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Modern Business Corporation: The Root of Many of Today's Environmental Problems?
Profit maximization has always been the primary goal of a modern business corporation even if it is not the exclusive focus. The dispersal of share ownership and the size of corporations have transformed the shareholders into passive investors and drawn the distinction between the management and shareholders (Millon 1990). The social entity view of corporations seems to imply that the board of directors could do things that benefit the public but not necessarily maximize shareholders' financial interests (Allen 1992). However, in many cases a few investors own a majority of the shares and they can have significant influences over the board of directors to act towards maximizing share returns. Even in the case that the shares are so scattered that the board of the directors becomes independent of shareholders, only if the corporation makes a profit, can it do things towards the advancement of the general welfare. In short, profit always comes first in businesses and all other duties are secondary. Driven by profit seeking, modern business corporations do whatever increases profit even at the expense of the environment. As long as cutting down trees brings the best financial interests today, a logging company does not mind what will happen in the future. Pursuing its own economic interests, an oil company, regardless how much wildlife its oil spill has destroyed, still ships oil in outdated tankers and ageing pipelines and also opposes greenhouse gas legislation. Not to reduce profit by increasing cost, a chemical plant avoids implementing pollution control and discharges pollutants to river or air without treatment so long as it can. To make money out of mountains, a coal firm performs mountain top removal mining despite the risk of annihilating ecosystems, contaminating water and transforming the biologically diverse forests into barren lands. All these examples are too common in the business world. And some companies even have been known to compare the profit from an illegal action and the regulatory penalties and proceed with the illegal action on that basis. Some people might argue that the emergence of corporate environmentalism suggests that modern business corporations do care about the environmental problems and are working at it. However, we need to look into their motivations carefully to draw the conclusion. Lyon et al. (1999) reviewed two explanations for corporate environmentalism: improved corporate productivity and "Green" consumers. Behind both cases is the motive for corporations to obtain more profit by cutting cost or attracting some particular customers. Further, they provided a third explanation that the environmental initiatives are simply strategies used by corporations to influence the actions of regulators. By preempting tougher regulations whenever possible or weakening forthcoming regulations, corporations are able to make more profit at less cost. The legal structure of the modern business corporation is indeed at the root of many of today's environmental problems; be it unconsciously or indirectly, the other two major players in the game, consumers and governments, also have their responsibilities. Haven't the consumers encouraged corporations' environmentally harmful behaviors by choosing cheaper, non-green alternatives instead of more expensive green products? Haven't government policies been influenced by the corporations because of their donations for election campaigns? After all, the three of them together are responsible for today's life style based on mass production, consumption and disposal that has had a great impact on the environment. In conclusion, modern business corporations are a fundamental source of many of today's environmental problems. However, we also need to consider the role of consumers and governments.
References Lyon, T. P. and Maxwell, J. W. (1999) Corporate Environmental Strategies as Tools to Influence Regulation, Business Strategy and the Environment, 189-196 Millon, D. (1990) Theories of the Corporation, Duke L. J. 201 Allen, W. T. (1992) Our Schizophrenic Conception of the Business Corporation |
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