RESOLUTION EC 111

FORUM: ECONOMIC COMMITTEE

QUESTION OF: Measures to promote sustainable capitalism

SUBMITTED BY: Australia

CO-SUBMITTERS:Austria, Gabon, Mauritania, WTO (Trade), Holy See, Israel, Finland, Republic of Korea, Ecuador, Pakistan, Eritrea, Yemen, Myanmar, Malaysia, Spain, Algeria, Russian Federation, Qatar, Mongolia, Latvia.

STATUSPassed

THE ECONOMIC COMMITTEE,

Defining sustainable capitalism as a modified form of capitalism that is based on conscientious practices that seek to preserve humanity and the planet,


Recognizing that within the last decade the world’s richest have come to own 44% of the world’s wealth while the poorest 56% hold only 1% of it; this wealth gap has resulted in the decrease of the standard of living for the middle class worldwide, resulting in widespread social unrest,

 

Highlighting that the COVID-19 pandemic widened the inequality with an alarming number of people falling into poverty worldwide, 

 

Taking into consideration that capitalism is the dominant global economic system, affecting the majority of the world population, 

 

Aware of the damage that firms and businesses cause to the local environment and people via globalisation, especially within the context of developing countries,

 

Acknowledging the current principles of modern economic systems and the tendency of firms and businesses to function independently, prioritizing interests, 

 

Reaffirming the significance of the role of private enterprises in achieving the establishment of sustainable capitalism,

 

Bearing in mind that Small and Medium Enterprises (SME) are the most impactful polluters, based on their practices and resource management,

 

Emphasizing the need for intervention and supervision by IGOs and the Worldwatch Institute,

 

