TFG AriadnaLuarca

THE ENVIRONMENTAL RESPONSIBILITY OF MULTINATIONAL
CORPORATIONS
TRABAJO FIN DE GRADO

GRADO EN RELACIONES INTERNACIONALES (INGLES)
CURSO ACADÉMICO 2023/2024
CONVOCATORIA JUNIO
AUTORA: Luarca Criado, Ariadna

DNI: 54304541T
TUTORA: Rosa Tapia Sánchez, María
En Madrid, a (Día) de (mes) de 2024
ABSTRACT: Multinational corporations (MNCs) have emerged as major actors in the

global economy and international society is becoming increasingly concerned about their
impact on the environment. Currently, there exists no global regulatory framework to enforce
The environmental responsibility of multinational corporations
environmentally responsible behavior by corporations, particularly in developing countries

where they operate. All regulatory efforts have been voluntary initiatives led by
intergovernmental organizations, with a specific emphasis on international and regional
codes of conduct addressing business impact in two key domains: social conditions and the
environment.
Index:
I. Introduction.......................................................................................................................2
1. Methodology..................................................................................................................3
II. Enterprises ethical responsibility......................................................................................4
1. Concept of Ethical Responsibility...............................................................................4
2. Importance of Ethical Responsability, especially in MNCs:.....................................4
III. Relationship between MNCs and the environmental crisis.........................................5
1. CO2 Emissions of MNCs..................................................................................................6
2. Oil industries.................................................................................................................7
2.1 Willow project........................................................................................................8
2.2. From Oil to Renewable Energy..............................................................................8
IV. Legal Framework and international standards related to the environmental
responsibility of MNCs..............................................................................................................8
1. International Conventions and soft law instruments................................................9
2. The Sustainable Development Goals (SDGs) as connectors of corporate strategies
with global priorities...........................................................................................................10
3. Sustainability Framework. European Regulation: Public Policies and EU
Normative............................................................................................................................11
4. Regulation of developing countries as legal assets for MNCs.................................14
V. Ethical Responsibility of Multinational Companies......................................................16
1. Business incentives to invest in sustainability..........................................................16
1.1. Sustainability, Investment, and Access to Financing:...............................................16
1.2. Sustainable Finance:..................................................................................................17
1.4. Taxonomy of Sustainable Finance:............................................................................18
1.5. Promoting Investment through Sustainable Financial Products:...............................18
1.6. UN Principles of Responsible Investment:................................................................19
2. Green-Washing...........................................................................................................20
3. Transparency of MNCs..............................................................................................21
3.1 Key EU Directives and Regulations:....................................................................21
4. Key non-financial performance indicators...............................................................23
VI. SUSTAINABILITY IN SMEs.....................................................................................24
VII. NEW MODELS OF SUSTAINABLE BUSINESS....................................................25
Ariadna Luarca Criado
1. Pioneering Sustainable Business Models..................................................................25

1.1. Leveraging Sustainability for Innovation and New Business Opportunities........25
1.2. Sectors Primed for Sustainability-Driven Business Opportunities.......................26
VIII. CONCLUSION............................................................................................................26
IX. BIBLIOGRAFIA.........................................................................................................29
I. Introduction
The phenomenon of globalization, over the past few decades, has significantly
transformed the global economic landscape, primarily through the proliferation of
multinational corporations (MNCs). These corporate giants have emerged as major players in
the international business arena, having tremendous economic power and political influence.
As they expand their operations across borders, concerns about the ethical and environmental
responsibility of MNCs have come to the forefront of international discourse.
According to the United Nations Conference on Trade and Development (UNCTAD), a

staggering 82,000 parent companies have established 810,000 foreign affiliates scattered
worldwide. Notably, a substantial 85 percent of the largest MNCs originate from the United
States, the European Union, and Japan. This concentration of economic power has bestowed
upon MNCs the capacity to significantly impact the politics, economies, and societies of the
countries in which they operate.
The urgency of the situation is amplified by the unprecedented environmental

challenges that humanity faces in the 21st century. These challenges encompass issues
ranging from the pollution of water, air, and soil to the distressing loss of biodiversity,
wildlife, and natural habitats. These adverse effects, in turn, have far-reaching consequences
for human well-being, including health, food security, and social harmony. While many of
these environmental issues are global in scope, their immediate and severe impacts tend to be
disproportionately felt in emerging and developing economies.
What further exacerbates the situation is the modus operandi of MNCs, which often
involves shifting industrial activities towards these developing countries. This practice, while
contributing to economic development, is not without its ethical and environmental concerns.
Human rights violations and environmental degradation frequently accompany such industrial
relocations, as these corporate entities can adversely affect vital environmental resources,
contributing to greenhouse gas emissions, the unsustainable exploitation of biodiversity, and
the generation of hazardous substances and waste.
However, it is essential to recognize that MNCs are not solely bringers of

environmental degradation. They also possess the capability to wield their technological
progress and research and development capacities to ameliorate environmental conditions.
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This duality of their impact on the environment underscores the need for a comprehensive
understanding of their ethical and environmental responsibility.
This paper intends to delve into the complex web of social, economic, and
environmental concerns intertwined with the industrial activities of MNCs. It underscores the
pressing need for heightened awareness and scrutiny concerning business decisions that could
potentially impact the environment from an ethical point of view. The performance and
conduct of MNCs, therefore, assume a pivotal role in shaping not only the domestic policies
of the nations they operate in. But also, in influencing international relations and the global
response to environmental challenges.
1. Methodology
This research adopts a mixed-methods approach to explore the complex relationships

between multinational corporations, globalization, and environmental ethics. The
methodology consists of the following components:
1. Literature Review: An extensive review of existing literature from sources

including academic journals, UNCTAD reports, and publications from environmental
watchdogs to establish a theoretical and contextual foundation.
2. Case Studies: Examination of specific instances where MNCs have had
significant environmental impacts. These case studies will be selected based on the severity of
environmental issues and the level of influence exercised by the corporations involved.
3. Data Analysis: Quantitative data from environmental reports and economic
statistics will be analyzed to assess the direct and indirect impacts of MNCs’ operations on
environmental degradation and sustainability.
4. Interviews and Surveys: Conducting interviews with experts in corporate
ethics, environmental law, and economic development. Surveys will also be distributed to
stakeholders in countries affected by MNC operations to gather diverse perspectives on the
perceived impacts of these corporations.
5. Comparative Analysis: Comparing policies and practices across different
MNCs to identify patterns in corporate behavior and the effectiveness of regulatory
frameworks aimed at mitigating environmental harm.
The culmination of this research will offer insights into the ways MNCs can align their
operational strategies with global sustainability goals, proposing recommendations for
policymakers, corporate leaders, and civil society to foster a more ethical and environmentally
conscious global economy.
II. Enterprises ethical responsibility
1. Concept of Ethical Responsibility

In today's global business landscape, the concept of ethical responsibility has undergone
a profound transformation, with many businesses, particularly those operating in emerging
markets, embracing Corporate Social Responsibility (CSR) as a fundamental component of
their ethical conduct. This evolution in ethical perspective extends beyond the traditional
focus on profit generation and encompasses an active commitment to enhancing the well-
being of local communities, employees, and the environment. Moreover, it entails the
development of various community projects, including the construction of schools, hospitals,
and the development of essential infrastructure.
Fundamentally, socially responsible companies have embraced the notion that they bear
responsibility not only for financial outcomes but also for the social and environmental
impacts of their operations. This shift in perspective has led to the establishment of
comprehensive policies and programs designed to ensure that these impacts are consistently
integrated into their daily decision-making processes. These companies are guided by the
understanding that responsible business practices are not only compatible with, but
indispensable for long-term sustainability, profitability, and reputation enhancement.
In essence, the adoption of Corporate Social Responsibility is not merely a

philanthropic endeavor; it is a strategic decision grounded in the understanding that
responsible business practices create a positive impact on society and the environment while
simultaneously fostering trust and goodwill among their stakeholders.
2. Importance of Ethical Responsability, especially in MNCs:
In today's globalized world, multinational corporations (MNCs) play a central role in

