The predatory brand. Socio-environmental impacts of multinationals in Latin America

The predatory brand. Socio-environmental impacts of multinationals in Latin America

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By Ane Garay and Silvia M. Pérez

Classical development analyzes tend to be posed on a theoretical level that deliberately ignores the interdependence of the economic system with other dimensions of reality. However, as established by the Sustainable Human Development framework, there are a number of non-economic variables that constitute essential conditions for development processes [1] to be possible. One of them is environmental.

Ecological economics explains that economy, society and nature are not different and isolated parts. On the contrary: every economic system is the product of a social system that, in turn, lives, organizes and extracts the resources it needs from an ecosystem. The ecosystem offers certain possibilities and imposes physical limits on the model of social and economic organization. Preserving the ecological balance requires respecting these limits. In other words, to be sustainable, the system must consume energy and resources and generate waste to the extent that the earth is capable of renewing and assimilating it. From this perspective, it is evident that capitalism, a system that for its own survival needs to maintain an increasing consumption of resources and energy and that is exclusively oriented towards the maximization of individual profit, is environmentally unsustainable.

But beyond the ecological economy approach, there is a broad consensus around the role of ecosystems in the economy and human well-being, to the point that sustainability has been assumed and incorporated into the international cooperation agenda. Thus, the Millennium Development Goals (MDGs) formulated by the United Nations, through objective 7 (which aims to guarantee environmental sustainability), include goals and indicators to do with:

  • Incorporating the principles of sustainable development into national policies and programs and reducing the loss of environmental resources;
  • The loss of biodiversity;
  • Access to drinking water and basic sanitation services;
  • Improving the lives of slum dwellers.

Today, one of the key scenarios to understand the strong interdependencies that link human well-being with the environment is Latin America. And it is that this is a strategic region at a global level that, as the Economic Commission for Latin America and the Caribbean (ECLAC) emphasizes, “provides important global ecosystem services”, such as “the regulation of atmospheric pollution, the regulation of environmental cycles. hydrological and climatological, the regeneration of soil fertility, the decomposition of residues, the absorption of pollutants and the pollination of crops ”[2].

ODM, transnationals, environment and development

The international consensus around the relevance of environmental preservation, as well as complaints from multiple social groups, have made multinationals dedicate a lot of effort to project an image of sustainability that legitimizes their actions. From the rhetoric of Corporate Social Responsibility to more sophisticated discourses, supported by "academic" research by numerous think tanks [3], multinationals currently seek to establish themselves as "leading actors" in policies and discourses on sustainable development.

However, transnationals are responsible for innumerable socio-environmental impacts. Their practices, as shown by many investigations, are systematic and an essential requirement for obtaining maximum profitability, the ultimate goal (in that case all the analyzes coincide) of large companies.

If we simply take into account the limited parameters proposed by MDG 7, and analyze the contribution of foreign direct investment and transnational companies to each of these goals in Latin America, we conclude that their practices do not contribute in any way. some to development.

In this sense, and based on these goals, we could categorize the impacts generated by multinationals. Impacts that not only do not help to achieve these goals, but rather go in the opposite direction to the UN proposals on sustainable development.

Regarding goal 1 (incorporation of sustainable development principles into national policies and programs and reducing the loss of environmental resources), multinationals in Latin America have promoted the extractivist model prevailing in the region thanks to the commercial legal asymmetry and to the power of their lobbies, which inhibit in many countries the implementation of legislation to preserve the environment.

The rise in the prices of raw materials in international markets in recent years has resulted in a neo-extractivist trend in the Latin American economies. The exploitation of large mines of coal, gold and other natural resources for export is attracting growing flows of FDI: in 2010, 43 percent of the total inflow of FDI in South America was destined to the exploitation of raw materials, mainly metal mining , hydrocarbons and food.

Oil and gas activity precisely has particularly serious impacts on ecosystems: land displacement and modification of the course of water currents (in the exploration phase), deforestation, destruction of the environment (for the construction of plants and access roads) , discharges, incineration of substances, leaks and spills, emission of polluting gases and acid rain, among others. The corporations most denounced for their environmental impacts are those dedicated to the mining and oil sector. The crucial role of these sectors in capitalism means that, despite being under protection, many regions with high ecological value are being exploited and destroyed.

