Trade, Environment and Investment

Foreign Direct Investment (FDI) holds the promise of contributing to sustainable development of host developing countries to the extent that it provides a source of long-term finance and encourages the diffusion of environmentally sound technologies (ESTs) across borders. Transnational corporations (TNCs), in conjunction with governments, could play an important role in achieving global environmental objectives. Empirical studies are needed to gather evidence on a number of issues, including the following: do TNCs contribute to fulfilling global environmental objectives, to what extent are ESTs transferred to affiliates and what are the spillover effects on local companies.

The UNCTAD project on Trade, Environment and Investment, funded by the German government, is meant to explore measures for promoting sustainable development through Foreign Direct Investment (FDI) and more particularly the role of TNCs in supporting the efforts of developing countries in implementing and achieving the objectives of Multilateral Environmental Agreeements (MEAs) in host countries. Under this project, UNCTAD is responsible for the organisation of a series of seminars and coordination meetings. For more information on this project, see Trade, Environment and Investment .

In parallel to the UNCTAD project, the German government is funding the Institute for Environmental Management and Business Administration to carry out the UFOPLAN project. Under the UFOPLAN project, the Research Institute will carry out five company level case studies in China, India and Malaysia. These case studies will provide the substantive input to the seminars and meetings organised for the UNCTAD project.

A third project, the UNCTAD/CBS (Copenhagen Business School) project is presently being carried out by CBS in collaboration with the UNCTAD Division on Investment, Technology and Enterprise Development. Under this project entitled "Case studies of cross border environmental management in TNCs" a series of case studies are being conducted on environmental practices in transnational corporations in China, India and Malaysia. The UFOPLAN project will focus on the same countries in order to benefit from the lessons learned in carrying out the UNCTAD/CBS case studies and in order to complement their findings.

Both the UFOPLAN and the UNCTAD/CBS project will be presented in Spring 2000, in Geneva. Preliminary findings of both projects were presented at a Pre-UNCTAD X Seminar on "Making FDI Work for Sustainable Development" held this year. See background information and documents.