shaping societies, economies, and the environment on a worldwide scale. With their
expansive operations, MNCs possess an unparalleled reach and influence. However, this
influence comes with a profound ethical responsibility. MNCs have crucial significance in
ethical responsibility, focusing on the global impact they have, the ethical lapses they
sometimes encounter, the role of ethical responsibility in shaping their reputation and long-
term success, the importance of legal and regulatory compliance, and their social and
environmental impact.
Multinational corporations are powerful entities due to their extensive global operations.
They have a significant impact on societies, economies, and the environment worldwide.
Through their supply chains, production processes, and distribution networks, MNCs can
affect the lives of people in all corners of the world. They can stimulate economic growth in
developing countries but also have the potential to exploit resources and labor. Therefore,
their actions can either be a force for positive change or a source of harm. This global reach
and influence underscore the necessity for MNCs to act responsibly and ethically.
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Unfortunately, MNCs have not always lived up to their ethical responsibilities. In recent
years, we have witnessed numerous ethical lapses that have rocked the corporate world, such
as environmental violations. Exemplified the consequences of disregarding ethical standards.
These incidents not only harm the reputation of the corporations involved but also lead to
adverse societal and environmental effects. These ethical lapses serve as a reminder of the
critical need for MNCs to establish and uphold robust ethical standards.
III. Relationship between MNCs and the environmental crisis
The correlation between Multinational Corporations (MNCs) and the environmental

crisis is a multifaceted interaction between the two, marked by intricate dynamics, and
significant consequences. The vast global footprint of MNCs has a profound impact on
environmental sustainability, encompassing various dimensions that collectively contribute to
the ongoing environmental crisis.
MNCs, operating across diverse geographies, manifest a substantial environmental

footprint. Their extensive supply chains, manufacturing operations, and expansive distribution
networks necessitate considerable resource utilization and waste generation. This, in turn,
leads to ecological strain, resource depletion, and a significant contribution to the
environmental burden.
The activities of MNCs significantly contribute to pollution and emissions. Industrial

processes associated with MNCs emit greenhouse gases, thereby exacerbating climate change,
air and water pollution, deforestation, and loss of biodiversity, resulting in far-reaching
environmental consequences.
Many MNCs engage in resource extraction, intensifying the strain on natural resources.
This leads to habitat destruction, environmental degradation, and the depletion of non-
renewable resources, impacting ecosystems and biodiversity.
Furthermore, as stated above, Multinational Corporations work under different legal

borders as they take advantage of those countries with a lower regulation. Thus, operating
across diverse jurisdictions introduces the challenge of varying environmental standards.
MNCs might exploit regions with lax environmental regulations, leading to discrepancies in
environmental impacts across different operational locations, decrementing their water
sources, disrupting ecosystems, and adversely affecting the health of the local population and
incrementing, the global issue, climate change.
While some MNCs have demonstrated a commitment to sustainability, investing in eco-

friendly technologies and renewable energy sources, a widespread implementation of such
initiatives across the corporate world remains a work in progress. As we will see later, the
predominant focus often remains on environmental policies as marketing operations to

achieve financial returns rather than comprehensive environmental protection.
MNCs also possess the potential to lead transformative change. Implementing more
sustainable practices, advocating for cleaner technologies, and aligning with stringent
environmental standards can collectively redirect the trajectory of their impact, contributing
positively to global environmental sustainability. Thus, here comes the impetus for an
integrated approach to corporate responsibility and codes of conduct that harmonize economic
objectives with environmental protection becomes imperative in addressing the environmental
crisis.
1. CO2 Emissions of MNCs
The Intergovernmental Panel on Climate Change (IPCC) attributes 89% of global CO2
emissions to fossil fuels and industry, with oil being a substantial component. These
emissions are critical factors in the rising global temperatures, which have already seen an
increase of approximately 1°C, moving perilously close to the 1.5°C threshold that could
precipitate catastrophic environmental changes.
As global leaders in industry and commerce, Multinational Corporations (MNCs) play a

pivotal role in shaping the environmental landscape of our planet. The activities of these
corporations have far-reaching impacts on global carbon emissions, particularly through their
extensive supply chains and international investments.
Multinational corporations are integral to the global economy, influencing vast

networks that span multiple countries. A significant study by UCL and Tianjin University
highlights the profound impact these corporations have on global carbon emissions.
According to the research, supply chains of MNCs account for a fifth of global emissions.
This staggering figure is indicative of the substantial environmental footprint that MNCs
leave behind through their operations and economic activities.
The international reach of MNCs allows them significant control over their supply
chains through foreign direct investment (FDI). This influence is a double-edged sword.
While it has the potential to spread sustainable practices, it often results in the outsourcing of
emissions to developing countries, where environmental regulations may be less stringent.
The UCL and Tianjin University study illustrates this by showing how emissions have
increased due to investments flowing from developed to developing regions. Ranked by the
carbon 118 footprints of the MNEs hosted by each country, the Chinese mainland was the
largest hosting 119 country (1584.5 million tons) in 2016, followed by the EU and the US
(Fig. S3). Over the study 120 period 2005-2016, the carbon footprints of MNEs hosted by the
US and the EU remained relatively 121 stable and even decreased slightly. However, the
carbon footprints of MNEs hosted by developing 122 countries, such as the Chinese mainland
and India increased sharply, as developing countries have become increasingly attractive FDI
destinations.
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This pattern of investment contributes to a problematic shift of the emissions burden to

poorer parts of the world. While developed countries benefit from reduced domestic
emissions, developing countries face increased environmental degradation. This not only
exacerbates global emissions but also places a disproportionate impact on countries with
fewer resources to manage and mitigate environmental harm.
The carbon footprints of the world’s largest MNCs are monumental. For example, BP,
meanwhile, generated more emissions through its foreign affiliates than the foreign-owned oil
industry in any country except for the United States; Walmart, meanwhile, generated more
emissions abroad than the whole of Germany’s foreign-owned retail sector, while Coca-
Cola’s emissions around the world were equivalent to the whole of the foreign-owned food
and drink industry hosted by China. For instance, López et al. (2019) found that in 2009 the
carbon footprint of US MNEs’ foreign affiliates was greater than that of the territorial
emissions of the UK. Thus, foreign affiliates alone are responsible for more emissions than
many countries' total emissions. Such statistics highlight the critical need for MNCs to take
responsibility for their carbon footprints, especially those of their foreign affiliates. Measuring
and managing these emissions is challenging but essential for global sustainability efforts.
The role of MNCs in global carbon emissions is undeniable. Their extensive supply
chains and international investments significantly contribute to environmental degradation,
particularly in developing countries. While there has been some progress in recognizing and
addressing these issues, much work remains. MNCs must intensify their efforts in
sustainability, not only for the sake of compliance but for the health of our planet. The shift
towards renewable energy and stricter emissions standards in all operational territories is not
just a corporate responsibility—it is a global necessity.
2. Oil industries
Oil giants stand as primary contributors to global CO2 emissions. The unabated
combustion of fossil fuel reserves is predicted to release volumes of carbon dioxide far
exceeding the thresholds considered safe for maintaining global temperatures within 2°C
above pre-industrial levels. This segment of emissions, significantly driven by multinational
oil corporations, dwarfs the contributions of other sectors, including major commercial
players like Amazon, which emits around 60 million tons of CO2 annually, a figure that pales
in comparison to the emissions from oil conglomerates.
The pursuit of oil and gas has led to severe ecological disruptions. Extraction processes
often result in habitat destruction, interference with animal migratory patterns, and frequent
oil spills, which have devastating long-term effects on marine and terrestrial ecosystems. The
World Wildlife Fund has underscored the profound consequences of these activities,
highlighting how they compromise the health and sustainability of natural habitats and human
communities dependent on these ecosystems.
Despite the clear understanding of their role in accelerating climate change, oil
companies continue to invest in operations that extend their environmental footprints. Tactics
like greenwashing are prevalent, where initiatives such as Shell’s commitment to invest $100
million annually to offset emissions cover merely a fraction of their overall pollution—just
10% of their emissions. These efforts are often perceived as inadequate and purely strategic,
aimed at maintaining corporate image rather than effecting real change.
The inherent nature of the oil industry makes true sustainability a challenging, if not
impossible, goal. The extraction and processing of oil produce significant environmental and
social impacts that cannot be completely mitigated. While companies can make efforts to
reduce the adverse effects, the sector's fundamental reliance on fossil fuels poses a significant
barrier to achieving genuine sustainability. Thus, the transition to renewable energy sources
and the cessation of oil subsidies are critical steps toward mitigating the oil industry's
environmental footprint and achieving a sustainable future.
Increasingly, the oil sector faces legal challenges and policy restrictions aimed at
curbing its environmental impact. Notable cases include various lawsuits against major
companies like ExxonMobil for their role in environmental degradation and climate
misinformation campaign.
2.1 Willow project
It is a massive oil drilling venture on Alaska. The area where the project is planned
holds up to 600 million barrels of oil. The project would generate enough oil to release 9.2
million metric tons of planet-warming carbon pollution a year.
The influence wielded by oil multinational corporations is evident in the political

