Corporate “Social Responsibility”

Principles versus Interests

The website of every large corporation these days has a section labeled Corporate Social Responsibility containing high-minded language about its commitment to sustainability, community development, human rights and the like.

For the most part, these positions serve mainly as a form of corporate image-burnishing and have little real-world applicability. Now, however, a group of large U.S. and foreign banks are being challenged to live up to their CSR principles in connection with one of the most contentious projects of our day: the Dakota Access Pipeline.

Following a recent decision by the Army Corps of Engineers to block the final permit needed to route the pipeline (usually referred to as DAPL) under North Dakota’s Lake Oahe and dangerously closely to the Standing Rock Sioux Reservation, the project is stalled. Yet that could quickly change with the incoming Trump Administration.

Meanwhile, attention has turned to a syndicate of 17 lenders that have committed a $2.5 billion line of credit to the project. Among the leaders of the pack are Citigroup and TD Securities, owned by Canada’s Toronto-Dominion Bank. Of the 17, all but two are endorsers of a CSR document known as the Equator Principles. (The list of endorsers is here; the two members of the syndicate not among them are China’s ICBC Bank and Suntrust Robinson Humphrey.)

The principles were drawn up in 2003 by a group of major banks facing increasing pressure from environmental and human rights groups over their involvement in controversial projects undertaken by mining, petroleum and timber corporations.

In adopting the principles, banks committed to providing loans only to those projects whose sponsors could demonstrate that they would be performed in a “socially responsible” manner and according to “sound environmental principles.” Sponsors were also supposed to conduct assessments that took into consideration issues such as the impact on indigenous communities.

The current version of the Equator Principles states that projects affecting indigenous peoples should include “a process of Informed Consultation and Participation, and will need to comply with the rights and protections for indigenous peoples contained in relevant national law, including those laws implementing host country obligations under international law…Projects with adverse impacts on indigenous people will require their Free, Prior and Informed Consent.”

It is highly questionable that Equity Transfer Partners and the other companies involved in DAPL have met this test. On the contrary, the harsh response of the project sponsors and local law enforcement agencies to the peaceful protests at the site has demonstrated an utter disregard for the concerns of Native water protectors.

It is no surprise that opponents of the pipeline are calling the lenders to task. In November a group of more than 500 civil society organizations from 50 countries issued a joint letter to the 17 lenders citing the Equator Principles and calling on them to suspend their financial support of the project until the concerns of the Standing Rock Sioux Tribe are fully addressed.

So far there is no sign that the lenders are prepared to withdraw their support of the pipeline. This means there will be more clashes ahead — both between police and protestors, and between the profit interests of the lenders and their purported principles.

Putting Apple in Its Place

Apple’s indignant response to the European Commission tax ruling has nothing to do with an inability to pay. The company’s cash pile of more than $200 billion could cover the assessment several times over. Instead, it’s something more akin to the attitude attributed to the late New York hotelier Leona Helmsley: only the little people pay taxes.

Large corporations like Apple think that what they do is so important that they should be able to skirt their fair share of taxes. Some of their dodging is covert and some is done brazenly out in the open; some is done against the wishes of tax collectors and some is done with their full cooperation.

The covert portion of Apple’s tax avoidance started to come to light in 2012, when the New York Times published an investigation of the company’s use of esoteric accounting devices such as the “Double Irish With a Dutch Sandwich” to route profits in ways that minimized tax liabilities or eliminated them entirely. A year later, the Senate’s Permanent Subcommittee on Investigations issued a report providing additional details on Apple’s tax tricks. It also held hearings in which Apple CEO Tim Cook insisted what the company was doing was simply “prudent” management while Kentucky Sen. Rand Paul brought shame on himself by declaring that Apple was owed an apology.

While Congress has done little to thwart corporate tax dodging, the EC used the Senate report to launch an investigation of Apple that resulted in the recent ruling. Now some members of Congress are making fools of themselves by protesting that ruling.

As Apple’s global tax dodging has gotten the most attention, the company has been able to avoid some domestic taxes with much less bother. That because states and localities routinely offer the kind of special tax deals to individual companies that are banned in Europe, more so now that Ireland’s attempted end-run was rejected.

This is seen most clearly in the subsidy packages that Apple and other tech giants such as Facebook and Google receive when they build new data centers necessary to handle the ever-increasing volume of human activity taking place in “the cloud.” Although the decision as to where to locate the facilities is based primarily on considerations such as the availability of low-cost energy (data centers are power hogs), these companies want to receive large amounts of taxpayer assistance.

