Challenging corporate power and equity fines

In a time of spiralling crises, Rob Harrison from Ethical Consumer talks to Professor David Whyte about the importance of taking corporate structure seriously.

August 2023

In 2020 David Whyte, at that time at Liverpool University, published a book called 'Ecocide - kill the corporation before it kills us'. Like other books before it, such as Joel Bakan's bestselling 'The Corporation' from 2005, it presents detailed evidence of how specific companies have knowingly destroyed ecosystems in the pursuit of financial gain. On one level then, it won't be much of a revelation to readers of Ethical Consumer, because we write about examples of this on a daily basis.

There were however two key elements which stood out.

The first is that Professor Whyte challenges the idea that all we need to fix the problems around us is just better, or more robust, regulation from governments.

The second is the idea of 'equity fines' as one way of making progress. If an oil company, for example, is found guilty of damaging a river, rather than issuing a monetary fine, a judge could order the company to issue new shares that could then be held by the affected community.

I (Rob) interviewed David in June, focusing on these two elements, but also the idea of building a coalition to address the corporate structure. I began by asking him why he chose to write the book.

Taking corporations seriously

DW: It grew out of a frustration with the corporation not being taken seriously.  One of the points the books makes is that almost all investment capital in the world, measured as money, flows through corporations. There's very little you could imagine that is untouched by corporations, and I'm not sure we take that seriously when we think about the big problems like climate change.

In the book I explain how corporations are the driving forces behind industrial carbon use and ultimately all of the other threats to biodiversity we see, such as plastic use and so on.  And I'm not sure we're taking that seriously enough. Like what is the corporation in a political and legal sense?  The fundamental basis for corporate power is its personhood, the idea that it can act as an independent entity, which is separate from shareholders and its managers.

I'm a great believer in the phrase 'system change, not climate change'. I agree that the problem is capitalism, but the problem with just stopping there is you don't specify how you change capitalism and who the real targets of that change have to be.

Now, I happen to think that the system will not change, unless we fundamentally reorganise our social relationships with each other, and our economic relationships with each other, and the way that we organise politically and in communities.

If we are tackling capitalism, corporations make the problem less abstract and much more clear in terms of what the problem is. So another driver for the book is to try and be a bit more clear about what we mean by system change.

The problem with government regulation

RH: I was also interested in what you wrote in Chapter 3: 'Regulation at the end point of the world'. Many of the civil society groups we work with here at EC argue that robust regulation of corporations will get us to where we need to be. I think you are challenging that?

DW: I wrote in Chapter 1 about how colonial European states used corporations to do their dirty work – like seizing land and plundering resources. And looked at over this longer period you can see the deep relationship between companies and governments.  

States have a dual function. They both enable and control environmental damage. They enable it by creating rules for liability, for markets and contracts and so on. They control it through rules around pollution.  

There should be a balance between these two functions, but it is also a contradiction. And because governments want growth, some people are pessimistic about our reliance on states to protect us.

If you think about the 200 biggest polluting factories in Britain, they're all licensed by the government to emit a certain amount of pollution and they negotiate that with the government and the regulatory agencies involved. So there's a kind of regime of permission too, that the state establishes which harm the environment.

On top of this we've seen the Environment Agency hollowed out and emasculated by years of austerity. The current sewage crisis is largely a regulatory crisis.

RH: It's a fascinating idea and one that resonates with some other areas of our work here at Ethical Consumer. For example, Ethical Consumer is a multi-stakeholder co-op with carefully-balanced board seats for both workers and investors. We're also exploring the idea of a multi-stakeholder corporation where consumers could hold a stake and have board representation too. There's an idea out there of a corporation whose key stakeholders (including potentially abstract ones like the biosphere or future generations) could each own a proportion of assets and share control.

The need to re-democratise

RH: One of the perennial issues we face at Ethical Consumer is that to get real change we need government to change the rules but, as we talked about earlier, there are often many reasons why this isn't going to happen quickly.

DW: I do think that, as much as possible, we need to think about a cooperative model of ownership where communities have a say over how their food is organised, how their water system is organised, and how their energy systems are organised. We should control how our hospitals and care systems are run, and also how people are supported in their homes to give care to other people. For me this cannot be determined by a few people at the top who are primarily concerned with making a profit.

So I do think that you need a different type of organisation which moves beyond the state and corporations. But if you have a big energy system it's a bit more difficult. You can't produce that at a community level. Even if it's based entirely on renewables you need a national grid and you need a national infrastructure.

So we do need to think about ways in which we redemocratise at a local level and bring things down more closely at a local level to popular control, but also have a way of democratising the way we coordinate that as well.

And of course that's often talked about in idealistic terms, especially in the global north, as something we could potentially do here. However, there are many, many places around the world where local food systems already thrive and exist, and they're under attack precisely by the same corporations. And Ethical Consumer has done much more work on this. The Monsantos and the Unilevers of this world are threatening local systems of autonomous food production everywhere.

So this is not just a national or parochial question. To talk about some kind of local control outside the existing state and corporate system that we have is a deeply international question. So I think the question is how we collectivise the way we produce and consume things and get away from a model in which the individual just faces this huge corporate behemoth at every step in the social structure.

Building a coalition around challenging corporate structure?

RH: We started off reflecting on how there didn't appear to be much in the way of active campaigning in this area – on how it didn't feel like the issue was being taken seriously.

DW: So for example, the Occupy movement had, as one of their demands, to withdraw the privileges of corporate personhood. But that's something that I think is very difficult to contemplate in the more mainstream parts of the corporate accountability movement now. If you look for example at any of the important UN documents, the IPCC reports, the reports that come after the COP conferences, corporations are always seen as the solution.

There have been some other organisations who have called for dismantling corporate structures, and I'm thinking about the Transnational Institute in Amsterdam as one example. But beyond that, I still think it's a bit early for a lot of organisations, a lot of campaigning organisations, to be thinking about how we can reform corporations themselves. But I think that's what we need. And time is running out.

RH: Yes. The books we see on this subject are often quite few and far between. Prem Sikka published a UK book called 'Fighting Corporate Abuse' in 2014, and David Korten's 'When Corporations Rule the World' was from 2001.

The B Corporation movement is kind of coming from the same place. It says, 'shareholder primacy is a problem, and we need to go in and fix the articles of association', and then you need to check your carbon impacts and create better management. And it's having a big growth period right now. So they are talking about corporate reform, it's just that they're not going as far.

DW: I wouldn't oppose that, but it doesn't, as you indicate, go far enough, because it doesn't change the basic structure of the corporation which provides directors and owners with legal immunity. A lot of B Corporations are advertising agencies or cafes and things like that which is probably OK. I think for things that are vital to life: food and health and energy and so on, corporations concerned with making a profit and have limited liability should not have any role.

I think equity fines would be a good thing for campaigners to organise around. And especially in climate litigation cases. The realistic chances of the courts adopting such an approach now are low. But if this was something that had some kind of popular or mass support around it, it might be difficult for it to be ignored?

More information

Ecocide by David Whyte costs £9.99 and is published by Manchester University Press.