Yale-WWF_final

2. Key players in the environmental and social governance ofOFDIThere is a lack of a systematic approach to addressing OFDI’s environmental and socialimpacts in both academia and practice. The discourse on OFDI and the environment has beendominated by the nexus between OFDI and the environment, which shows no determinaterelation between the two. However, dire environmental and social consequences caused byOFDI in some regions of the developing world are real and call for urgent solutions. Lessonslearned from various case studies do shed light on how to resolve but are hardly to begeneralized elsewhere.As “a cross-border expansion of production”, OFDI’s governance essentially involves threelevels along the supply chain, i.e., host countries, investor countries and international regimes. 8Bringing varying business, political, environmental and social forces, all the three levels exertinfluences on the environmental and social impacts of OFDI in host countries, despite withdifferent effects.Host countries play a critical role in governing environmental and social dimensions of OFDI.It is widely agreed that the environmental and social policies in place in host countries as wellas the political will and capacity of the institutions that enforce and implement the policies arethe determining factors to OFDI’s environmental and social impacts. Market and industrialnorms on environmental and social issues can influence OFDI’s choices on the level ofenvironmental and social standards to use in host countries, which can be higher or lower thaninvestor countries or international practices. 9 Pressures from local communities and civilsociety can drive OFDI to adopt good environmental and social practices.Investor countries can also play a role in directing OFDI’s environmental and socialperformance. On one hand, investor countries can establish environmental and social policiesfor OFDI to ensure that they meet expected environmental and social standards in hostcountries. On the other hand, investor countries can help host countries build capacity andfind synergies in regulating environmental and social dimensions of OFDI. 10 Business forcesin investor countries can use their commercial ties to push OFDI for better environmentaland social performance in host countries. Environmental and social forces can be an advocatefor environmental and social interests of host country communities and draw domesticattention to environmental and social misconduct of OFDI.Besides the investor and host countries, other countries can also deeply engage into theinvestment projects in the host countries. Unlike the host country or investor country, the8Gallagher, Kevin P., and Lyuba Zarsky. "No Miracle Drug: Foreign Direct Invesment and SustainableDevelopment." In International Investment for Sustainable Development: Balancing Rights and Rewards,by Lyuba Zarsky, 13-45. London & Sterling, VA: Earthscan, 2005.9Hansen, Michael W. Cross Border Environmental Management in Transnational Corporations: AnAnalytical Framework. Frederiksberg: Corporate Business School, 1999.10Araya, Monica. "FDI and the Environment: What Empirical Evidence Does—and Does Not—Tell Us."In International Investment for Sustainable Development: Balancing Rights and Rewards, by LyubaZarsky. London & Sterling, VA: Earthscan, 2005.35