Globalisation

What is it?
Globalisation is the phenomenon whereby there is a cross border economic, social and technological exchange.

For example, Nike is a global company since it has offices and interests in many different countries - manufacturing in one country, production in another and the distribution centre in yet another.

Furthermore, its customers are spread across the world. Whilst some argue that this helps create global employment and opportunity, others fear that globalisation is leading to exploitation of the workforce, damages local economies and endangers the environment, as companies exploit variations in laws and standards around the world.

Sustainability and exploitation
For example, a global company who needs wood but has quotas for its farming in its home country can go to other areas of the world where there is not the same stringent legislation.

They can then buy cheap timber but at a high cost to the local environment. Similarly, labour costs vary around the world and several global corporations have been exposed for their exploitation of their workforce, particularly those employees in the South.

As a result of increasing consumer pressure, some global companies are now starting to address these issues.

A possible solution?
In order to combat these problems, many argued there was the need for corporate and social responsibilities.

This led to the development of the ‘Corporate Social Responsibility’ (CRS) agenda.

This would ensure that companies took much more responsibility for their actions and in return they would face less government regulation. Companies would have to publish what they were doing to ensure sustainable development in relation to their impact and involvement around the world.

As well as helping protect the environment and local economies, it would also have the knock-on benefit of retain consumer confidence and loyalty.

Current problems
At present CSR is not really working because it is a voluntary code of practice. Although some companies have implemented these measures and taken responsibility, most have not. CO2 emissions continue to rise and the number of people in poverty has increased.

This has led calls for legislation to ensure that companies comply with the voluntary guidelines. Within the UK, legislation would require the mandatory reporting of the impact of a company on the economy, society and environment, clear consultations with shareholders, defined company directives and the setting up of the Standards Board to ensure compliance.