landscape, as President Biden, despite his campaign promise to curtail oil drilling on public
lands, found himself compelled to backtrack. The administration cited existing and valid
leases held by Conoco in the area as a significant factor in their decision-making process.
This persistence in oil extraction persists despite global commitments aimed at curbing
the rise in average global temperatures to a maximum of 2.7 degrees Celsius. The
implications of surpassing this threshold, as outlined by the UN, could lead to millions of
deaths worldwide.
The only way to prevent it is to stop burning fossil fuels which is responsible for more
than three-quarters of the carbon emissions.
2.2. From Oil to Renewable Energy
IV. Legal Framework and international standards related to the environmental

responsibility of MNCs
This part of the work explores the legal framework and international standards aimed at
holding MNCs accountable for their environmental impact. It examines both soft law
instruments, such as international conventions and guidelines, and hard law regulations,
focusing particularly on the European Union's comprehensive normative framework. Through
an analysis of key legal instruments and initiatives, I intend to highlight the importance of
transparency, accountability, and sustainability in shaping MNC behavior and promoting
environmental responsibility.
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Despite the fact that the economic activities of MNEs cause serious damage to the
environment of host countries, there is still a huge lack of environmental protection measures
for MNEs in host countries as of now. So, in the intervening two or three decades between the
massive transfer of polluting companies by multinational corporations, both the international
community and the home and host countries of MNEs have developed a range of treaties and
regulatory measures.
1. International Conventions and soft law instruments
The international community has developed numerous environmental conventions and

soft law instruments to address environmental challenges. These include treaties such as the
Basel Convention, the United Nations Framework Convention on Climate Change, and the
Convention on Biological Diversity, which establish principles and guidelines for
environmental protection. Additionally, soft law instruments like the UN Guiding Principles
on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, the ISO
26000 Guidance on Social Responsibility, and the Global Reporting Initiative (GRI)
Standards provide recommendations and guidance for responsible business conduct, including
environmental stewardship.
Some of the main international standards related to the environmental responsibility of

MNCs are:
- The UN Guiding Principles on Business and

Human Rights (2011), which establish the state duty to protect human rights, the corporate
responsibility to respect human rights, and the need for effective remedies for victims of
business-related human rights abuses.
- The United Nations Global Compact (UNGC)
is a voluntary initiative launched by the United Nations in 2000 to encourage businesses
worldwide to adopt sustainable and socially responsible policies and to report on their
implementation. The UNGC is based on ten principles derived from key UN conventions
and declarations related to human rights, labor, environment, and anti-corruption. The
UNGC provides a framework for companies to align their strategies and operations with
these principles and to take actions that advance societal goals. By signing onto the Global
Compact, companies commit to integrating these principles into their corporate strategies,
policies, and procedures, and to reporting annually on their progress.
- The OECD Guidelines for Multinational
Enterprises (2011), which provide recommendations for responsible business conduct in
areas such as disclosure, human rights, environment, employment, taxation, and consumer
interests.
- The ISO 26000 Guidance on Social
Responsibility (2010), which offers guidance on how organizations can operate in a
socially responsible way, including environmental aspects such as pollution prevention,

resource efficiency, climate change mitigation and adaptation, and biodiversity protection.
- The Global Reporting Initiative (GRI)
Standards (2016), which are the most widely used framework for sustainability reporting,
covering topics such as environmental management, emissions, waste, water, biodiversity,
and environmental compliance.
While soft law instruments provide valuable guidance, they lack binding legal force and
depend on the willingness of MNCs to comply. Thus, this challenges ensuring effective
enforcement and accountability for environmental responsibility. As if the MNC does not
accept, then the relevant guidelines and principles are unable to lay a significant role in
helping social responsibility of multinationals. Therefore, only rely on international treaties to
regulate multinational enterprises may not be effective, as they do not create legal obligations.
However, these instruments can still influence corporate behavior and serve as a basis for
voluntary commitments and initiatives.
On the other hand, we can see how regulations or hard law is directly applicable and
enforceable in all member states. It creates binding rules and obligations for the institutions,
member states and the private sector as it can be challenged before a court. Talking about
environmental responsibility, a key example of hard law is the EU Normative.
2. The Sustainable Development Goals (SDGs) as connectors of corporate strategies with

global priorities.
In 2015, the Millennium Development Goals (MDGs) reached their conclusion.

Developed between 2000 and 2015, they focused on eight objectives in the realm of
development: eradicate extreme poverty and hunger, reduce child mortality, improve maternal
health, combat HIV, malaria, and other devices, ensure environmental sustainability, develop
a global partnership for development, to achieve global primary education, to promote gender
equality, to reduce child morality, to promote maternal health and universal partnership. Their
successors, the SDGs, reflect a profound understanding that global sustainable agenda cannot
progress without comprehensive scope and implementation. Hence, these new SDGs
encompass 17 objectives and call upon both developing and developed nations, as well as
businesses, governments, and civil society.
Regarding businesses and given that the SDGs cover a wide array of sustainable
development issues such as poverty, health, education, climate change, and environmental
degradation, they can serve to align business strategies with global priorities. Companies can
utilize the SDGs as a general framework to shape, direct, communicate, and report on
strategies, goals, and activities, leveraging their benefits. However, for this to occur,
businesses would require guidance for orienting, measuring, and managing their contributions
to the SDGs.
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The SDG Compass, developed by Global Compact GRI, elucidates how the SDGs
impact businesses. Providing the necessary tools and knowledge to place sustainability at the
heart of their strategy. The guide presents five steps to help companies maximize their
contribution to the SDGs:
 Step 1: Understanding the SDGs: This entails grasping the expectations placed on
companies and the opportunities they offer. For governments, it involves
translating the SDGs into national action plans, policies, and initiatives that reflect
different realities and capacities. For companies, it entails discovering new growth
opportunities and reducing risk profiles by developing solutions to achieve the
SDGs.
 Step 2: Defining Priorities: With 17 SDGs comprising numerous targets and

indicators, not all will impact every business. Understanding where the company
should focus its efforts is crucial. This requires a strategic approach to the SDGs,
including an assessment of their current and potential impacts along the supply
chain.
 Step 3: Setting Objectives: Once the company has identified current and potential
risks and impacts in its value chain, it is necessary to establish sustainable
development objectives. These objectives should be specific, measurable, and time-
bound, endorsed by company leadership, and integrated into its processes.
 Step 4: Integration into Company Management: Implementing activities to advance

towards the objectives may not be easy. The best way to ensure this happens
systematically is to integrate them into the company's strategy and business
operations. Achieving the company's sustainable objectives will require
involvement from all areas; everyone needs to understand the sustainability
objectives, why they have been implemented, and what role they play in achieving
them. Sustainability integration will create new internal partnerships, where people
and departments work together to find the most efficient and impactful solutions to
advance sustainability. Integrating sustainability KPIs, key sustainability indicators
in the company's dashboard alongside financial performance indicators, can be an
excellent way to make sustainability a business imperative.
 Step 5: Reporting and Communication: Non-financial performance data disclosure

is increasingly important for various stakeholders. Additionally, communication is
an ongoing process that serves to monitor and measure progress, understand what
works and what doesn't, adjust programs and activities where necessary, and
engage with stakeholders based on data obtained.
3. Sustainability Framework. European Regulation: Public Policies and EU Normative

