Is big more ethical than small?

Its common to portray large multinational corporations as selfishly concerned with the bottom line and willing to trample over environmental and ethical concerns in the quest for the dollar. So I’ve been interested to read some people solidly on the left/environmental side make the point that this ignores the fact that they are also often exposed to disproportionately large risks to their reputation, which may make them behave more ethically than their smaller regional counterparts who don’t face the same scrutiny.

Peter Singer in his book The Ethics Of What We Eat, gives qualified support for McDonalds over most small take away food companies on the basis of their higher ethical standards. This article in The Guardian sums up the essence of his message:

Singer’s arguments are a challenge to knee-jerk antiglobalisation campaigners for whom McDonald’s is an unmitigated evil. Trapped in a small town and forced to choose an independent takeaway or the golden arches, Singer would plump for the latter (as his book points out, in the US, McDonald’s has insisted its eggs come from hens given more space than the legal minimum, among other “ethical” innovations). “The fact that a big chain has a national and international reputation to protect means they need to be a bit more cautious about what they are doing than someone who has no brand and is not going to suffer from any kind of disclosure,” he says.

Similarly Jared Diamond wrote in his book Collapse that some large mining companies were much more ethical in their behaviour than smaller companies were. Small mining companies may not outlast their mine and go broke leaving a large mess for the public to clean up. Larger companies with reputation and on going business to protect may perform better on ethical and environmental grounds, cleaning up messes and generally putting considerable effort into minimizing environmental impact.

He expresses some of this sentiment in this American Scientist interview.

And the other big surprise is what goes on in the business world, because eight years ago I, like many people, had naively thought of big businesses as usually making messes and being evil and usually being concerned only with the bottom line and being an unstoppable force. But having been engaged with oil companies and mining companies and logging companies in recent years, I’ve seen that, yes, some of those companies were even worse than most of us believe, but some of them are far better and do a much more effective job of taking care of their environment than even the National Park Service does—not out of charity, but because they’ve discovered that it’s cheaper for them to take care of the environment and thereby minimize the risks of a $4 billion Exxon Valdez or Santa Barbara oil-spill blowout.

Also in this interview he expands his point.

The short message of my chapter on big businesses is that people who are concerned about environmental problems tend to think of big business as being evil, selfish, only concerned with the bottom line; that they are among the most destructive in society today. That certainly used to be my attitude towards big businesses until—what was it?—seven years ago, when I started getting involved with oil companies, and then learning more about mining companies.
The brief answer is that there are some big businesses which are terrible, just as bad as we all think, and there are some big businesses that are doing a terrific job, and that are the most potent forces for sane environmental policies today.
For example, the international oil companies. We love to hate the international oil companies. For the most part, they cleaned up their act twenty years ago, because they had some very bad experiences. They had the Exxon Valdez oil spill, which cost Exxon something like $4 billion. They hid the Piper Alpha fire in the North Sea that killed 170 people and produced big lawsuits against Occidental. Even earlier, they had the Santa Barbara blowout.
So the international oil companies have largely cleaned up their act. They’ve shifted to double-hulled tankers. You still read about tankers having spills, but those tankers don’t belong to big oil companies; they belong to small companies.
Again, with the oil industry, we think of the Alaska Wildlife Refuge: those evil people wanting to drill in the Alaska Wildlife Refuge. But my friends in the big oil companies tell me they don’t want to drill in the Alaska Wildlife Refuge, it’s the government that does.
So that’s oil.
In the mining industry, different kinds of mining are very different. Copper mining is dirty; gold mining is even worse. Borax mining is clean; the cleanest mine in the United States is a Borax mine in Death Valley run by Rio Tinto. Platinum and palladium mining in Montana is done very cleanly. So different types of mining are different. It all has to do, partly, with different impacts involved with different types of mining, and then also, among mining companies, Rio Tinto got burned like Exxon. Rio Tinto owned the big copper mine in Papua New Guinea that triggered civil war and got closed down, so Rio Tinto lost several billion dollars. Rio Tinto learned their lesson, whereas other mining companies haven’t.

The reputation of a brand for many large corporations is perhaps the most important thing and all decisions must be made with a view as to what that loss of reputation may cost. With modern communications its much more difficult to keep operations in remote countries free from scrutiny, and potential backlash can occur globally from local incidents.

While in many cases it is only through scrutiny and criticism that these companies are kept behaving ethically, it does well to remember that those who aren’t being scrutinised so closely may well be worse and opposition to multi-national corporations can often be misplaced. Often they are the most vulnerable to criticism, and amenable to reform.

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2 Responses to Is big more ethical than small?

  1. […] Criticality has an interesting post on the grey area of environmental damage caused – and not caused by conglomerates and multinationals (Note: MNEs! A new piece of jargon I picked up from one of my organizational behaviour textbooks yesterday) which made me reflect again on my own earlier post (where I got kind of pious). In Is big more ethical than small? « Criticality Steve talks about the big oil companies who have cleaned up thier – seldom as a consequence of a Damascene conversion experience, admittedly – and reflects (I’m paraphrasing heavily) on the ‘handsome is as handsome does’ approach to environmentalism that this leads towards. […]

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