  1. Recommends the incentivization of businesses by national governments in conducting sustainable business practices, to promote an environmentally conscious ideology among firms and businesses: 
    1. governments may introduce subsidies partially granted by the International Monetary Foundation (IMF) to firms and businesses to buy infrastructure for sustainable development or pay for research and development in working towards sustainable business practices   
    2. introduction of a system of tradable environmental credits, with a framework in the carbon credit system, the Kyoto Protocol, 1992 and the United Nations Framework Convention for Climate Change (UNFCCC):
      1. a fixed number of tradable permits will be created, with each permit being an allowance to emit a decided amount of pollutant
      2. the price and quantity of trade permits may be decided by economic and environmental specialists, to reflect a balance between environmental sustainability and economic viability
      3. these permits can be purchased from the government by any firm or business, and will set an upper bound on the pollutants that can be emitted by the business
      4. permits can be traded between firms and enterprises, with the trade being overseen by the government
      5. environmental credits may be implemented for greenhouse gases, fossil fuels amongst other pollutants, to cap the total pollutant emission by an industry
    3. launching of awareness programs for SMEs and multinationals elucidating the importance of the environment in their businesses focusing on:
      1. nudge theory to persuade entrepreneurs to take environmentally conscious choices
      2. the lack of availability of resources in the near future, and the resulting price hike, must be made clear to entrepreneurs to make them aware of environmental degradation in their businesses
    4. member nations may apply for grants or loans to the IMF to implement the same: 
      1. The acceptance of the application is solely at the discretion of the IMF
      2. Reaffirming the guidelines for application to the IMF for loans;
  2. Suggests member nations to increase the ability of firms to achieve Pareto efficiency for the optimum conditions in society through the following policies such as but not limited to: 
    1. introducing legislation to incorporate and modify Corporate Social Responsibility into the framework of a nation with the following regulatory mechanisms:
      1. determining the concentration ratio of each firm in the industry
      2. mandating corporate social responsibility based on the size of each firm in the industry and relative to the quantity of their revenue  
      3. providing tax incentives for firms who exceed their quotas for Corporate Social Responsibility 
      4. enforcing a greater revenue tax rate for firms who do not meet their quota for Corporate Social Responsibility (CSR), depending on their efforts to achieve it or lack thereof 
    2. recognizes that companies are at the core of the capitalist system, which is why they are the best platform for a change through the adoption of CSR rules which are:
      1. a set of management practices that ensures a responsible business conduct
      2. aiming at protecting the environment and having a positive social impact
      3. ensuring that multinational corporations as well as SMEs provide decent wages to their employees and abide by environmental rules at a larger scale
      4. assessing corporations on their compliance with these Universal CSR standards
      5. providing incentives and tax reductions if a company achieved a certain level of CSR
    3. urging the development of a nationwide database that has a list of Ultimately Beneficial Owners (UBO’s), the entity that is the ultimate and final beneficiary for any given corporation in the nations which includes the following details: 
      1. reduction of profit shifting, base erosion, and illegal shell company activity in tax havens to reduce tax non-compliance 
      2. identifying culprits of illicit financial flows  
      3. punishing frequent evaders who exploit regulatory arbitrage 
      4. preventing violations of taxation and financial treaties that drive fair financial flows in capitalist nations by: 
      5. giving taxpayers due notice that they are bound by such treaties and agreements and providing them with communication on how to meet the requirements
      6. ensuring equitable distribution of taxation over populations and committing to progressive taxation following the 2030 Agenda
      7. reducing the extent to which taxes prevent enterprises from achieving economies of scale;
  3. Urges all member states to consider businesses and companies affected by the COVID-19 pandemic, especially from a microeconomic perspective, as qualified for receiving basic emergency monetary assistance as a form to encourage previously established sustainable practices during lockdown through means such as, but not limited to:
    1. identifying sustainable businesses as any company fulfilling any of the 2030 UN Sustainable Development Goals (UNSDGs)
    2. offering monetary assistance inversely proportional to the net worth of a company, thus maximizing the efficiency of the implemented programs to aid the most vulnerable of independent providers;
  4. Further urges the More Economically Developed Countries (MEDCs), the World Bank, and the IMF to proceed to funding of SMEs, which suffer from the aftermath of the pandemic, the trade wars, and the economic instability, thus contributing to the implementation of more sustainable and eco-friendly alternatives to fossil fuels, pollutive machinery, workers’ exploitation, abuse of nature and the UN to inspire and advise SMEs, in ways such as but not limited to:
    1. funding of research programs concerning innovative low-cost technology, affordable both for MEDCs and Less Economically Developed Countries (LEDCs), so as to minimize waste production and the carbon footprint of SMEs and large corporation
    2. promoting eco-friendly companies, hence not only expanding the global supply chain but also eliminating the marginalization of companies due to the monopolistic dominance of large enterprises in areas such as technology manufacturing, automobiles, electricity, etc
    3. urging firms to adopt more sustainable transportation methods, supply modes, and production models and implement the factor environment in their agenda, thus raising awareness inside the firm and also contributing to the education of the public on the matter through direct and indirect advertisement
    4. promoting the adherence to the UNs established rules for a green economy, that successfully combines profit maximization with environmental preservation;
  5. Calls upon member nations to encourage firms to raise awareness among their employees about the sustainability practices and publish results and also introduce more eco-friendly modes of supplying commodities in methods such as but not limited to: 
    1. mandating integrated reporting, encouraging firms to include their financial and ESG performance into a single report 
    2. mandate replacing equipment with more sustainably acceptable equipment, 
    3. having informed staff talk to employees about the firm’s sustainable progress and walk them through the firm’s sustainable features and/or facilities.
  6. Encourages Member Nations to align itself closer to the targets set out by the 12th Sustainable Development Goal of Responsible Consumption by collaborating with the food and beverage industry for the following tasks:
    1. Carrying out routine inspections of the resource management and consumption with the following provisions:
      1. The individuals who carry out the inspections will go through mandatory training programs to ensure professionalism
      2. The inspection will occur under the supervision of a member of the establishment so as to prevent any violation of privacy
      3. The inspector will be tasked with scoring each establishment on a criteria sheet developed by the Food Ministry of the nation that is standardized across all firms
      4. The above criteria shall include resource influx to output ratio, quantity of wastage on a daily average, sales revenue with market share and the amount of monopoly power available to the beverage,
    2. Re-enforcing standards for the packaging of the goods so as to limit the use of non-biodegradable plastic through the following measures:
      1. Encouraging private-sector investment into the development of natural preservatives and recyclable packaging that can not only reduce soil and water pollution but also allow the quality of the food to remain undiminished
      2. Establishing a maximum percentage limit for the quantity for non-biodegradable plastic permitted in packaging for food and drinks
      3. Promoting packaging collection drives by establishments and firms in order for them to be recycled and multi-purposed by the firms and eventually the industry as a whole;
  7. Further suggests a focus on waste management in the manufacturing sector to arrest industrial waste generation at its source and ameliorate air, water and land pollution, by implementing:
    1. a stricter implementation of environmental legislation on firms and businesses, to reduce violations by having:
      1. biannual checks by the government to determine the extent of water pollution for production plants in vicinity of water bodies
      2. biannual reports by manufacturing firms and businesses on the levels of greenhouse gases inter alia carbon dioxide, methane, carbon monoxide and chlorofluorocarbons in a five-kilometer perimeter around registered industrial production plants
      3. documentation of all solid and semi solid waste disposal with the location and style of disposal by manufacturing firms
      4. stricter punishments for firms breaking environmental laws, by methods such as additional fines, higher taxes and blacklisting
    2. incentivization of firms in the manufacturing and production sector which use environment friendly methods of production, with the following recommendatory guidelines:
      1. firms must be encouraged to utilize fabric filters, scrubbers, plate towers or any such air pollution control methods
      2. alternate waste disposal systems such as sanitary landfills, incineration and composting (biological waste only) should be promoted over open dumping
      3. dumping of industrial effluents into water bodies such as lakes, rivers and seas must be discouraged
      4. using renewable energy sources including geothermal energy, wind energy and solar energy, in place of coal power plants and the like is to be encouraged
      5. any firm following these guidelines may be incentivized by tax benefits, government aid and other fiscal incentives
      6. each government is free to determine the specifics of the extent, methods and reasons of incentivization, and is free to request the United Nations Environment Programme (UNEP) for any assistance it feels is necessary.