The European Union (EU) has also developed a comprehensive normative framework
on the environmental responsibility of MNCs, based on the principles of precaution,
prevention, rectifying pollution at source, and the polluter pays principle.
The current President of the Commission, Ursula von der Leyen, announced her
mandate by introducing the European Green Deal. The European Green Deal is a
comprehensive strategy to stimulate economic growth, create environmentally friendly jobs,
and combat climate change within the EU. It is likened to the creation of the EU Single
Market in 1985, highlighting its significance and ambition.
The European Green Deal (2019) is the EU's roadmap for achieving climate neutrality,
and includes actions on clean energy, circular economy, biodiversity, zero pollution and
sustainable finance. It encompasses a wide range of initiatives, including the European
Climate Law, which legally commits the EU to become climate-neutral by 2050 and sets out
mechanisms for monitoring and reviewing the EU’s progress, and the Circular Economy
Action Plan, aimed at reducing waste and promoting recycling. This involves setting
ambitious targets and standards for MNCs, such as reducing greenhouse gas emissions,
increasing renewable energy sources, promoting circular business models, and integrating
environmental and social criteria into investment decisions. One of the key strengths of the
European Green Deal is its holistic approach, which recognizes the interconnectedness of
environmental, social, and economic factors. By addressing multiple sustainability challenges
simultaneously, the Green Deal aims to maximize synergies and minimize trade-offs,
ensuring a balanced and equitable transition to a greener future.
The EU has allocated one trillion euros through the European Investment Bank to invest
in climate and environmental sustainability. Additionally, the Transition Fund for the period
2021-2027 and the Just Transition Mechanism aim to support workers and communities
affected by the transition to a greener economy.
The EU's new strategy, "From Farm to Fork," focuses on promoting sustainable
agriculture and preserving biodiversity. It aims to ensure food security while minimizing the
environmental impact of agricultural practices.
One of the key tools utilized by the EU to advance its sustainability goals is the
inclusion of trade and sustainable development chapters in its Free Trade Agreements (FTAs).
These chapters serve to promote the adoption of international standards among trading
partners, particularly in areas related to labor rights, environmental protection, and sustainable
development. They often include commitments for both parties to ratify international labor
conventions and multilateral environmental agreements, such as the Paris Agreement on
climate change.
The Paris Agreement, adopted in 2015, represents a landmark international accord

aimed at addressing climate change by limiting global warming to well below 2 degrees
Celsius above pre-industrial levels. The Paris Agreement marked a turning point in Europe's
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approach to sustainability. Prior to this accord, sustainability goals, including the United
Nations' Sustainable Development Goals (SDGs), were present in the spirit of various
corporate governance codes across European Union member states. However, these goals
remained largely indeterminate and were addressed primarily through the lens of Corporate
Social Responsibility, lacking a clear definition of how to proceed with their implementation.
The Paris Agreement, adopted by the United Nations General Assembly, introduced a new
framework for sustainable development, known as the Agenda 2030, which centralizes the
SDGs and encompasses the three dimensions of sustainability: environmental, social, and
governance. From this moment onward, the SDGs became intricately linked to the EU's
framework of action. As a party to the Paris agreement, the European Union (EU) has been at
the forefront of efforts to combat climate change through various legal initiatives, including
those targeting multinational corporations: Under the Paris Agreement, the EU has committed
to reducing its greenhouse gas emissions by at least 40% by 2030 compared to 1990 levels.
This target has significant implications for MNCs operating within the EU, as they are
required to comply with emissions reduction regulations and contribute to the overall effort to
mitigate climate change.
 One of the key mechanisms employed by the EU to reduce greenhouse gas emissions
is the Emissions Trading System (ETS). This system sets a cap on the total amount of
greenhouse gases that can be emitted by certain industries, such as power generation,
industry, and aviation. MNCs operating in these sectors are required to obtain permits
for their emissions, and those exceeding their allowances must purchase additional
permits or reduce their emissions. This creates a financial incentive for MNCs to
invest in cleaner technologies and reduce their carbon footprint.
 In addition to the ETS, the EU has implemented various carbon pricing mechanisms to
internalize the costs of greenhouse gas emissions and incentivize MNCs to transition
towards low-carbon technologies. This includes carbon taxes and carbon border
adjustments, which impose a price on carbon emissions generated by imported goods.
These measures not only help to level the playing field for domestic MNCs but also
encourage global cooperation in reducing emissions. The EU has set ambitious targets
for increasing the share of renewable energy in its overall energy mix. MNCs are
encouraged to invest in renewable energy projects through various incentives, such as
feed-in tariffs, subsidies, and tax credits. By transitioning towards renewable energy
sources, MNCs can reduce their reliance on fossil fuels and contribute to the EU's
climate goals.
As I will talk more deeply later on, I believe is also worth mentioning it at this point, the
EU has introduced regulations requiring MNCs to disclose climate-related information in
their financial reports, for instance: the Non-Financial Reporting Directive (2014). This
includes information on greenhouse gas emissions, climate-related risks, and the impact of
climate change on their business operations. By increasing transparency and accountability,
these reporting requirements help investors and stakeholders assess the climate performance
of MNCs and make informed decisions.
Overall, the EU's legal initiatives to combat climate change through persecuting MNCs
reflect its commitment to achieving the objectives of the Paris Agreement and transitioning
towards a low-carbon economy. By imposing emissions reduction targets, implementing
carbon pricing mechanisms, promoting renewable energy, and enhancing corporate
transparency, the EU aims to harness the power of multinational corporations in addressing
one of the most pressing challenges of our time.
4. Regulation of developing countries as legal assets for MNCs
In recent years, much criticism of the role of multinational corporations in

underdeveloped countries has emerged. Multinationals are critiqued for their distortion of
development. As most multinational enterprises are parent companies in their home countries
and set up in other countries in the form of subsidiaries. And after an environmental pollution
accident, multinational corporations can effectively avoid their own liability by virtue of the
limited liability system of their subsidiaries, thus indirectly reducing the amount of
compensation.
Regulations of industrialized countries are usually stricter than the regulation of

developing countries. In the last decades, it has been strongly emphasized that multinational
companies that operate in developing countries, are governed by less strict environmental
standards compared to standards in the parent country. These companies cannot be held liable
for environmental damages from their operation, as long as they operate based on the
environmental regulations of developing countries, even if it is possible to decrease or prevent
such damages by utilizing higher environmental standards. Nonetheless, damages to the
environment do not just affect the host country; it causes a global problem. The rate of
increasing pollution and the hazards it causes show the necessity to implement higher
environmental standards in developing countries. This objective is reachable by the
international implementation of environmental regulations by home countries of multinational
companies. NON-INTERVENTION PRINCIPLE
Recently, multinational companies have started using comparable methods regarding

environmental issues. Generally, these companies generate domestic environmental standards,
that are equal to or more than all standards in the main regions of investment; and all
equipment across the world must conform to these standards. However, the number of
multinational companies that have accepted such standards is very little, and it seems that dual
standards are dominant. Due to diminishing expenses of environmental protection,
multinational companies can increase their short-term profits, and from the point of view of
consumers, especially those in advanced countries, the multinational corporation provides a
better product at a lower cost and may even raise the prices of domestic factors of production.
There is also consensus that multinational investments increase the propensity for
conflict -either international or domestic- between multinationals and the host country or
15
between competing groups within the host country. Even when overt conflicts are absent,
there is a consensus that investment by multinational corporations both enhanced and
maintains their hegemonic dominance in underdeveloped countries.
The value of internationalized production now exceeds the value of international trade,
and the former has therefore displaced the latter as the main vehicle of international economic
exchange.
On the other hand, conventional writers attribute major economic benefits to the
presence of multinational corporations because these enterprises bring in missing or deficient
factors of production such as capital, technology, and managerial skills. Developing countries
are virtually dependent on foreign sources, specially of the advanced nations of North
America, Western Europe and Japan for their technology.
President Castro of Cuba described multinational corporations (MNCs) as international

monopolies which are the principal agents in the world capitalist process of accumulation and
exploitation. He has drawn attention to the “alarming increase in the influence of these
corporations in world economic relations” which “naturally had great social and political
effects for third world countries.”
Infusion of foreign capital, technology and managerial skill from the developed
countries leads to growth in profitable sectors, thereby generating foreign exchange for the
developing countries. Being funded of capital and technology, through MNCs and direct
investments, as well as licensing arrangements, are essential for the rapid industrialization of
the developing countries. All of this is based on the belief that American path of development
and growth is the most promising for developing countries, and capitalism as a system, the
most efficient way of global resource allocation and equitable benefits for all.
Stephen Hummer challenged these claims of economic efficiency of the MNCs, with
the question: efficient for what and for whom? they are efficient at oligopolistic decision
making and ensuring their own expansion and survival.
Hymer subsequently conceptualizes the New Imperial system of transnational corporate

