The Effect of Multinational Enterprises on Climate Change

Multinational enterprises (MNEs) provide both a fundamental risk to and an opportunity for climate change mitigation. The climate ambitions of MNEs will affect the environmental performance of countries around the world. As a leading actor, proactive MNEs can impose sustainability standards or encourage green technology transfers that, in some cases, could affect millions of producers and accelerate the climate transition. However, obstructive MNEs may equally hold back any progress to reduce a country’s emissions via inaction or by actively resisting, obstructing, or lobbying against change.

The objective of this report is to study the effect of MNEs on climate change. Toward this goal, the report reviews the latest available data, conducts new empirical analysis, and summarizes pioneering literature. The report answers four key questions related to the relationship between MNEs and climate change:

1) What effect do MNEs currently have on climate change, both through their own activities and through the emissions of their broader supply chains?; 2) How do MNEs shape the potential transfer of green technologies to domestic firms, and how do different types of interactions with MNEs stimulate such technology transfers?; 3) How committed are leading MNEs currently to transitioning their supply chains to net-zero emissions by 2050, and do they have long-, medium-, and short-range strategies to realize this?; 4) What types of policies can influence MNEs’ effects on climate change?

The World Bank came into formal existence in 1945 following the international ratification of the Bretton Woods agreements. It is a vital source of financial and technical assistance to developing countries around the world. The organization’s activities are focused on education, health, agriculture and rural development, environmental protection, establishing and enforcing regulations, infrastructure development, governance and legal institutions development. The World Bank is made up of two unique development institutions owned by its 185 Member Countries. The International Bank for Reconstruction and Development (IBRD) focuses on middle income and creditworthy poor countries and the International Development Association (IDA), which focuses on the poorest countries in the world.