In October 2019, the CEO of the fast fashion conglomerate H&M, Karl-Johan Persson made an ambiguous and highly controversial statement about the increasing awareness of the general public towards more sustainable standards of living. In an interview with the American broadcasting company Bloomberg, Persson expressed concern that embracing sustainable ways of life poses a social threat and advocates for certain behaviours in the society, like a more sensible consumerism.

In April 2019, in another interview, published on Fashion United, Persson talked about H&M’s collaboration with organisations like the UN and the Ellen MacArthur Foundation as well as the company’s strategies for implementing sustainable means of production and ensuring fair wages and decent working conditions throughout the company. He also characterised the fashion giant as a proponent of strong corporate ethic.

The public backlash that followed Persson’s reflections on how the increasing demand for more sustainable lifestyles may harm the economic growth of companies, such as his, is mildly put, normal. It begs the question whether corporations are exempt from behaving ethically because the alleged ultimate goal of businesses is, according to what I view as a general misconception, generating profit.

It is also worth reflecting on the role of economic growth of private companies in the context of handling global problems like poverty, climate change and unjust distribution of labour and resources.

In this paper, I will discuss the ethics of business and what contributions, if any, industries can make to creating a more just global society. I will also examine how corporate responsibility relates to the responsibility of governments to uphold our moral laws. I will do that by analysing Denis Arnold’s understanding of John Rawls’ conception of global justice, as presented in The Law of Peoples (Rawls, 1999).  

When we talk about global justice, matters like fair distribution of assets, equality of opportunity and the legitimacy of the global order in terms of governmental and corporate power, are fundamental elements of the discussion. There is still disagreement among philosophers and political theorists whether global justice is even achievable, or justice is only viable within the physical borders of single nation states. This is not so surprising because, when we scale a problem, it automatically becomes more complex as it presupposes a myriad of perspectives and factors to be considered. 

In his paper Global Justice and International Business (Arnold, 2013), Denis Arnold rightfully points out that, corporate organisations have been traditionally omitted in the debates on global justice and excused from responsibility in these matters, because the main contributions to global justice philosophy tend to come from political science and international law rather than from moral philosophy and business management.

In this sense, corporate actors are not traditionally seen as important to or even capable of resolving global poverty issues or economic struggles in less developed countries because those fall into the jurisdiction and duties of governments. I support Arnold’s view that business ethics plays a crucial role in how we conceive of global justice and the local impact of transnational companies can have tremendous implications for foreign economies.

An example that comes to mind is a country like Bulgaria which has been struggling with serious economic hurdles since decades. The development of the IT industry in more recent years, which was catalysed by the presence of large international companies in the country, has indeed created many jobs and had positive effects on the technological evolution of the society. However, it has also accumulated human and financial capital in a single location and made occupations which have little to offer to the IT sector, practically obsolete. This, in its turn, has widened the economic inequality between different cities and layers of the society.

According to the Global Climate Action at a Crossroads report, issued by the World Economic Forum in December 2019, only a third of the approximately 7000 companies worldwide that report to the Carbon Disclosure Project, fully disclose their emissions. Even fewer have set reduction plans in line with the 2015 Paris Agreement, when the international community agreed to collectively work towards decreasing of the global temperature rise below 2°C. Regardless, global greenhouse emissions continue to increase by 1.5°C each year. Interestingly, climate change did not appear 5 years ago, it began with the industrial revolution in the 18th century and grew exponentially with the resultant economic boost and urbanisation in, what we usually refer to as ‘the developed part of the globe’.

Social phenomena such as drastic climate changes and the growing economic divide between and within nation states, is the reason why corporations bear as much responsibility for global justice as governmental institutions and individuals, as corporations are among the primary contributors to these events. I find it absurd to question or worse ⏤ mock the accountability which companies should demonstrate, especially in a situation like the present.

Shockingly enough, respected theorists like the American economist Milton Friedman had the audacity to claim that social responsibility is something that corporations cannot have because responsibility is a quality which only humans possess, and corporations are (I am paraphrasing), amorphous mindless structures (Friedman 1970, p. 173). F

riedman  seems to have taken a too literal interpretation of the term corporation as he felt the need to explain an obvious fact, namely why a corporation is different from a human individual. He even went to the extent to state outright that the social responsibility of businesses is to generate profit and implied that the allocating of resources for social causes undermines the very purpose of companies.