capital. The New Imperial System tends to centralize high level decision making in a few key
cities like New York or London; rest of the world is confined to lower levels of activity and
income. Income, status, authority, consumption patterns will radiate out from the center in a
declining fashion to the hinterland. Inequality is root into this New Imperial System
reproducing hierarchies of dependence and dominance, wealth, and poverty at every level;
and as corporate capital becomes more internationalized. The international economic, social,
and political systems tend to become more hierarchical, unequal, and authoritarian.
International inter-dependence
V. Ethical Responsibility of Multinational Companies
1. Business incentives to invest in sustainability.
There are reasons why a company should be interested in investing in sustainability

from both a supply and demand perspective. So, business incentives to invest in sustainability
can be understood from two perspectives: supply and demand.
From the supply perspective, a company may find motivation to invest in sustainability
due to the positive effect it has on its profitability. Companies that implement corporate social
responsibility policies often experience tangible benefits, such as differentiation in sustainable
indices compared to their non-sustainable competitors. For example, the FTSE4Good IBEX,
associated with sustainable companies, may show better performance than generalist indices.
Additionally, adhering to responsible investment principles or announcing sustainability
policies can increase a company's stock price. These positive effects can attract sustainability-
conscious investors and increase the company's market capitalization.
On the other hand, from the demand perspective, there is a growing demand for
sustainable products in the market. Companies can capitalize on this trend by renewing
traditional products in obsolete markets or introducing new sustainable products in emerging
and developing markets. They can even enter markets where they had no previous presence,
leveraging technologies or tools implemented that give them a comparative advantage
associated with sustainability policies.
Furthermore, investing in sustainability can improve a company's reputation,

positioning it as a leader in sustainable business. This can differentiate it in the market and
allow it to charge higher prices for its products, as consumers are increasingly willing to pay
more for sustainable and ethically responsible products. In summary, investing in
sustainability can generate a series of economic and reputational benefits for companies, both
in terms of supply and demand, which can significantly contribute to their long-term success.
1.1. Sustainability, Investment, and Access to Financing:
Sustainability can drive economic growth through two main channels: better access to
financing and institutional support for promoting sustainable investment, which is
increasingly relevant throughout Europe.
Sustainability has impacted the management on access to financing. As currently, the

financial industry is undergoing a gradual metamorphosis in which sustainability criteria are
being incorporated into risk assessment and pricing of their products. There is the possibility
that in the future, sustainable companies may have access to lower interest rates as a result of
considering climate and social risks in financial analysis. This is because financial institutions
are recalibrating their risk assessment methodologies and see a company that adopts
sustainable practices is perceived as more prudent and therefore less risky in the medium and
17
long term, Consequently, these forward-thinking entities may enjoy preferential terms,
including potentially applying a lower interest rate.
Sustainability transcends short-term gains. By incorporating environmental and social

considerations, financing decisions extend beyond immediate profitability. A company´s
commitment to sustainable practices signals resilience, fostering investors confidence. As a
result, sustainable enterprises may access capital at more favorable terms, aligning with their
long-term vision.
1.2. Sustainable Finance:
This mechanism underpins the creation of sustainable finance, which refers to the
process of adequately encompassing investment decisions that harmonize economic growth
with environmental and social responsibility. Sustainable finance transcends conventional
profit seeking. This translates into a greater volume of investment in sustainable and long-
term activities, following the definition used by the European Commission.
Sustainable finance evaluates climate change mitigation, resource efficiency,

biodiversity preservation, and circular economy principles. Investments are channeled toward
activities that minimize environmental impacts.
1.2.1. European Commission's Action Plan:
The European Commission's Action Plan for Sustainable Development Financing,

introduced in 2018, is a cornerstone of the European Union's strategy to integrate
sustainability into the financial sector. This comprehensive plan outlines a visionary approach
to reshaping financial systems to support sustainable development goals. The Action Plan for
Sustainable Development Financing, which establishes three priority objectives:
1. Redirect capital flows towards sustainable investments. By incentivizing sustainable

investments, the plan steers financial resources toward climate-neutral, resilient and resource
efficient endeavors
2. Assess and manage financial risks arising from climate change, resource depletion,
environmental degradation, and social issues. Robust risk assessment frameworks enhance the
resilience of financial systems. It focuses on the identification, assessment, and management
of financial risks arising from climate change, resource depletion, environmental degradation,
and social issues. This objective acknowledges the financial sector's vulnerability to
environmental and social upheavals, which can disrupt markets and economies. Implementing
robust risk management frameworks is essential to enhance the resilience of financial systems
against such disruptions.
3. Promote transparency and long-term management of financial and economic activity,
to ensure that financial and economic activities align with sustainability goals. By promoting
clear, accurate, and timely information about financial products and their sustainability
impacts, the EU seeks to empower investors, policymakers, and the public to make informed
decisions.
These objectives seek to promote sustainable investment and mitigate risks associated
with environmental and social challenges, while encouraging greater transparency and
accountability in financial and economic practices. As these measures are implemented, they
will likely drive considerable changes in how financial markets operate, encouraging a shift
towards more sustainable economic practices. The success of this plan could serve as a model
for other regions and contribute to global efforts in sustainable development financing.
1.4. Taxonomy of Sustainable Finance:
The taxonomy of sustainable finance aims to categorize and define which activities
substantially contribute to sustainability and how they should be measured. In other words, it
provides a methodology for classifying and monitoring metrics and compliance with
thresholds in activities that significantly contribute to six sustainable objectives.
The six environmental objectives established by the European Commission for the
European Union are as follows:
1. Mitigation of climate change: activities that actively combat climate change, reduce
greenhouse emissions, and promote carbon neutrality fall under this category. From
renewable energy projects to carbon capture initiatives, these endeavors contribute to a
greener future.
2. Adaptation to climate change: These activities enhance resilience against climate-
related risks. They focus on safeguarding communities, ecosystems and infrastructure from
the impacts of a changing climate. Think of flood prevention measures, drought resistant
agriculture, and climate resilient infrastructure
3. Water treatment: Sustainable water management, efficient use, and pollution
prevention contribute to this objective. Activities that protect water resources, improve water
quality, and enhance ecosystem health align with this goal. From wastewater treatment plants
to sustainable irrigation practices, water related projects play a crucial role.
4. Circular economy and recycling: Encouraging circular practices, such as recycling,
reusing, and minimizing waste, supports resource efficiency and reduces environmental
impact. Circular economy initiatives aim to close the loop, ensuring that materials are reused,
repurposed, or recycled. Think of eco-friendly packaging, upcycling, and waste to energy
projects.
5. Pollution and contamination: Activities that prevent pollution, reduce toxic
emissions, and promote clean air, water and soil fall within this objective. From air quality
improvement projects to hazardous waste management, these endeavors contribute to a
healthier planet.
6. Biodiversity: Conservation efforts, habitat restoration, and protection of endangered
species contribute to maintaining biodiversity. Preserving natural habitats, reforestation
projects, and wildlife conservation initiatives all play a vital role in safeguarding biodiversity.
19
1.5. Promoting Investment through Sustainable Financial Products:
Sustainable financial products are instruments designed to finance sustainable projects,

paving the way to bridging finance and purpose. In this context, small and medium-sized
enterprises (SMEs) can issue them or receive financing from other entities to demonstrate that
their actions are associated with a sustainable concept or project. However, due to the size of
SMEs, they are more likely to be recipients of financing than issuers.
Some examples of sustainable financial products are:
- Green loans: They empower SMEs to finance projects with positive

environmental impact. These loans come with the commitment that the borrowed funds
must be channeled into climate friendly initiatives that positively contribute to
combating climate change, following green loan standards.
- Sustainable bonds: Issuing companies are financed with the condition that they
must allocate the funds to projects aligned with climate change mitigation or other
sustainable objectives. These bonds foster responsible investment and transparency.
Where it’s a green bond supporting renewable energy projects or a social bond funding
affordable housing…
- Thematic investment funds and ETFs: Direct investments into specific themes,
including sustainability. By supporting projects that align with environmental and social
goals, these funds drive positive change. These financial products empower investors to
make a difference.
1.6. UN Principles of Responsible Investment:
The Principles for Responsible Investment (PRI) serve as a compass for companies
navigating the complex landscape of sustainable investment. Developed by investors, for
investors, these principles provide a framework for incorporating environmental, social, and
governance (ESG) factors into investment practices. The PRI is not just a check list; it
embodies a commitment to responsible corporate governance. Companies voluntarily adopt
these principles, signaling their dedication to transparency, integrity, and accountability. By
adhering to PRI, organizations gain more than just reputational benefits they unlock a
gateway to a sustainable future.
By adhering to these principles, companies can access:

- Training: Training programs are offered to improve understanding of
responsible investment practices and sustainability. These programs bridge the gap
between theory and application, equipping members with the knowledge needed to
navigate ESG complexities.
- Classification tools: Tools and methodologies are provided to evaluate and

classify investments based on their social and environmental impact.
- Regulatory disclosure: Guidance is provided on regulatory requirements
related to responsible investment and disclosure of information.
- Networking: PRI fosters a global network of like-minded entities committed to
responsible investment. Companies gain access to a community of practitioners,
facilitating collaboration, knowledge exchange, and best practices.
However, it is important to note that accessing these resources and opportunities may
require significant commitment from companies, including an exercise of transparency about
their internal practices and policies. Additionally, accessing PRI resources may involve
financial investments. SMEs, in particular, need to weight these costs against the potential
benefits.
2. Green-Washing
Public concerns regarding the environment are greater than ever before. These
sentiments have seen a significant increase in recent years (Smith 2019). Thus, consumers are
increasingly receptive to businesses doing their part in the climate crisis. Most are willing to
switch to purchasing from these businesses and also pay more for their products if they
believe it will benefit the environment (Knight, 2020). In order to meet this rising demand for
environmentally beneficial good, businesses are rapidly pledging to environmental causes
(delloite, 2020). It seems like anything and everything has “gone green” in todays age. Such
as airlines, car companies, retailers, restaurants, even networks. This is an attempt of MNCs to
respond to the growing demand of customers for greener products, businesses have been put
in that intricate situation of having to readjust their policies. However, this response has not
always been candid and many businesses and corporations have resorted to greenwashing to
maintain or even increase their profits.
Greenwashing in MNCs' environmental accountability is a significant concern for

stakeholders. Greenwashing refers to the deceptive practice of portraying a company or its
products as environmentally friendly or sustainable, while in reality, their actions do not align
with these claims, in other words, greenwashing as to any number of practices that businesses
use to attempt to trick their customers into thinking they are buying an eco-friendly or
sustainable product when they are actually not. For instance, a lot of fast fashion brands
buyback programs, such as Zara’s pre-owned platform or taking their clothes alarms off, or
their attempts to use say recycled polyester, while not doing anything to reduce the amount of
clothing that they produce. So, businesses may publicly appear to take environmental action,
whilst privately taking actions that damage the environment.
Businesses engage in greenwashing to capitalize on the growing consumer demand for

environmentally friendly goods, foster positive relationships with the public, and enhance
their brand image. Because they believe that being seen by customers as ethical increases
profitability, many businesses engage in greenwashing.
21
People worldwide realize the importance of considering the environment when making
daily decisions and purchases. Customers are more likely to make purchases today from
businesses that are thought to offer environmentally friendly products (Solomon, 2017).
Customers frequently consider businesses that are more sustainable to be ethical. As a result,
they frequently choose to patronize companies they believe to be sustainable in their business
practices. Therefore, many companies are working hard to improve the sustainability of their
operations to win over customers. Thus, due to this, they resort to greenwashing to continue to
appear ethical to customers.
Whilst businesses lying to or misleading consumers is not new, greenwashing is a

unique case due to the permanent damage it causes the environment. This is especially
concerning given the planet is in danger of crossing several climate 'tipping points' (Marshall,
2020), after which damage will be difficult to recover. Thus, it is imperative greenwashing is
brought under control to reduce the devastating impacts of climate change.
3. Transparency of MNCs
As the world becomes more conscious of the need to protect the environment, MNCs
are increasingly expected to be transparent and accountable for their environmental practices.
Referring to the transparency of MNCs as the extent to which multinationals disclose and
account for their environmental impacts, practices, and performance to their stakeholders and
the public.
Transparency is not merely a regulatory requirement but a fundamental component of

modern corporate strategy that enhances trust and credibility among stakeholders. Transparent
reporting helps stakeholders gauge the extent of an MNC's impact on the environment and
holds corporations accountable for their actions. For example, Coca-Cola's public disclosure
of its water usage and Nestlé's sustainability reports, which detail environmental impacts and
goals, are critical for ensuring that these corporations are accountable to the public and
committed to environmental stewardship.
The visibility of environmental practices incentivizes MNCs to enhance their

sustainability efforts. This scrutiny often stems from the fear of reputational damage, which
can have tangible effects on a company’s bottom line. Reporting frameworks such as the
Global Reporting Initiative (GRI) and the AccoutAbility AA1000 standards provide
guidelines that help MNCs report on their environmental, social, and economic performance.
These standards encourage MNCs to not only disclose adverse impacts but also highlight
improvements and future sustainability goals, creating a pathway for continuous
improvement.
In addition, the EU has introduced regulations requiring companies to disclose climate-

related information in their financial reports. This aims to improve transparency and enable
investors to assess climate risks and opportunities.
NOTICIA ALE ADIÓS ECOPOSTURISMO
3.1 Key EU Directives and Regulations:
The European Union (EU) has been at the forefront of integrating environmental
concerns into the corporate sector through a series of directives and regulations aimed at
enhancing transparency.
a. The Non-Financial Reporting Directive (2014/95/EU):
The NFRD amend the Accounting Directive (2013/34/EU) and has been transposed into
national law by member states. This directive requires large public interest company, with
more than 500 employees, to disclose non-financial information, including environmental,
social, and governance (ESG) aspects. It mandates the presentation of non-financial reports
(NFR) for the first time in 2018 and requires expert verification of such reports.
The Non-Financial Reporting Directive (2014) is aimed at increasing transparency and

accountability among large companies regarding their environmental, social and governance
(ESG) performance. This directive requires large companies to disclose information on their
environmental, social and governance performance, including environmental policies, risks
and outcomes¹. The NFRD serves as a vital tool for promoting sustainability and responsible
business practices within the EU. By mandating companies to disclose non-financial
information, the directive enhances transparency and enables stakeholders to assess a
company's overall performance beyond just financial metrics.
However, the effectiveness of the NFRD has been subject to scrutiny. Critics argue that
the directive lax enforcement mechanisms and standardized reporting requirements, leading to
inconsistencies and limited comparability across disclosures. To address these concerns, the
European Commission proposed a revision of the directive in April 2021, aiming to improve
the quality, comparability, and reliability of non-financial information disclosed by
companies.
b. EU Taxonomy Regulation (Regulation EU 2020/852):
This regulation establishes a unified classification system for environmentally

sustainable economic activities within the EU. It sets criteria for determining whether
economic activities contribute to environmental objectives and establishes thresholds for
performance. It aims to facilitate sustainable investment by creating a ‘green list’ of
environmentally sustainable economic activities. This helps investors, companies,
policymakers, and particulars to identify which activities can be considered environmentally
sustainable.
23
It focuses on six environmental objectives, including climate change irrigation and

adaptation, sustainable use and protection of water and marine resources, transition to a
circular economy, pollution prevention and control, and protection and restoration of
biodiversity and ecosystems.
According to the Article 8 of the Taxonomy regulation, companies require to publish

sustainability indicators from 2022 onwards.
c. Corporate Sustainability Reporting Directive (CSRD):
Building on the foundations of the NFRD, the Corporate Sustainability Reporting

