Environmental Engineering Reference
In-Depth Information
It is not just the fact that TNCs tend to invest in high environmental impact sectors that
has led to calls for corporate greening. The focus on the environmental impact of TNCs
also has much to do with the remarkable growth of these entities and their increasing
weight in the global economy in recent years, as the sheer volume of their activity alone
has environmental consequences that must be considered, regardless of the sector in
which they operate. As of 2005 there were some 77 000 TNCs (some 20 000 of which are
headquartered in developing countries) and over 770 000 foreign a
liate
fi
rms in opera-
tion globally. These
rms account for around one-tenth of global GDP and make up
around one-third of world exports (UNCTAD, 2006, p. 10; 2001, p. 9; 2002, pp. xv and
272). The value of FDI has also grown remarkably in recent decades. In 1970 the level of
FDI in
fi
fl
ows stood at US$9.2 billion, and by 2005 it was US$916 billion (UNCTAD,
2006).
In this context of growing numbers of TNCs and growing value of FDI, combined with
heightened concern with respect to the environmental impact of this investment, a
number of international instruments have emerged over the past few decades to encour-
age corporate good environmental practice (KMPG and UNEP, 2006). These initiatives
are primarily voluntary in nature, and aim to provide both guidance and standardization
to corporate greening e
orts at the international level. Some of these initiatives have
emerged from within industry itself. But others have been put in place by other actors,
although all initiatives work in close cooperation and coordination with industry itself.
Because of the high degree of industry participation in such initiatives, many have seen
these developments as a kind of 'privatization' of global environmental governance
(Clapp, 1998), though with a complex relationship to government authority (Falkner,
2003).
The idea of greening TNCs and FDI is not entirely new. The UN Centre for
Transnational Corporations sought to impose a global code of conduct for TNCs back
in the 1970s, with the idea of holding TNCs accountable for the negative impacts of their
global activities (FOE, 1998; Clapp, 2005). The initiative, however, was stopped short in
the run-up to the Rio Earth Summit in 1992, where industry was incorporated into the
global dialogue on 'sustainable development'. At Rio and in its aftermath, voluntary
industry measures were promoted as being the appropriate governance mechanism by
which to clean up the environmental impact of the activities of global
ff
rms. The result
was the emergence of an array of voluntary initiatives at the international level to address
di
fi
erent aspects of corporate greening, rather than pursuing a single regulatory approach
at the global level.
The number of such initiatives is large, and appears to be still growing, with new ini-
tiatives being adopted almost yearly since 2000. Although each of these international
mechanisms addresses a di
ff
erent need and niche with respect to corporate greening, the
landscape has become somewhat crowded and confusing. The principal mechanisms and
types of mechanisms are outlined below.
ff
Global Reporting Initiative
In an e
ort to provide information on the environmental and social dimensions of their
business operations, many TNCs began voluntarily in the 1990s to issue regular sustain-
ability and corporate social responsibility (CSR) reports (Lamberton, 2005). Because
these reports were mainly the product of self-analysis, with no oversight of the extent to
ff