His defence of the capitalist economy, be it even at the expense of the general public, which Friedman seems to have perceived as a responsibility solely of governments, is, in my opinion, completely ludicrous. Calling the urge of businessmen to engage in fair wage policies and social causes ‘a suicidal impulse’ (Friedman 1970, p. 178), is outrageous. Maybe Friedman would gladly endorse Persson for looking out for the interests of venture capitalists and billion turnover enterprises at the gates of a climate and social catastrophe. 

Normally, in the discourse around global justice and justice in general, John Rawls’ egalitarian theory is a central reference point. In his Law of Peoples (Rawls 1999), Rawls draws a distinction between peoples and states. Our conventional perception of the word states is connected with political power and preserving the sovereignty of a single country of people with common history, language and culture. This logically comes into contradiction with how modern societies are structured ⏤ not all members of the society share the same language and history but are rather a mix of cultures.

This is why Rawls introduces the term peoples when we talk about justice on an international level, to denote the norms that transcend local borders. He identifies liberal, decent, outlaw and burdened states as the primary forms of political regimes in global justice affairs. Liberal states are democratic societies, governed by egalitarian principles, where human rights are respected, peace is preserved, and the people can hold the state accountable for any transgression or oppression it might commit against them or another state in order to pursue political agendas. Decent societies are not necessarily liberal (democratic) but they are reasonable enough, unaggressive, respect universal human rights and tolerate differences in the conception of what fair lifestyle entails (for example in religious terms).

Outlaw states are states with an oppressive political regime which violates human rights and where international interference is needed. Burdened are states in unfavourable conditions whose historical, social, and economic circumstances make their achieving a well-ordered (either liberal or decent) political rule, difficult or impossible (Rawls 1999, p. 90). Rawls’ views on how states should relate to one another internationally is often criticised as too mild and tolerating even non-democratic leaderships. Essentially, Rawls says that liberal states only have a right to interfere in other states’ internal dealings when the former have to preserve the integrity of their territory or protect human rights in countries where the prevalent regime is incapable of doing so.

This is the political conception of global justice where democracy is seen as vital to the legitimacy of political systems (Arnold 2012, p. 131). The other one, the cosmopolitan, maintains that the international community should not tolerate oppressive regimes or violation of human rights and advocates for global socio-economic justice grounded in universal ethical principles. Arnold takes Rawls’ global justice framework as a reference in the debate around what obligations, if any, corporations have to members of BoP as he calls them ⏤ (base of pyramid business strategies, intended to alleviate poverty while remaining profitable). 

Arnold does that because Rawls’ global justice theory rests on a Kantian contractarian view of the basic structure of society where labour, obligations and duties are distributed between social institutions according to the idea of social cooperation. Arnold maintains, and I agree, that corporations have distinctive abilities and resources which enable them to influence the understanding of justice by citizens and the basic frameworks of society.

Naturally, there is a difference between types of global institutions. Arnold clusters them in 3 categories: 1) governmental organisations, 2) non-governmental organisations (international cooperation unions), and 3) transnational corporations. I agree with Arnold that Rawls’ account for global justice does not constitute a feasible ethical framework for determining what obligations, if any, corporations have to assist members of BoP.

Rawls’ theory of global justice is to a great extent political and discusses the way states should refer to one another in the international arena although he does mention the loosened accountability of corporate powers when we consider questions of global and even domestic justice (Rawls, 1999, p. 24). I think we can all agree that corporations are private organisations and so they are not bound by the same political obligations as nation states.

Undeniably though, corporations and governments stand in an interesting power dynamic with each other which can sometimes be abused from both sides (I expand on this later). Arnold claims, rightly I think, that we can only seek responsibility from corporations to members of BoP on a human rights’ cosmopolitan basis. In other words, corporations cannot be held accountable for any vulnerabilities (poverty, illiteracy) that originate in purely political negligence. Nevertheless, corporations are blameworthy whenever they take advantage of the misery of people in unfavourable conditions (members of BoP) in the form of harmful exploitation.