules.
121. 7:55In essence, we have jurisdictional laws across the world:
122. 8:00each country gets to decide where and how
123. 8:04it's going to take jurisdiction over companies.
124. 8:07Sometimes it's where the company operates –
125. 8:11that is, where its headquarters is.
126. 8:13Sometimes it's where the company does business,
127. 8:16but again we rely on uni...
128. 8:19individual states to make those decisions.
129. 8:21Sometimes governments work together to establish rules,
130. 8:25but each country gets to decide where
131. 8:28and how it's going to take legal action over companies.
132. 8:32So, is international law fit for purpose as these companies develop?
133. 8:38I believe that international law is moving to a place where
134. 8:43companies may be held to account.
135. 8:46For example, several years ago the UN established guiding principles
136. 8:52on business and human rights,
137. 8:54which were intended to create a global standard,
138. 8:59to implement a framework to prevent and address
139. 9:02the risk of human rights on business activity.
140. 9:06But as long as we have nation states,
141. 9:10I believe that we will rely on individual countries to enforce these norms.
142. 9:15Even though the UN established principles
143. 9:18to guide businesses on human rights,
144. 9:21we rely on individual countries to enforce the law on companies.
145. 9:27So, we've heard that the way multinational corporations
146. 9:31are spread around the world makes them hard for the law to control.
147. 9:37We also heard that the law is changing to deal with that.
148. 9:41But international laws will always depend on countries
149. 9:46to agree to follow them.