As my colleague Kasia Tarczynska points out in a forthcoming report on the subject, companies such as Apple regularly negotiate subsidy packages and special tax breaks worth hundreds of millions of dollars for data centers that typically create only a few dozen jobs.

In North Carolina, Apple successfully pressured the state to allow it to calculate its income taxes through a special formula that will save the company an estimated $300 million over the 30-year life of the agreement. Local officials provided property tax abatements worth about $20 million more. All this for a project that was to create only about 50 permanent jobs. Despite its $1 billion cost, the facility did little to boost the local economy. “Apple really doesn’t mean a thing to this town,” a resident told a reporter in 2011. Apple went on to receive generous subsidy packages for additional data centers in Oregon and Nevada.

Apple’s various forms of tax avoidance are reminders that large corporations, even those that profess to have enlightened social views, don’t have respect for government and resent having to follow its rules. Rather than pay taxes and follow regulations, they prefer to make charitable contributions and undertake corporate social responsibility initiatives. In other words, they want to do things on their own terms and not comply with the same obligations as everyone else. Kudos to Europe for beginning to put Apple in its place.

The Limits of the Koch Charm Offensive

Charles and David Koch and their Koch Industries conglomerate, long known for an unapologetic defense of unfettered capitalism and hard-right politics, are said to be going soft. The brothers are taking pains to associate themselves with more progressive policies such as criminal justice reform, while their corporation has been running feel-good ads highlighting its purported commitment to enlightened principles such as sustainability.

At the same time, the Kochs are depicting themselves as backers of supposedly responsible Republican presidential candidates and shunning iconoclastic front-runner Donald Trump.

The Koch charm offensive does have its limits. A slew of groups funded by the billionaires are at the forefront of the campaign against the Obama Administration’s Clean Power Plan and are doing their best to defend fossil fuels. When it comes to environmental policy, the Kochs are still in the stone age.

That position is not merely a matter of ideology. Their opposition to environmental and other safety regulations amounts to a defense of the way the Kochs do business.

This was made clear to me in some work I’ve been doing on a new research tool called Violation Tracker that my colleagues and I at Good Jobs First are preparing. Patterned on our Subsidy Tracker, the new resource will take company-specific data on regulatory violations and link the individual entries to the parent corporations of the culprits. This will allow us to present violation totals for large firms and show which of them are the most frequent offenders.

The initial version of Violation Tracker, which will be released this fall, will cover data from the Environmental Protection Agency, the Occupational Safety & Health Administration and a few other federal health and safety agencies. Coverage on wage and hour violations, financial sector transgressions and other forms of corporate misconduct will come later.

A preliminary tally of EPA and OSHA data from the past five years indicates that units of Koch Industries have been hit with more than $3.5 million in penalties. The biggest amount comes from Flint Hills Resources, the conglomerate’s oil refining arm. For example, in 2014 the company had to pay $350,000 and sign a consent decree to resolve EPA allegations that it was violating the Clean Air Act through flaring and leaking equipment.

Georgia-Pacific, the Koch Industries forest products company, received more than $600,000 in penalties during the five-year period. These included $60,000 in penalties proposed in January by OSHA in connection with worker exposure to formaldehyde and other dangerous substances.

In 2013 the fertilizer company Koch Nitrogen had to pay $380,000 to settle allegations that its facilities in Iowa and Kansas violated the Clean Air Act.

Regulatory violations by Koch businesses began before the five-year period that will be initially covered in Violation Tracker.

For instance, in 2000 the Justice Department and the EPA announced that Koch Industries would pay what was then a record civil environmental fine of $30 million to settle charges relating to more than 300 oil spills. Along with the penalty, Koch agreed to spend $5 million on environmental projects in Texas, Kansas and Oklahoma, the states where most of its spills had occurred. In announcing the settlement, EPA head Carol Browner said that Koch had quit inspecting its pipelines and instead found flaws by waiting for ruptures to happen.

Later in 2000, DOJ and the EPA announced that Koch Industries would pay a penalty of $4.5 million in connection with Clean Air Act violations at its refineries in Minnesota and Texas. The company also agreed to spend up to $80 million to install improved pollution-control equipment at the facilities.

