A Path to More Sustainable Corporations in the United States

• Author: Anna Colby
• Position: J.D., Georgetown University Law Center (expected May 2022); B.A., University of Virginia (2017)
• Pages: 861-881

A Path to More Sustainable Corporations in the

United States

ANNA COLBY*

INTRODUCTION: GLOBALIZATION & THE ROLE OF CORPORATIONS

“Globalization is a word used to describe the growing interdependence of the

world’s economies, cultures and populations brought about by cross-border trade

in goods and services, technology, the flows of people and information.”

1

Global

trade has “skyrocketed” in the past century, and U.S. trade levels now exceed a

third of its GDP, and world trade volume exceeds half of world GDP.

2

Globalization has seen some big winners—developing manufacturing countries

such as China and India, highly skilled professionals, and multinational corpora-

tions.

3

But it has also devastated working class families with the impact of low-

cost imports and loss of manufacturing jobs in the United States.

4

Income and wealth inequality has grown across the developed world; while

companies and rich individuals have gotten richer, the average income has basi-

cally stayed the same.

5

In the United States, from 1990 to 2014, “the GDP

increased by seventy-eight percent,” but “the real median household income was

barely higher in 2014 than it had been in 1990.”

6

Western countries face “stagna-

tion of living standards”, “rising inequality,” and “dangerous environmental

risk.”

7

Corporations play an important role in globalization and the rising inequality.

Even though Americans are working more productively than ever, the fruits of

their labors have primarily accrued to corporate profits; “From 1979 to 2018, net

productivity [how much workers produce per hour] rose almost 69.9 percent,

* J.D., Georgetown University Law Center (expected May 2022); B.A., University of Virginia (2017)

© 2021, Anna Colby.

1. Melina Kolb, What is Globalization?, PETERSON INST. FOR INT’L ECON. (Oct. 29, 2018) (updated Feb. 4,

2019), https://www.piie.com/microsites/globalization/what-is-globalization, [https://perma.cc/SQS5-AJYN].

2. Id.

3. See id.

4. See id.

5. See MICHAEL JACOBS & MARIANA MAZZUCATO, RETHINKING CAPITALISM: ECONOMICS AND POLICY FOR

SUSTAINABLE AND INCLUSIVE GROWTH CH. 1 (John Wiley & Sons, Inc. 2016) (“At the same time ‘wealth in-

equality has grown even more than income.’ The rise in inequality has been seen across the developed world:

‘In the UK, the share of national wealth owned by the top 1% rose from 23% in 1970 to 28% in 2010. In the

US, it has risen from 28% to 34% over the same period. In the US in 2010, the top 0.1% alone owned almost

15% of all wealth.’”).

6. Id.

7. See id.

861

while the hourly pay of typical workers essentially stagnated – increasing only 11.6

percent over thirty-nine years.”

8

The rising tide does not lift all boats. In other words,

workers are getting poorer and corporations and their owners are getting richer.

Beyond exacerbating inequality, corporations are also exploiting the labor

force and polluting to profit.

9

Corporations are key players in globalization; they

set wage standards, labor standards, and make key decisions on trade and

outsourcing.

10

Multinational corporations use global supply chains to create their products.

11

“Global supply chains are production networks that assemble products using parts

from around the world.”

12

Today, eighty percent of world trade is driven by sup-

ply chains run by multinational corporations.

13

Corporations increasingly source

goods and services from complex chains of suppliers that often span multiple

countries.

14

These countries have different legal, regulatory, and human rights

practices. And “more than 450 million people around the world work in supply

chain related jobs.”

15

“Through their global supply chains, many businesses risk

contributing to the more than 12 million deaths attributable to unhealthy environ-

ments each year.”

16

Corporations also outsource to countries with lax environ-

mental standards to avoid compliance with regulations in the United States.

17

While corporations become wealthy from globalization and trade, workers are

suffering and society is paying in environmental costs.

18

So, what can be done to promote a more sustainable role for the corporation?

To address this question, this Note explores private norm reordering to encourage

more sustainable corporations. Part I describes corporate governance and how the

shift in the purpose of a corporation sets the stage for change. Part II discusses the

8. The Productivity Pay Gap, ECON. POL’Y INST. (July 2019), https://www.epi.org/productivity-pay-gap/

[https://perma.cc/H9GH-FNNF].

9. See generally Paul Griffin, Carbon Majors Report 2017, THE CARBON MAJORS DATABASE (July 2017)

(finding “over half of global industrial emissions since human induced climate change was officially recognized

can be traced to just 25 corporate and state producing entities”); HUMAN RIGHTS WATCH, HUMAN RIGHTS IN

SUPPLY CHAINS: A CALL FOR A BINDING STANDARD ON DUE DILIGENCE (2016) [hereinafter HUMAN RIGHTS

WATCH].

10. See Benjamin W. Heineman, Jr., The Ideal of the ‘Lawyer Statesman’, 22 No. 5 ACC DOCKET 59, 62

(May 2004).

11. Kolb, supra note 1.

12. Id.

13. UN CONF. ON TRADE AND DEV., Investment and trade are increasingly entwined via GVCs (Feb. 27,

2013), https://unctad.org/news/investment-and-trade-are-increasingly-entwined-gvcs-report-says [https://

perma.cc/UJT5-2JKN].

14. See id.

15. HUMAN RIGHTS WATCH, supra note 9, at 2.

16. Id. at 7.

17. See generally Itzhak Ben-David, Stefanie Kleimeier & Michael Viehs, Research: When Environmental

Regulations Are Tighter at Home, Companies Emit More Abroad, HARV. BUSINESS REV. (Feb. 4 2019), https://

hbr.org/2019/02/research-when-environmental-regulations-are-tighter-at-home-companies-emit-more-abroad

[https://perma.cc/HPJ5-XUX4].

18. See generally id.

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