Social Licenses for Business

Amy Dwyer discusses the idea of a social license for businesses in order to encourage ethical practice.

During the Labour leadership debates, Lisa Nandy discussed the idea of introducing social licenses for businesses with ethical practices, sustainable methods and those who provide their employees with suitable working conditions and pay. She argued that for too long we have allowed corporations to dominate global markets who do not treat staff well or use sustainable methods. That these practices are not penalised, but they should be. A social license would be the incentive for companies to act in an ethical and sustainable manner.

The fact that businesses are able to exploit their workers and rely on unsustainable and damaging business practices while simultaneously making their CEO’s and stakeholders some of the richest people on the planet, serves to make a mockery of smaller businesses, who are not able to compete but treat their staff well and use sustainable and ethical sources and practices. We should be championing these businesses and ensuring that they stand a chance, yet instead the government allows multi-national corporations who exploit staff to get away with tax avoidance.

Although recently there has been a growth in the movement against fast fashion, where fashion brands encourage a throw-away society of wearing items once and then never again. This is supported by employing workers in the global south and paying them far less than they would pay workers in the same state as their headquarters. Furthermore, this movement is very much grassroots-led as opposed to government or legislation-led. We need more action from the government to combat these practices, they lead to an exploited workforce and enormous amounts of waste. The fashion industry is responsible for 10% of global emissions, yet we have been consistently slow to do anything about it.[1]

It is becoming clear that we need to ask ourselves why businesses should be held to a lower standard than other sections of society? This is especially important when we consider how much profit these corporations make each year, which would easily cover real liveable wages for workers. Jess Bezos could end world hunger with the amount of wealth he has gained at the expense of those who have generated his wealth. There is little to excuse his business practices and the government should do all that it can to hold these corporations to account.

The APPG on International Corporate Responsibility produced a report recommending that more is done to tackle businesses who behave in a damaging way. Yet Nandy noted that ‘despite the apparent will in government to accept the report’s recommendations…there has been little action so far’.[2] Unless the government wholeheartedly commits to thorough checks and the introduction of social licenses to demonstrate the importance of ethical business practices to the UK, we will not see any changes. International corporations will continue to exploit both people and the environment to seek ever higher profit margins and we will allow them to do it.

Human rights campaigners and members of the APPG on International Corporate Responsibility, namely Lord Stevenson, have pushed for the human rights duty on London Stock Exchange, but it has yet to be introduced.[3] The continued reluctance to provide comprehensive measures to tackle businesses who violate human rights and sustainability measures ensures that this issue remains salient and unresolved.

Amazon is perhaps the most notable, with CEO Jeff Bezos now ranking as the richest person in the world, for its unethical business practices. The fact that between 2015 and 2018 an ambulance was called to a UK Amazon warehouse 600 times highlights their neglect of employee safety in the workplace. Ambulances were called out to one Amazon factory in Rugeley 115 times, compared to only 8 call-outs to a nearby Tesco warehouse of a similar size.[4] These statistics make clear that Amazon does not prioritise staff welfare or safety, which should in turn lead to condemnation from the government. Instead, Amazon UK only paid 3% more tax despite 35% raise in profits in 2019.[5] The government is letting these corporate giants get away with exploiting British people and are rewarding them for these unethical practices by allowing them to get away with tax avoidance.

Perhaps of even greater concern, the UK’s new digital services tax, set to be introduced to force large tech companies to pay more taxes in the UK, will fail to force Amazon to pay more tax. It has been revealed that, instead, the 2% increase in tax will be passed on to much smaller traders who use the Amazon platform.[6] This repeated tendency for large corporations to use smaller companies for their benefit and ensure they are not challenged, is central to this goal of realising social licenses for business.

Amy Dwyer is studying for an MA in Politics and is an ambassador at 50:50 Parliament. She is also Women’s Officer for the North West Young Fabians.

She tweets at @AmyDwyer23









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