In a third major environmental case against Koch that year, a federal grand jury in Texas returned a 97-count indictment against the company and four of its employees for violating federal air pollution and hazardous waste laws in connection with benzene emissions at the Koch refinery near Corpus Christi. The company was reportedly facing potential penalties of some $350 million, but in early 2001 the newly installed Bush Administration’s Justice Department negotiated a settlement in which many of the charges were dropped and the company pled guilty to concealing violations of air quality laws and paid just $10 million in criminal fines and $10 million for environmental projects in the Corpus Christi area.

In 2002 Koch Petroleum Group, the Koch entity involved in most of these environment problems, was renamed Flint Hills Resources. That name change was as cosmetic as the current charm offensive.

If the Kochs really want to improve their reputation, they should go beyond public relations and make fundamental alterations in their business practices.

The CSR Sham

“We are committed to using our resources to increase opportunity, protect the environment, advance education, and enrich community life.” That declaration comes from the chief executive of the computer systems company Oracle, which is featured in a new report on spending by large companies on corporate social responsibility, or CSR. Statements like this, which are de rigueur these days in corporate communications, seek to give the impression that big business is largely a philanthropic endeavor – that the pursuit of profit and community betterment are not only consistent but are often indistinguishable from one another.

The report on CSR spending was prepared by the consulting firm EPG on behalf of the Business Backs Education campaign, which is based in Britain – where CSR is an even bigger deal than in the United States – and is said to be “led by UNESCO, the Varkey GEMS Foundation, and Dubai Cares under the auspices of the Global Education and Skills Forum.” Bill Clinton has lent his name to the effort.

I was unable to find a copy of the full report posted online, so I am depending on a summary published by the Financial Times. The main finding is that U.S. and UK companies in the Fortune Global 500 spending about $15.2 billion a year on CSR activities.

It’s not clear whether that number is supposed to be impressive, but it is worth noting that the 128 U.S. companies on the list alone account for $8.6 trillion in annual revenue. But even more significant than the amount of CSR expenditures is what they are being spent on. According to the report, 71 percent of the spending by U.S. companies consisted of in-kind contributions, often consisting of the firm’s own products. Oracle, which the FT calls “one of the biggest CSR spenders,” is said to grant “its software to secondary schools, colleges and universities in about 100 countries.” Pharmaceutical companies often donate their own drugs.

Not only is such in-kind giving much cheaper than cash contributions – it also serves to promote the company’s products. The giveaways are in effect marketing campaigns to raise the profile of and increase the future demand for those products.

EPG appears to have used a narrow definition of CSR, consisting of spending that is more commonly defined as philanthropic. CSR also includes broader initiatives on issues such as the environment. Such activities present another set of problems, given that those voluntary initiatives are often used by business as a way of thwarting more rigorous regulatory oversight.

The report is part of the Business Backs Education effort to get corporations to increase the portion of their CSR spending that goes to education. That sounds like a worthwhile mission, but when you look at who is behind the campaign, it all seems somewhat less altruistic.

One of the key backers is the Varkey Gems Foundation, which was established by Sunny Varkey (photo), a Dubai-based entrepreneur who founded and runs Gems Education, the largest operator of private schools in the world and a for-profit provider of services to public schools. Forbes estimates Varkey’s personal wealth at $1.8 billion.

In other words, Varkey is pushing corporations to contribute more to educational budgets that in many cases will be spent on purchasing services that will enrich him and his company even more. And he’s doing this under the banner of CSR and with the imprimatur of UNESCO and the former president of the United States.

From the findings of the EPG report to Varkey’s broader plans, all this is a glaring example of how much of CSR is a sham, a way for large companies and the superrich to promote their self-interest while pretending to be humanitarians.

Religion Inc.

Is Justice Samuel Alito really that clueless? During the 2010 State of the Union address, he nervously mouthed the words “not true” when President Obama warned that the Supreme Court’s Citizens United ruling would allow corporate special interests to dominate U.S. elections. A few days ago, Alito wrote an outrageous opinion in the Hobby Lobby case affirming the religious rights of corporations but insisting this would not do much other than prevent a few companies from having to include several kinds of birth control in their health insurance plans.

Alito’s claim about the narrow scope is already beginning to unravel. Although the written opinion suggested that only four types of contraception such as IUDs that religious zealots view as tantamount to abortion would be affected, the Court subsequently ordered lower courts to rehear cases in which employers sought to deny coverage for any form of birth control.

Business owners with other religious views contrary to federal policy will undoubtedly soon speak up. This is exactly what Justice Ginsburg warned about in her powerful dissent, calling Alito’s opinion “a decision of startling breadth” that enables “commercial enterprises, including corporations, along with partnerships and sole proprietorships, [to] opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.”

