Industry and agriculture

Manchester city centreTransnational Corporations

Transnational Corporations (TNCs) are companies that operate in a number of different countries. They are agents of modern economic globalisation. The largest of these giants consist of vast international networks of supply and sales chains. They are responsible for production and consumption patterns that require vast amounts of energy to be used transporting goods between different markets all across the globe.

Many of the world’s largest TNCs are head-quartered in the UK. These include Tesco, whose worldwide sales topped £37 billion last year, resulting in an amazing £2.03 billion profit. Other famous names include Barclays, Vodafone, Diageo and Rio Tinto.

By their very nature, each of these organisations has a huge carbon footprint. This is the amount of carbon dioxide used by an individual or organisation as they go about their everyday lives or operations. It is usually measured in terms of the tons of carbon dioxide emitted into the atmosphere as a result of fossil fuel being used to provide energy for buildings, transport and the manufacture and eventual disposal of goods.

The global supply networks of TNCs are highly carbon-emitting. For instance, runner beans flown into a UK supermarket from Zambia are responsible for 2,011kg CO2 per load, whereas sprouts driven from Kent to London by lorry only generate 5kg CO2 per load.

How are UK TNCs responding to the challenge of climate change?

Pressure for large TNCs to reduce their carbon footprint is likely to come from two sources:

  • Consumers are becoming far more concerned about climate change and the role that their own personal consumption habits are playing. They may begin to avoid products that have been air-freighted vast distances. If this happens, companies will respond to market demand and start looking to source more food locally if they think it will help sales - which could be good news for British producers. Consumer pressure has certainly worked in this way in the past - firms such as Barclays stopped investing in South Africa during the Apartheid era (when black South Africans were denied political rights) as a result of consumer boycotts. We could therefore see the geographies of major supermarket chains changing in future - favouring locally-produced goods over imports. However, this in itself could be controversial if farmers in developing countries lose desperately-needed sales.
  • Green fuel taxes may be introduced by the government. Increased fuel taxes would force TNCs to rationalise their transport networks and to use less energy in stores - all of which would help reduce CO2 emissions. Concern for the environmental was one of the reasons why Ken Livingstone introduced the London Congestion Charge which has succeeded in reducing carbon emissions from London's transport.

One highly controversial area of industry where future changes may need to be introduced is the aviation sector. Taxing aviation fuel would bring the airlines in line with the rail sector. The aviation sector is the fastest growing contributor to the greenhouse gas emissions that cause climate change - but it is currently exempt from the emissions reduction schemes adopted under the Kyoto Protocol.

Further reading:

Student Practice Question:

Discuss the social and environmental impacts associated with the rise of large Transnational Corporations.

Impacts can be positive as well as negative. While an answer should draw attention to the worst impacts of TNCs, it might also suggest that legislation and rising consumer awareness of the importance of reducing carbon emissions may eventually result in the ecological footprint of TNCs being reduced. But not without negative social impacts for producers in far-way countries.