On the other hand, multinationals not only contribute to the loss of biodiversity (goal 2) by overexploiting species (in the case of shrimp farming by the Pescanova company in Nicaragua, for example), but also by destroying habitats through deforestation and substitution of forest for pasture lands and monocultures; polluting; introducing foreign species (including transgenic ones, paradigmatic is the case of soybeans and multinationals like Monsanto in Argentina); and fragmenting the territory [4].

A significant example of the impacts of multinationals on biodiversity is that of the Aguaragüe National Park in Bolivia [5]. Beyond having a vital ecological and hydrological importance for the region (about 70 percent of the water for human consumption and agriculture in the Bolivian Chaco comes from this park) [6] and being the territory of the Guaraní people, it concentrates a multitude of economic interests that pressure and impact on the biodiversity and populations of the entire region (multinational hydrocarbons, infrastructures, logging, transgenic monocultures and hydroelectric plants operate in the park).

One hundred percent of the park's surface is subject to hydrocarbon activities and concessions. It is crossed by several gas pipelines that transport the gas produced by companies such as Repsol, Petrobras, Petroandina, YPFB or British Gas. Several reports denounce the contamination of watersheds and soils that affect biodiversity, crops and health.

Goal 3, which seeks to ensure sustainable access to drinking water and basic sanitation services, is also hampered by the interests of transnational corporations, which play a fundamental role in the privatization and grabbing of the resource. Latin America, the richest region in the world in fresh water, is key for companies that intend to take over water and sanitation management in their cities. At the same time, the growing activity of mining corporations has serious impacts on water resources, with severe effects on the environment and populations.

This is the case of the Cerro Blanco gold mine, owned by Canada's Goldcorp, located in Guatemala and affecting one of the most important natural reserves in El Salvador, Lake Güija. The national table against metallic mining reports that the thermal water drainage in the mine is contaminating the lake with heavy metals that, in turn, reach the upper basin of the Lempa River, the backbone of the Salvadoran water network. The hoarding of water resources is another of the impacts included in the report issued by the Office of the Attorney for the Defense of Human Rights of the country: the processing of materials to obtain gold and silver requires the consumption of almost 4,000 liters of water for each ounce of mineral extracted [7], which is equivalent to 95 times the average daily consumption of a person.

Are transnational corporations essential for sustainable human development or rather are they protagonists of socio-environmental predation?

Ane Garay Y Silvia M. Pérez They are researchers at the Observatory of Multinationals in Latin America (OMAL) - Peace with Dignity.

This article has been published in issue 56 of Towns - Information and Debate Magazine, April 2013.


[1] According to the Economic Commission for Latin America and the Caribbean (ECLAC), “environmental sustainability refers to the environmental aspect, inseparable but distinguishable, of sustainable development: responding to present human needs without destroying the capacity of the environment to meet these needs in the long term ”. ECLAC, Millennium Development Goals in Latin America and the Caribbean,

[2] Idem.

[3] See, for example, the studies promoted by the Elcano Royal Institute: Iliana Olivié et al., The 'black box' of the impact of direct investment on development, RIEC, 2010; idem, Foreign Direct Investment and development: recommendations for Spanish cooperation, 2011.

[4] González Reyes, Luis (2011): Environmental sustainability: a global public good, Platform 2015 and more, Madrid.

[5] Database of territorial conflicts in Bolivia (2006-2012), CEDIB-Diakonía, 2012. See also, for an overview, the article by Mónica Oblitas and R. Sagárnaga “Aguaragüe, a reserve at risk”, The times, May 2, 2010.

[6] Madalbo Foundation: "Water for the Chaco or hydrocarbons for transnationals?" Petropress, CEDIB, June 25, 2011.

[7] Larios de López, Dina; Guzmán, Herbert; Mira, Edgardo: "Risks and Possible Impacts of El Salvador Metal Mining", Journal of Central American Studies, Volume 63, Number 711-712, 80. Cited in Special report on the mining project ‘Cerro Blanco’ and the potential human rights violations in the Salvadoran population.


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  1. Jedediah

    Sorry to interrupt you, but I need a little more information.

  2. Magis

    very satisfying topic

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