Alito was apparently so shaken by Ginsburg’s accusation that he felt a need to deny it at length. The denial is not only unconvincing, it is clumsy and takes Alito into some strange territory for a supposed business-friendly conservative.

In their religious zeal, Alito and the other conservatives on the Court apparently forgot that corporations have been trying for the past century to depict themselves as totally apart from religious and moral concerns. Business enterprises are amoral institutions, laissez-faire proponents such as Milton Friedman repeatedly told us—they exist only to maximize their profit. It has often been corporate critics who have brought religious and moral issues into disputes over business practices.

Alito seems to embrace the notion of corporate social responsibility (CSR) when he writes (p.23):

Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives.

Alito even makes reference to growing acceptance of the benefit corporation, which he describes as “a dual-purpose entity that seeks to achieve both a benefit for the public and a profit for its owners” (p.24).

It’s unclear whether Alito sincerely believes in the validity of CSR initiatives or is simply using this comparison to try to make his assertion of corporate religious rights more palatable. Oddly, he describes as “unlikely” the possibility that a large publicly traded company would ever make a religious claim, even though such firms are among the biggest promoters of CSR.

Whatever Alito really thinks, his reference to CSR does not make the ruling any more convincing. CSR is already problematic to the extent that its practitioners try to use their supposedly high-minded voluntary initiatives to discourage more stringent and more enforceable government regulation. But at least these corporations are simply trying to influence government policymaking rather than asserting an absolute right to be exempt because of supposed religious convictions.

As much as Alito tries to deny it, his ruling has the potential to cause a great deal of mischief. A religious component can already be seen in the climate crisis denial camp; what will prevent companies from asserting that their beliefs prevent them from complying with environmental regulations? Is it that hard to imagine that business owners holding a scripture-based belief that women should be subservient to men may claim they should not be subject to anti-discrimination and equal pay laws?

Alito seems to be opening the door to such aggressive stances when he insists that “federal courts have no business addressing” the question of whether a religious claim by a corporation is reasonable (p.36). It’s true that, in general, government should not be passing judgment on matters of faith, but that principle falls apart when special interests try to use religion to undermine democratically adopted public policies. It’s even worse when those interests are employers asserting their beliefs at the expense of their workers.

The Supreme Court has done considerable damage by elevating the free speech rights of corporations; now it is compounding the sin by giving those corporations special religious rights as well.

Targeting the Climate Culprits

The new U.S. National Climate Assessment makes for sobering reading. In a document of more than 800 pages, it shows that climate change is not some possibility in the distant future but rather a crisis we are already beginning to experience. Extreme weather events linked to climate change, it states, are “disrupting people’s lives and damaging some sectors of our economy.”

Although it is forthright in stating the scientific evidence, the report, as an official government document, avoids assigning blame for the run-up in greenhouse gas emissions to specific parties, and it does not make specific proposals for mitigating the problem.

A very different approach is taken in research recently published by the Climate Accountability Institute, which as its name suggests is very much about naming names. The institute’s Carbon Majors project has accomplished the remarkable feat of estimating how much in the way of carbon and methane emissions can be linked to specific companies going back decades.

In a painstaking analysis, principal investigator Richard Heede has reconstructed the corporate lineage of the major fossil fuel and cement corporations, assembled data on their historical output and estimated the greenhouse gas emissions caused by that output. In the case of Chevron, for example, the analysis goes back to 1912 and includes predecessor entities such as Standard Oil of California, Gulf Oil, Texaco, Getty and Unocal. The report also covers state-owned oil companies, which Heede notes have not done a good job of providing production statistics.

In all, Heede documents more than 900 billion metric tons of carbon dioxide equivalents and links them to 90 of the world’s largest oil, gas, coal and cement-producing entities. If contributing to the climate crisis can be considered an offense against the planet, these 90 entities are the biggest climate culprits.

So who are they? Table 11 of Heede’s report shows that the companies with the largest cumulative emissions are the following:

Chevron: 51.1 billion metric tons
Exxon Mobil: 46.7 billion metric tons
Saudi Aramco: 46 billion metric tons
BP: 35.8 billion metric tons
Gazprom: 32.1 billion metric tons
Royal Dutch Shell: 30.8 billion metric tons
National Iranian Oil Company: 29.1 billion metric tons
Pemex: 20 billion metric tons
ConocoPhillips: 16.9 billion metric tons
Petroleos de Venezuela: 16.2 billion metric tons

Pressuring these companies through a divestment campaign of the type that is beginning to take hold among U.S. universities (Stanford has just announced it will purge its portfolio of coal stocks) is a good start, but it will probably not be enough.