Directive (CSRD) came into force in 2023 and will apply starting from the 2024 financial
year. The CSRD aims to improve the reliability, comparability, and relevance of sustainability
information, encompassing broader ESG aspects. It extends the scope of reporting beyond the
entities covered under the NFRD to include listed SMEs and other companies, significantly
broadening the impact of EU sustainability reporting requirements. Companies are now
required to report according to the European Sustainability Reporting Standards (ESRS),
ensuring a standardized approach to sustainability reporting across the EU.
d. The Non-Financial Information and Diversity Law (Law 11/2018)
Specific to Spain, Law 11/2018 incorporates the EU Directive 2014/95/EU into Spanish
national law, expanding the scope of companies required to disclose non-financial
information. This law applies to entities with over 250 employees and meets specific financial
thresholds. It emphasizes the need for companies to disclose detailed information about their
business models, due diligence policies, and non-financial performance indicators. This law
represents a critical national adaptation of EU directives, ensuring that the objectives of
increased transparency and sustainability are integrated into the corporate governance
structures within Spain.
This law significantly expands the number of companies required to submit a non-
financial information statement compared to Royal Decree Law 18/2007, which applied only
to public interest entities meeting certain requirements. Now, in addition to public interest
entities, other companies are also required to submit this statement if they meet certain
criteria, such as having an average number of employees exceeding 500 or meeting certain
financial thresholds for two consecutive years.
After three years from the entry into force of the law, the obligation to submit the non-
financial information statement will apply to all companies with more than 250 employees
that meet certain financial criteria. This mandatory report that companies must submit under
the aforementioned provisions should include aspects such as the group's business model, due
diligence policies and procedures, key non-financial performance indicators, and procedures
for detecting and evaluating risks, including short, medium, and long-term impacts.
4. Key non-financial performance indicators.
Key “non-financial performance indicators" are metrics used to assess a company's

performance in areas not directly related to its finances, such as environmental, social, and
corporate governance impact. These indicators provide important information on how a
company is managing critical aspects beyond its financial profitability.
In the context of the mentioned regulations, companies are required to use recognized
and generally applicable standards when reporting on these key indicators. This means that
they must explicitly mention the national, European, or international framework they used for
each aspect evaluated. Some examples of these standards include the European Commission's
guidelines, the CNMV's Guide for Listed Companies, the United Nations Sustainable
Development Goals, the OECD Guidelines for Multinational Enterprises, and ISO 26000,
among others.
Information on these non-financial indicators should address important issues such as

environmental impact, social and labor issues, human rights, corruption, and the company's
contribution to sustainable development goals. Additionally, this information must be verified
by an independent verification services provider to ensure its reliability and credibility.
The non-financial information statement may be issued in a separate report, but it must
be clearly indicated that it is part of the management report and comply with the same criteria
as the latter. Additionally, it must be presented as a separate item on the agenda of the
company's general shareholders' meeting for approval.
Finally, these reports must be made available free of charge to the public and accessible
on the company's website within six months of their preparation and must be retained for at
least five years. This ensures transparency and accessibility of information on the company's
non-financial performance for its stakeholders and the public.
INDEX LUNA
EMPRESAS ESPAÑOLAS Y MEDIOAMBIRNTR [17:25, 24/04/2024] luna🪩:
sustainability index
[17:25, 24/04/2024] luna🪩: De que es y cuánto obtienen las principales empresas
españolas
[17:26, 24/04/2024] luna🪩: De las mejores que salgan hablas de sus políticas
medioambientales
[17:26, 24/04/2024] luna🪩: Y ya llegas a 30 paginas
[17:28, 24/04/2024] luna🪩: Al parecer hay unos premios europeos del medio ambiente
[17:28, 24/04/2024] luna🪩: Pues que empresas españolas salen
25
VI. SUSTAINABILITY IN SMEs
Small and medium-sized enterprises (SMEs) play a central role in economic

development, both globally, where they encompass over 50% of GDP, and nationally, where
they represent approximately 99% of the business fabric and generate around 70% of
employment. Therefore, the call to the private sector for its contribution to the 17 goals of the
2020-2030 agenda specifically includes them. The fact that the phenomenon of corporate
responsibility has primarily emerged in large companies is not a barrier for SMEs to join it; in
fact, it is necessary for them to do so for corporate responsibility to be real and promote
sustainable development throughout the entire business sector.
SMEs, like all business activities, have an impact on the environment as they operate
across a wide range of activities, such as production, trade, or the provision of goods and
services. Additionally, it is essential to consider that concern for environmental issues is
increasingly evident in today's society, which demands more strongly that companies respect
and care for their surroundings. For these reasons, it is necessary for SMEs to work first and
foremost to promote consumption reduction and savings within the organization, adopting
best practices that make their production processes more efficient and contribute to preventing
impacts on the environment. Moreover, by incorporating clean technologies that contribute to
this goal and optimizing the use of materials and raw materials. Finally, they must comply
with existing legal requirements in environmental matters and prepare for compliance with
future regulations.
VII. NEW MODELS OF SUSTAINABLE BUSINESS
1. Pioneering Sustainable Business Models
Sustainability has emerged not merely as a necessity but as a fertile ground for
pioneering entirely new business models. It is increasingly recognized as an opportunity for
innovation— a platform where fresh business models are devised with a focus on sustainable
development.
1.1. Leveraging Sustainability for Innovation and New Business Opportunities
In the context of sustainable business practices, a model such as proposed by

Ludequefren offers a comparative advantage by generating superior value for customers and
simultaneously aiding development. Such models, driven by the imperative of sustainable
development, suggest a broad array of technological innovations, particularly where pollution
is prevalent. This leads to significant transformations in industries, nations, or sectors with the
highest pollution rates, demanding comprehensive business engagements in the sustainability
transformation process.
Analysis of World Resources Institute data reveals that CO2 emissions are majorly
derived from buildings (17%) and transportation (12%), with significant industrial
contributions from iron and steel (8%), chemicals and petrochemicals (6%), and cement (3%).
Companies aiming to export sustainable services or products should target nations with high
pollution rates undergoing substantial sustainable transitions.
Notably, 84% of global emissions are sourced from just 20 countries, with the
International Energy Agency estimating an annual need of $1.2 trillion for energy transition
alone, a figure poised to rise with the expected global population increase by 2050.
1.2. Sectors Primed for Sustainability-Driven Business Opportunities
This segment outlines various sectors where sustainability is recognized as creating

significant business opportunities, particularly related to the transition towards sustainable
practices:
 Education and Environmental Information: Aimed at increasing awareness among
stakeholders about the sustainability impacts on projects and organizations. Initiatives
include training on the circular economy and best practices in energy and
transportation usage.
 Climate Change Mitigation: Offering specialized services designed to lessen the
adverse climate impacts produced by industrial activities. This includes the
electrification of processes and promoting sustainable transportation solutions.
 Climate Change Adaptation:Providing technical and strategic advice for the shift from
unsustainable to sustainable models, whether from environmental or social
perspectives.
 Renewable Energies: Encouraging existing firms to adopt renewable energy tools and
designs to enhance profitability through cost reductions. The share of global energy
from renewables like wind and solar is projected to increase significantly by 2035 and
2050.
 Sustainable Construction: Utilizing new technologies in the design and construction of

infrastructure, focusing on waste utilization, energy conservation and self-generation,
and natural water management.
 Water Management: Offering comprehensive solutions in water use, management, and

treatment services, including purification, primarily for residential and commercial
applications.
These sectors exemplify the expansive scope for businesses to engage with
sustainability as a fundamental element of their growth and innovation strategies.
Noticia que me paso ella
27
Ben and Jerrys the ideal MNCs Most are willing to switch to purchasing from these
businesses and also pay more for their products if they believe it will benefit the
environment
VIII. CONCLUSION
In light of the information provided and considering the long term implications, it is
evident that we cannot afford to ignore the environmental costs incurred while pursuing short-
term profits. The irreversible damage caused by climate change demands our attention and
action.
Our world has undergone significant transformations, continues to evolve, and will
persistently change. As global citizens, we must adapt to an environment where the exchange
of goods and services fosters not only economic growth but also social and environmental
well-being, this process involves adapting production and consumption models at various
levels. Achieving this necessitates a modernization of our economy, embracing sustainable
production and consumption models to rectify existing imbalances within the system. We
must chart a sustainable course for our mobility, our methods of production and energy
utilization.
In line with this shift, the European Union is positioning itself to use legislation as a
vehicle for defining a framework that promotes sustainable best practices. The impact of
sustainability on the legal framework for businesses is significant. Notably, the Non-Financial
Reporting Directive requires companies of a certain size to report environmental, social, and
governance metrics. Additionally, we have examined the Companies Act and its modification
to incorporate social and governance components derived from the previous law.
Examples such as the Green Deal, sustainable finance taxonomy, EU Grand Bond
standards, and the directive on non-financial reporting illustrate the granularity required for
companies to report on environmental and social impacts. All businesses will need to adapt to
these regulations and contribute to sustainable development for the benefit of our planet and
future generations.
Furthermore, sustainability integration serves as both a competitive advantage and a

