Although an article on corporations might seem a little redundant given that last week’s article was on capitalism, corporations have an enormous role in climate change and sustainability that is particularly distinct from capitalism (more on that later). Not only do corporations perform capitalism well, but their interests will always be diametrically opposed to the people’s interests because of the profit motive inherent to capitalism. As with capitalism, it is crucial to analyze all of the actions taken by a company through the lens of profit and costs.
Corporations and business is primarily responsible for the vast majority of greenhouse emissions. For example, “100 energy companies are responsible for 71% of all industrial emissions since human-driven climate change was officially recognized” (1). It is pretty well known that the food industry is responsible for about 19%-29% of greenhouse gas emissions, and agriculture is responsible for more than half of non-CO2 emissions (2). Furthermore, agribusiness and the food industry are increasingly consolidated into monopolies in the US: Tyson, Cargill, Swift & Co, and National Beef Packing kill 84% of cows worldwide, and 81% of corn exports in the US is exported by Cargill, Continental Grain, ADM, and Zen Noh (3). Monsanto controls 97% of genetically modified corn, and 91% of genetically modified soy (3). These monopolies not only increase food prices, drive farmers into bankruptcy, and create food deserts (4), but they are unaccountable to economic forms of protest like boycotts because they control the market.
These monopolies are not just limited to the food sector: they thread their way through all industries (5). (Side note: monopolies are antithetical to capitalism because it eliminates the power of the free market, and corporations that provide essential services are “too big to fail” and are protected from bankruptcy by taxpayer dollars: see the 2008 financial crash) So, corporations are responsible to the vast majority of GHG emissions, while simultaneously being consolidated into enormous conglomerates, which means that a tiny minority of the population causes the vast majority of GHG emissions and climate degradation. Here is where the profit motive comes in: if a company can make more money by polluting the environment or harming people, they will do it. There are no other considerations taken into account. Take for example the 2008 mortgage crisis where banks were giving loans to anybody who asked, then chopping these loans up into little pieces, packaging the little pieces together, and started trading this debt. The banks did not want to maintain control of the debt because they knew that the debt would ultimately be uncollectable. When the financial crash happened because people could not afford to pay back the loans they were given, the banks received bailouts, and then they turned around and foreclosed/evicted all the people that could not pay their mortgages. These practices are nothing short of predatory, but the executives at the banks still got their bonuses and no one went to jail.
These massive corporations are able to continue their domination of our economic system by dominating our political system through lobbying and other forms of “political expression.” In the United States, the case of Citizens United vs. The Federal Elections Commission resulted in a Supreme Court decision that established corporate personhood
and First Amendment Rights for companies*. This decision allowed companies to spend as much money as they wanted in elections. In addition to bankrolling elections, corporations have tremendous lobbying power that most would consider bribery. Lobbying itself is not inherently bad; it is a way of petitioning the government to address (or not address) issues via legislation. However, the way lobbying is done now is nothing short of bribery. Lobbyists can host fundraisers for representatives, which is effectively a bribe where individuals donate money to the fundraiser in a quid pro quo style transaction. Lobbyists have written legislation that representatives then introduce as their own legislation: examples of this include ALEC’s legislation on private prisons (7). And finally, lobbyists and public officials demonstrate a phenomenon known as the revolving door where politicians or bureaucrats are offered lobbying jobs that pay extremely well in a quid pro quo style transaction (8).
In the bureaucracy this phenomenon is even more apparent: the current FCC chairman, Ajit Pai, was a Verizon exec. In known lobbying expenditures (shadow lobbying also exists), corporations are disproportionately overrepresented by lobbyists. In 2015, corporations spent $2.6 billion on lobbyists, which was 80% of all reported lobbying expenditures (6). Not only do these corporations levy intense lobbying power to push political agendas that yield more profits, and push negative externalities like the costs of climate change onto taxpayers, while corporations pay less and less taxes. As of 2015, about $2.4 trillion of untaxed corporate profits were stored in offshore accounts, which is about $700 billion in tax revenue (9). Companies like Amazon pay corporate tax rates close to 11%, which is far lower than the 21% corporate tax rate, which was dropped from 35% to 21% in 2018 (10 & 11). Unfortunately, lobbying generally benefits corporations by enabling loopholes in legislation for tax dodging and restricting environmental regulations.
In addition to influencing our political systems, corporations have immersed themselves in our social systems as well through advertising. The United States has fostered a well-documented culture of consumerism since consumption was touted as the solution for economic recovery following World War II (12). One of the driving forces of consumerism is the advertising industry, which is a microcosm for both the best and worst elements of capitalism. The advertising industry is rife with innovation as well as intrusion into the private life of people. Advertising used to be limited to outside the home until the introduction of televisions and radios. Now, advertising extends its fingers into more and more aspects of our lives. Corporations are capable of tracking online activity as well as location services to customize what ads people receive. Psychologists have attributed Americans’ propensity to consumerism to increased advertising (12). These advertising techniques are getting more and more sophisticated too. Now, fast food restaurants adopt personas on Twitter to create a friendly brand image with widespread appeal, and Slim Jim frequently comments on Instagram meme pages. Although these accounts and actions seem harmless, these marketing techniques encourage consumers to develop social relationships with companies and think of them as persons rather than corporations. One of the fundamental aspects of capitalism is that consumers are able to clearly tell which products are superior in quality and price in the free market, but the way advertising works demonstrates that corporations do not even believe this. On a similar note, companies that support social issues are not always genuine: for example, countless brands will change their social media profile pictures to something with a rainbow during pride month. Do these actions actually contribute to solving the issues that are important to the LGBTQ community, or is it an attempt to utilize the LGBTQ community as a customer base? Another technique known as outrage marketing has also started to become a trend where a company like Nike will support someone/something controversial like Colin Kaepernick and the fallout generated is essentially free advertising (14). In addition, corporations run more subtle advertising campaigns like Exxon and other petrochemical companies that funded climate denial junk science even though they knew in the ‘80s that climate change was a real problem (13). Some companies have claimed recently that they are aiming to be Carbon Neutral by a specific year, yet even this is designed to mislead. For example, Proctor & Gamble has promised to be Carbon neutral by 2030, but their Carbon audit only includes Scope 1 and Scope 2 emissions (that total about 4.3 million metric tons), which are emissions that result from the production of goods. P&G did not however include Scope 3 emissions, which are associated with the life cycle of their product and the production of raw materials. Including Scope 3 emissions, P&G’s carbon output is 215 million metric tons, which is 50 times the amount of carbon they claim to reduce (1). When sustainability and the future of our planet depends on people buying less stuff, corporations cannot be trusted to do what is right because their interests will almost always be diametrically opposed to the goals of sustainability. Although there may be some hope with Environmental Social and Governance (ESG) criteria taking priority at this year’s World Economic Forum (WEF) in Davos, it is crucial to always consider the profit motive when looking at any company’s claims and actions.
*Correction: The Supreme Court Decision of Citizens United vs. Federal Elections Commissions did not establish corporate personhood but upheld the right of corporations to make political speech by spending money. The 14th Amendment was used to gradually create corporate personhood.
7. 13th via Netflix