Other approaches are also being pursued. In an article in The Nation, Dan Zegart reports on efforts by environmental lawyers to mount a legal assault on fossil fuel companies like that used against Big Tobacco. It turns out that these lawyers are studying Heede’s research closely and are trying to figure out ways to use it in their suits.

Putting the industry on the defensive in the courts as well as in the streets is important, because the Carbon Majors will increasingly depict themselves as leaders of the effort to overcome the climate crisis rather than their true identity as key culprits in causing it to happen. I’m sure that Chevron is preparing a new version of its “Will You Join Us?” ad campaign of a few years ago, in which it painted a false picture of itself as part of the clean-energy vanguard.

The recent agreement by Exxon Mobil to insert warnings in its financial reports about the risks to its fossil fuel assets from possible stricter limits on carbon emissions is being hailed by environmentalists as a major transparency advance, but it could also be used by the company as a way of limiting future legal liability.

Another troubling sign of potential corporate maneuvering can be found in the National Climate Assessment itself. It is surprising to open Chapter 4 on Energy Supply and Use and find that one of the lead authors is Jan Dell of ConocoPhillips, one of Heede’s top-ten Carbon Majors. I, for one, would prefer not to see oil company representatives playing a role preparing key analyses of the climate crisis. The fossil fuel industry is a big part of that problem (to the tune of 900 million metric tons), not part of the solution.

A Great Place for Wage Theft

Restaurant giant Darden, which is being pressured by hedge funds to sell off both its Red Lobster and Olive Garden chains, got some good news recently when it appeared once again on Fortune magazine’s list of the 100 companies that are supposedly the best places to work.

That designation, for a company that has been the subject of numerous allegations of labor abuse, is even more puzzling than the idea that Darden would be better off without the outlets through which it grew into an $8 billion industry powerhouse.

For more than a decade, Darden has been accused by groups such as ROC United of using various means to shortchange its workers on their paychecks, a practice known as wage theft. In 2005 the company agreed to pay $9.5 million to more than 20,000 current and former servers at Red Lobster and Olive Garden outlets in California to settle a lawsuit claiming that the restaurants violated state labor regulations by preventing workers from taking required breaks and by requiring them to purchase and maintain their uniforms.

Three years later, Darden disclosed that it had paid $4 million to settle two class-action lawsuits alleging that it had violated California law in requiring servers and bartenders to make up for cash shortages at the end of their shifts. Also in 2008, Darden reported that it had paid $700,000 to settle another California suit claiming several types of wage and hour violations, including a failure to provide itemized wage statements and timely pay when an employee was terminated.

In 2011, following a U.S. Labor Department investigation that found workers were not being paid for all their hours, Darden agreed to pay $25,000 in back wages to 140 current and former servers at an Olive Garden in Mesquite, Texas. The company was also fined $30,800. That same year, the company consented to pay $27,000 in back pay and was fined $23,980 in connection with a similar federal investigation at a Red Lobster in Lubbock, Texas.

In the wake of the two Texas cases, suits were brought against Darden in several other states. For example, in early 2012 ROC United filed a class action case on behalf of Darden workers at another of the company’s chain, Capital Grille. For technical reasons, the action was later divided into separate actions in five jurisdictions (all are still pending).

An even larger legal challenge to the company came in September 2012, when a class action suit was filed in federal court in Miami on behalf of all current and former employees (back to 2009) at five of Darden’s chains. The 54 named plaintiffs in the case stated that the company did not pay them for the period between the beginning of their shifts and the time customers began to arrive, thereby forcing them to do prep work off the clock. Darden was also accused of failing to pay time-and-a-half for those working more than 40 hours per week and for improperly applying the lower subminimum wage for tipped workers when they were engaged in non-serving tasks.

The complaint in the case — which described the company as having “a steadfast, single minded focus on minimizing its labor costs” by arranging to have “as many tasks as possible performed by as few employees as possible” — also alleged that two of the named plaintiffs had suffered retaliation from management because of their participation in the case. Some 13,000 current and former Darden servers have joined the suit, which is pending.

The ROC United wage theft actions against Capital Grille also allege that the chain has engaged in a pattern of racial discrimination, including the denial of better-paid server and bartender jobs to non-white workers.