prerequisite for market access. Companies must adhere to sustainability policies that
encompass social and environmental standards. Compliance with sustainable procurement
practices is essential for suppliers and buyers alike. It is incumbent upon businesses to
understand regulatory frameworks related to sustainability and effectively incorporate them
into their operations. By doing so, they can communicate the positive developmental impacts
resulting from their business activities.
Efficiency in environmental practices directly correlates with economic efficiency. By

optimizing resource utilization, we can achieve cost savings. Therefore, integrating
environmentally conscious practices is pivotal for enhancing productivity and

competitiveness.
In the face of escalating global economic activities, multinational corporations (MNCs)

are increasingly recognized not only as principal drivers of economic growth but also as
significant contributors to environmental challenges. The transformation from a narrow focus
on ethical responsibility to a broader, more encompassing embrace of corporate social
responsibility reflects a pivotal shift in how MNCs perceive and approach their roles within
the global marketplace.
This evolution is necessitated by the pressing environmental issues that stem from the
complexities of the global economy—issues such as climate change, resource depletion, and
biodiversity loss. These challenges demand a reimagined framework of operation, one where
MNCs are not merely profit-driven entities but are also custodians of the environment. The
transition to sustainable practices is not just an ethical imperative but a strategic necessity,
integral to securing long-term corporate viability and societal well-being.
The shift towards sustainable practices, as discussed in the PDF, is underpinned by

legislative frameworks like the EU Directive 2024/825, which aims to curb deceptive
environmental practices and planned obsolescence. These regulations serve as crucial
mechanisms to ensure that MNCs' commitments to sustainability are not only professed but
also practiced, thereby mitigating the risks of eco-imposture.
As MNCs forge paths towards sustainability, they must navigate the intricacies of
global economic demands with a commitment to environmental stewardship. This dual
responsibility is the cornerstone of modern corporate social responsibility and a testament to
the evolved understanding of what it means to operate ethically in the 21st century.
In conclusion, the environmental responsibility of MNCs is a dynamic, multifaceted

challenge that intertwines ethical, social, and economic strands. As these corporations adapt to
the imperatives of sustainability, their journey will undoubtedly shape the contours of global
economic and environmental landscapes. The enduring commitment to sustainable practices
will not only redefine the standards of corporate operations but also ensure a healthier, more
sustainable world for future generations.
29
IX. BIBLIOGRAFIA:
(ORDENADA EN ORDEN ALFABETICO, SE AÑADEN TODAS LAS REFERENCIAS)
¹: [Corporate social responsibility (CSR) - European Commission](^1^)

²: [European Green Deal | European Commission]
³: [EU Climate Law | Climate Action - European Commission].
(1) Impact of green marketing, greenwashing and green confusion on green ....
https://www.emerald.com/insight/content/doi/10.1108/SJME-03-2022-0032/full/html.
(2) Study highlights ‘greenwashing’ practices among climate pledges of 24 ....
https://english.elpais.com/science-tech/2023-02-13/study-highlights-greenwashing-practices-
among-climate-pledges-of-24-multinationals.html.
(3) Green Marketing – Strategies & best practices - DMEXCO.
https://dmexco.com/stories/sustainable-marketing-strategies-and-best-practices-for-green-
marketing/.
(4) Greenwashing And Sustainability In Business Marketing And ... - Forbes.
https://www.forbes.com/sites/forbesbusinesscouncil/2022/12/21/greenwashing-and-
sustainability-in-business-marketing-and-communications/.
(5) Study highlights ‘greenwashing’ practices among climate pledges of 24 ....
https://bing.com/search?q=greenwashing+of+MNCs.
(6) ‘Greenwashing’ firms face steep new UK fines for misleading claims ....
https://www.theguardian.com/environment/2023/feb/19/greenwashing-firms-face-steep-new-
uk-fines-for-misleading-claims.
(7) MNCs’ corporate environmental responsibility in emerging and developing ....
https://www.emerald.com/insight/content/doi/10.1108/cpoib-03-2019-0019/full/html
(1) MNCs’ corporate environmental responsibility in emerging and developing ....

https://www.emerald.com/insight/content/doi/10.1108/cpoib-03-2019-0019/full/html.
(2) Environment policy: general principles and basic framework.
https://www.europarl.europa.eu/factsheets/en/sheet/71/environment-policy-general-principles-
and-basic-framework.
(3) Multinationals and socially responsible labour practices: Better ....
https://www.ilo.org/global/publications/world-of-work-magazine/articles/WCMS_091639/
lang--en/index.htm
31

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THE ENVIRONMENTAL RESPONSIBILITY OF MULTINATIONAL

TRABAJO FIN DE GRADO

CURSO ACADÉMICO 2023/2024

AUTORA: Luarca Criado, Ariadna

TUTORA: Rosa Tapia Sánchez, María

En Madrid, a (Día) de (mes) de 2024

ABSTRACT: Multinational corporations (MNCs) have emerged as major actors in the

environmentally responsible behavior by corporations, particularly in developing countries

1. Pioneering Sustainable Business Models..................................................................25

According to the United Nations Conference on Trade and Development (UNCTAD), a

The urgency of the situation is amplified by the unprecedented environmental

However, it is essential to recognize that MNCs are not solely bringers of

This research adopts a mixed-methods approach to explore the complex relationships

1. Literature Review: An extensive review of existing literature from sources

II. Enterprises ethical responsibility

1. Concept of Ethical Responsibility

In essence, the adoption of Corporate Social Responsibility is not merely a

2. Importance of Ethical Responsability, especially in MNCs:

In today's globalized world, multinational corporations (MNCs) play a central role in

III. Relationship between MNCs and the environmental crisis

The correlation between Multinational Corporations (MNCs) and the environmental

MNCs, operating across diverse geographies, manifest a substantial environmental

The activities of MNCs significantly contribute to pollution and emissions. Industrial

Furthermore, as stated above, Multinational Corporations work under different legal

While some MNCs have demonstrated a commitment to sustainability, investing in eco-

predominant focus often remains on environmental policies as marketing operations to

1. CO2 Emissions of MNCs

As global leaders in industry and commerce, Multinational Corporations (MNCs) play a

Multinational corporations are integral to the global economy, influencing vast

This pattern of investment contributes to a problematic shift of the emissions burden to

2.1 Willow project

The influence wielded by oil multinational corporations is evident in the political

2.2. From Oil to Renewable Energy

IV. Legal Framework and international standards related to the environmental

1. International Conventions and soft law instruments

The international community has developed numerous environmental conventions and

Some of the main international standards related to the environmental responsibility of

- The UN Guiding Principles on Business and

socially responsible way, including environmental aspects such as pollution prevention,

2. The Sustainable Development Goals (SDGs) as connectors of corporate strategies with

In 2015, the Millennium Development Goals (MDGs) reached their conclusion.

 Step 2: Defining Priorities: With 17 SDGs comprising numerous targets and

 Step 4: Integration into Company Management: Implementing activities to advance

 Step 5: Reporting and Communication: Non-financial performance data disclosure

3. Sustainability Framework. European Regulation: Public Policies and EU Normative

The Paris Agreement, adopted in 2015, represents a landmark international accord

4. Regulation of developing countries as legal assets for MNCs

In recent years, much criticism of the role of multinational corporations in

Regulations of industrialized countries are usually stricter than the regulation of

Recently, multinational companies have started using comparable methods regarding

President Castro of Cuba described multinational corporations (MNCs) as international

Hymer subsequently conceptualizes the New Imperial system of transnational corporate

V. Ethical Responsibility of Multinational Companies

1. Business incentives to invest in sustainability.

There are reasons why a company should be interested in investing in sustainability

Furthermore, investing in sustainability can improve a company's reputation,

1.1. Sustainability, Investment, and Access to Financing:

Sustainability has impacted the management on access to financing. As currently, the

Sustainability transcends short-term gains. By incorporating environmental and social