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Business Law
Ref No: 2033
Question 1: “With reference to relevant case law, international instruments, legislation and policy guidance, critically examine whether parent companies are being held sufficiently accountable in their home countries for the activities of their subsidiary and other group companies that negatively impact upon the environment, human rights and health and safety in host countries.”
1. Introduction
The question one of assignment will provide a discussion on critical evaluation of whether the parent companies are liable for the environmental damaging activities of the subsidiaries in their host countries. To provide a reference for the argument, difference earlier cases, developments and amendments in the laws and legislation will be studied in detail. This assignment will use case laws in order to support the argument that whether the parent companies are liable for the environmental damage caused by their subsidiaries or group companies. Development in UK laws will be given separate attention while discussing the argument.
2. Causes behind Subsidiaries Impacting Environment Negatively
One of the major serious issues that multinational enterprises face is their involvement in establishing and maintaining of legitimacy in their contribution to the environment, human rights, and health safety. Many multinational suffer due to their lack of maintenance in the environment. Multinational also play a huge role in sustaining the environment and keeping the citizens and especially their consumers safe from any health problems, while also make an immense contribution to protecting the environment and the rights of the general public (Oxley, 1999).Business Law
However, sometimes it’s not the parent company that is at fault but its subsidiaries or group companies are. Therefore, it’s significant for the parent companies to keep a check on its subsidiaries or group companies, how are they earning, gaining profits and their way of contributing to the environment. Secondly, it’s also important to ensure that the subsidiaries or group companies are not impacting the environment negatively, or violating human rights and their health safety rules and regulations. Thirdly, the parent companies should affirm the policies of their group companies or subsidiaries. And, also they are not violating any policies or regulations only in order to generate more profits from the customers (Jägers, Jesse, and Verschuuren, 2013).
Business Law It is further stated that the most critical issue for the MNCs is not just legitimacy but organizational legitimacy, which is their acceptance of their organization in the environment. Hence it is proven for years that success and survival of an organization depend upon its image and furthermore, its subsidiaries and group companies linked to it play a vital role in maintaining the image of the MNEs or parent companies in the market and in the minds of the consumers as well (Skinner, 2015).
Besides this, the organizational legitimacy can be examined at the level of the parent companies as a whole, and also the level of subsidiaries of parent companies in their host country. The organizational legitimacy of the parent companies as a whole is their approval and acceptance, while does not necessarily depends on the activities of their subunits or the group companies regarding the environment, human rights and health safety concerns (Schleimer and Pedersen, 2014).
Business Law Most of the time, the multinational corporations (MNCs) are in an attempt to cut their costs and yet generate profits and sales, due to this these parent companies impact the environment negatively through their subsidiaries. Such parent companies export their pollution related activities through their subsidiaries which are established in the least emerged nations. However, this disseminating of pollutants is a highly serious and health affecting issue on the environment (Tatoglu, Bayraktar, Sahadev, Demirbag and Glaister, 2014)…
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