In 2009 the U.S. Equal Employment Opportunity Commission announced that Darden’s Bahama Breeze chain would pay $1.26 million to settle allegations that managers at its restaurant in Beachwood, Ohio had subjected 37 black workers to repeated overt racial harassment. In addition to the monetary relief, the chain signed a three-year consent decree requiring it to improve its anti-discrimination practices throughout the country.

In September 2013 the EEOC filed suit against Red Lobster, alleging that female workers at its restaurant in Salisbury, Maryland have been subjected to “pervasive sexual harassment.” According to the agency, the harassment was committed by a manager, whose superior was said to have failed to take prompt action on the matter despite complaints from at least one of the affected workers.

Darden has also sought to lower its labor costs by becoming more active in the public policy arena. Until 2007 Darden spent less than $250,000 a year on federal lobbying. Beginning in 2008 that amount jumped to well over $1 million annually.

The company is a prominent participant in the National Restaurant Association (NRA), which promotes policies that enhance the bottom line of chains such as Darden. It has opposed living wage initiatives, worked to keep the minimum wage for tipped workers at $2.13 an hour (where it has remained since 1991) and resisted efforts by labor groups to enact mandatory paid sick days, often by promoting state laws that pre-empt local ordinances on the issue. Darden is reported to have helped write the pre-emption bill in Florida.

All of this somehow escaped the attention of Fortune and the organization, the Great Place to Work Institute, which compiles the list. Or perhaps the Institute doesn’t worry about real working conditions. A 2011 investigative report raised serious questions about its methodology, suggesting it is mostly interested in selling consulting services to the companies it is rating. As a recent Alternet piece notes, the lack of an arm’s-length relationship with those companies is also seen in the fact that Darden CEO Clarence Otis has been a speaker at Institute events.

The designation as a “great place to work” is featured by Darden on its website, but the dubious honor cannot change the company’s dismal labor track record.

Note: This piece draws from my new Corporate Rap Sheet on Darden, which can be found here.

Apologies and Apple

In 2010 Texas Rep. Joe Barton took the bizarre step of apologizing to BP for the Obama Administration’s effort to get the oil giant to compensate those affected by its massive spill in the Gulf of Mexico. Barton faced a firestorm of criticism and had to retract his statement.

It will be interesting to see if Sen. Rand Paul has to do the same with his outrageous statement the other day arguing that the Senate should apologize to Apple for the report of its investigations subcommittee documenting brazen tax dodging by the company. “I would say what we really need to do is to apologize to Apple, compliment them for the job creation they are doing, and get about doing our job,” Paul declared at a hearing to discuss the report.

I don’t know how Apple CEO Tim Cook restrained himself from jumping up and giving Paul a big wet kiss on the lips. Cook instead offered testimony that was part p.r. spiel about the wonderfulness of Apple and part outright dishonesty about its tax practices. Among his claims: “Apple does not use tax gimmicks.”

The problem is that the investigations subcommittee’s 40-page report described an array of loopholes and tricks by which Apple has shielded tens of billions of dollars from federal taxation. At the center of the scheme is the artificial designation of vast amounts of cash as being held offshore to keep it outside the reach of the IRS. That hoard, which now totals more than $100 billion, is actually, the New York Times reports, held in bank accounts in New York in the name of Apple subsidiaries based in Ireland.

For tax purposes, Apple claims that its key Irish entity has no legal residency (nor a physical presence or employees), meaning that it is not effectively taxed anywhere. A recent analysis by Citizens for Tax Justice concluded that Apple has paid “almost no income taxes to any country” on its offshore stash. This undermines the arguments made by Apple and other corporations for a new repatriation tax holiday or a shift to a territorial tax system.

“Apple has a very strong moral compass, and we believe in really good corporate citizenship,” Cook recently told the Washington Post. That claim was already preposterous, given past revelations about abysmal working conditions at the company’s supplier plants in China.

Tax dodging, unfortunately, is not widely regarded as being on a par with sweatshops as an indicator of corporate social irresponsibility. Apple, for instance, feels compelled to publish material asserting that it and its suppliers support labor and human rights and that they operate in an environmentally sound manner. There is no such statement on its website about compliance with tax laws.

Apple, like just about every other large corporation, not only manipulates the federal tax code but does the same at the state and local level, both through accounting schemes and by negotiating economic development subsidy deals, which frequently include corporate income tax credits, business property tax abatements and the like.

