In terms of the scholarly discussion on corporate social responsibility please outline the key arguments that may support the actions of the firms given in the case. Furthermore, discuss the main arguments against corporate social responsibility considering these firms’ actions. Use scholarly literature and examples from the case study to illustrate.
Though water is considered as essential to survival of all life forms, getting access to quality water is increasingly becoming difficult in the under-developed world. While privatization is promoted as the solution for this crisis, previous examples of such a move have resulted in adverse results, especially for the poor. Where privatization of water has been implemented in the last 10 years, contentious debates and protestations have risen in the communities affected by the project. In the case study titled ‘The Business of Water’, we read about the activities of some of the major water and beverage companies in the world like Suez, Coca-Cola, Vivendi, etc. These companies have installed several plants in developing countries such as India, Philippines, Bolivia, Brazil, etc in the last 10-15 years. Though there are some benefits to the society, in terms of the availability of safe bottled drinking water and a better range of beverages, the communities surrounding the plants have largely suffered as a result. In their defense, MNCs who’ve setup these plants cite various reasons behind their efforts. They point out how they bail-out financially stapped local administrative and public works bodies by putting forward a substantial amount of capital and investments. This in turn helps local municipalities to
“update the obsolete and decaying infrastructure of municipal water and sewer systems. By one federal estimate, it will require one trillion dollars over the next 20 years to replace aging sewer pipes and treatment plants. Second, many economists argue that private businesses are more cost-efficient and effective in providing services than the public sector. And third, in some quarters ideology favors downsizing government and outsourcing things to the private sector.” (Hale, 2006)
Despite these advantages that are held up by pro-privatization lobbyists, the ground realities have not changed for much of the population in which these MNC’s operate. MNC’s are seen to be driven purely on profit motive and are accused of failing in Corporate Social Responsibility measure. The most publicized case in this respect is the conflict between Coca-Cola and local communities surrounding its plant in Palchimada, Kerala. The village of Palchimada is located in the South Indian state of Kerala and is chosen for its impressive groundwater reservoirs and healthy annual rainfalls. But, as it turned out, within a few years of the plant’s operation the water table fell by several tens of feet and it became very difficult for local farmers and villagers to fetch water. This is a clear case of an MNC undermining the interests of the society for the sake of its private gain. It is also an illustration of how vapid and meaningless claims of Corporate Social Responsibility by MNCs turn out in reality. For progressive political leaders, incidents such as these across the Third World point to certain undeniable facts. They claim that MNCs exploit the dire economic situation of poor people. (Guislain, 1997) Joining ranks with MNCs are government officials, who pay scant respect to public welfare. These episodes have led some opponents of privatization, such as Maude Barlow and Tony Clarke, to draw a line in the sand, stating that
“the move to commodify depleting global water supplies is wrong-ethically, environmentally, and socially. They think privatization of water resources allows allocation decisions to be made by corporations that desire to maximize profits and ignores the environmental and social consequences of water allocation policies. These companies, focused only on the bottom line, are unlikely to invest in new technology or water conservation. To Barlow and Clarke, privatization interferes with citizens’ ability to allocate and manage their own water, concentrates power in the hands of monopolist corporations, and makes it difficult for local governments to reclaim control over the water system.” (Luoma, 2005)
• Glennon, R. (2005). Water Scarcity, Marketing, and Privatization. Texas Law Review, 83(7), 1873+.
• Guislain, P. (1997). The Privatization Challenge: A Strategic, Legal, and Institutional Analysis of International Experience (World Bank Regional and Sectoral Studies). Washington, DC: World Bank.
• Hale, S. I. (2006). Water Privatization in the Philippines: The Need to Implement the Human Right to Water. Pacific Rim Law & Policy Journal, 15(3), 765+.
• Luoma, J. (2005, June). THE WATER THIEVES: Privatization of Global Water Services Benefits Only Business. CCPA Monitor, 12(2), 32+.
• Megginson, W. L. (Ed.). (2005). The Financial Economics of Privatization. New York: Oxford University Press. Retrieved from http://www.questia.comPrivatization: A Global Perspective. New York: Routledge.
• Sitaraman, S. (2008). Privatization, Efficiency, Gender, Development, and Inequality-Transnational Conflicts over Access to Water and Sanitation. Human Rights & Human Welfare, 8, 91.