Last year, for example, Apple took an $89 million subsidy package to build a data center in Reno, Nevada that was expected to create only 35 permanent Apple employees. Three years earlier, Apple got a state subsidy package in North Carolina worth over $46 million (plus more at the local level) for a similar facility that was projected to produce only 50 permanent jobs.

Apple and other companies justify the taking of subsidies because it is legal and because it is usually linked to job creation, though in the case of Apple the number of jobs, at the data centers at least, is minute compared to the lost tax revenue.

What demands by rich companies for subsidies they don’t need really shows is that tax minimization is not, as corporate apologists would have us believe, just a response to the complexity of the federal tax code. It is a compulsion to increase net income, regardless of the consequences for the public. That is part of the definition of corporate irresponsibility.

Companies like Apple will continue to get away with fiscal murder until tax dodging and excessive subsidy taking are as stigmatized as the use of sweatshop labor and toxic dumping. At that point, even politicians of Rand Paul’s ilk might have to think twice about challenging the right of Congress to investigate unscrupulous tax accounting practices.

Who Pays for Extreme Weather?

As the northeast begins to recover from the ravages of Sandy, there are estimates that the giant storm caused some $20 billion in property damage and up to $30 billion more in lost economic activity.

The question now is who will pay that tab—as well as the cost of future disasters that climate change will inevitably bring about.

It’s already clear that the private insurance industry, as usual, will do everything in its power to minimize its share of the burden. Insurers take advantage of the fact that their policies often do not cover damages from flooding, passing that cost onto policyholders. Most of them are unaware of the fact and fail to purchase federal flood insurance until it is too late.

Insurers also exploit clauses in their policies that impose much higher deductibles for non-flood damages during hurricanes. Fortunately, governors in New York, New Jersey and Connecticut are blocking that maneuver by giving Sandy a different official designation (which is consistent with the National Weather Service’s use of the term “post tropical storm”). It remains to be seen, nonetheless, to what extent the insurance industry manages to create new obstacles for its customers.

The challenges for homeowners are just one part of the problem. Sandy also did tremendous damage to public infrastructure—roads, bridges, subway stations, etc. Although these are government assets, should the public sector bear the cost of rebuilding?

Many people are arguing, in the words of a New York Times editorial, that “a big storm requires big government.” That’s certainly true when it comes to initial disaster response. Many more people would have died and much more damage would have occurred but for the efforts of public-sector first responders and even the Federal Emergency Management Agency, which has been remade since its debacle during the aftermath of Hurricane Katrina.

But the challenges associated with extreme weather go far beyond those relief functions. There’s now discussion of the need for New York City to build a huge flood-prevention system along the lines of that in the Netherlands.

Taxpayers, especially those of the 99 percent, should not be forced to assume the entire cost of such a massive undertaking. Extreme weather is clearly linked to climate change, which in turn has been largely caused by the growth in greenhouse gas emissions caused by large corporations, especially those in the fossil fuel industry.

Holding corporations responsible for the consequences of climate change is not a new idea. Yet it is one that all too frequently gets drowned out amid the bloviating of the climate deniers, much of whose funding comes from the very corporate interests they are working to get off the hook.

Back in 2006 BusinessWeek wrote that lawsuits targeting corporations for global warming were “the next wave of litigation,” following in the footsteps of the lawsuits that forced the tobacco industry to cough up hundreds of billions of dollars in compensation. Such cases did materialize. For example, in 2008 lawyers representing the Alaska Native coastal village of Kivalina, which was being forced to relocate because of flooding caused by the changing Arctic climate, filed suit against Exxon Mobil, BP, Chevron, Duke Energy and other oil and utility companies, arguing that they conspired to mislead the public about the science of global warming and this contributed to the problem that was threatening the village.

Such suits have not had an easy time in the courts. The Kivalina case was dismissed by a federal district judge, and that dismissal was recently upheld by the federal court of appeals. A suit brought by the state of California against major automakers for contributing to global warming was also dismissed.

It is far from certain that corporations will continue to get off scot free. In fact, groups such as the Investor Network on Climate Risks argue that the potential liability is quite real and that this should be a matter of concern for institutional shareholders. The Network, a project of CERES, pursues its goals through initiatives such as appeals to the SEC to require better disclosure of climate risks and through friendly engagement with large corporations.

Yet it may be that a more confrontational approach is necessary to build popular support for the idea that big business needs to be held accountable for its big contribution to the climate crisis.

Unfortunately, we are already seeing steps in the opposite direction. The Bloomberg Administration in New York has already announced new storm-related subsidies that will apply not only to struggling mom-and-pop business but also to giant corporations. Unless there is a popular outcry, the city will repeat its mistakes in the wake of the 9-11 attacks of giving huge amounts of taxpayer-funded reconstruction assistance to the likes of Goldman Sachs (see the website of Good Jobs New York for the dismaying details).

The fact that the large New York banks that stand to benefit from Bloomberg’s new giveaways helped finance fossil-fuel projects that contribute to climate change shows just how self-defeating this approach is.

Rather than using public money to help wealthy corporations pay for storm damage on their premises, we should be forcing those companies to pay the costs of addressing the climate crisis they did so much to create.

———–

New in CORPORATE RAP SHEETS: a dossier on the many environmental and labor relations sins of chemicals giant DuPont.

Corporate Capture in Rio and at Home

The 50,000-person United Nations conference on sustainable development in Rio de Janeiro is bound to be followed by recriminations about what the nations of the world failed to accomplish. Perhaps the real story is what the planet’s giant corporations did accomplish in Rio — to advance their own interests.

Rio +20 is following what is now a familiar pattern in which governments drag their feet while major companies try to give the impression that they are the vanguard of environmental reform. The extent to which the United Nations — whose Centre on Transnational Corporations was once somewhat critical of big business — has embraced this dynamic can be seen on the website Business.UN.org, whose tagline is “Partnering for a Better World.” Corporations can post their sustainability goals on the site under the misleading category of Commitments. Whether the various goals are timid or ambitious, they are all, of course, voluntary in nature and thus unenforceable by the UN or any other body.

More is at work here than simple image-burnishing by many of the planet’s biggest polluters. According to a report issued for Rio +20 by Friends of the Earth International, large corporations and business associations have in effect hijacked the UN’s policymaking process: “There is increased business influence over the positions of national governments in multilateral negotiations; business representatives dominate certain UN discussion spaces and some UN bodies; business groups are given a privileged advisory role.”

“An even greater cause of concern,” the FOEI report goes on to say, “is the emergence of an ideology among some UN agencies and staff that what is good for business is good for society. This is reflected in a shift away from policies and measures designed to address the role of business in creating many of the problems that we face, towards policies that aim to define these problems in terms dictated by the corporate sector, meeting their needs without tackling the underlying causes of the multiple crises.”

All of this constitutes what FOEI calls “corporate capture” of the UN, a phrase that echoes the term “regulatory capture” used to describe what happens when the interests of corporations come to dominate the proceedings of government oversight agencies. FOEI has issued a statement with other NGOs decrying the excessive corporate influence over UN deliberations that has been endorsed by more than 400 groups from around the world.

It’s heartening that so many groups are willing to speak out, but it’s discouraging to realize that the same criticisms have been made for more than a decade, to little avail. At the time of the 2002 UN earth summit in Johannesburg, CorpWatch issued a report called Greenwash +10 that was already warning about the risks of the UN’s increasing commitment to corporate partnerships. It noted that one of those partnerships, Global Compact, claimed to be promoting business support for UN sustainability goals yet included among its members companies such as mining giant Rio Tinto with atrocious environmental records.

Rio Tinto is one of the companies singled out in the new FOEI report for continuing to engage in the same kind of hypocrisy. The mining company is also one of the main targets (along with BP and Dow Chemical) of the Greenwash Gold campaign, which accuses the companies of covering up environmental destruction “while pretending to be a good corporate citizen by sponsoring the Olympic games” being held this summer in London.

Undue corporate influence over climate policy is also the theme of a recent report by the Union of Concerned Scientists. While acknowledging that some U.S. companies have taken “consistent and laudable” actions in support of science-based climate reforms, it finds that others have worked aggressively to undermine such progress.

Most interesting is its finding that some large corporations have taken contradictory positions depending on the circumstances. For example, some companies are found to make legitimate statements of concern over climate change on their websites and in their filings with the Securities and Exchange Commission while misrepresenting the state of climate science in their comments submitted to Environmental Protection Agency proceedings. Companies that fall into the contradictory category — such as Alcoa, ConocoPhillips and General Electric — are said to be standing in the way of meaningful change.

Whatever positions corporations take, there will always be tension between their interests and the common good. The fact that those two goals may occasionally coincide does not justify the outsized role that corporations now have in policymaking at both the national and international levels. Progress on climate change and many other fronts will be a lot easier when we are free from corporate capture in all its forms.