Document Type


Publication Date

Winter 2008


An ever-increasing number of standards, guidelines, principles, norms, and best practices have been adopted to address the environmental and social impacts of multinational enterprises (MNEs). This increase in standards and norms corresponds to a rise in MNE sensitivity to the environmental and social impacts that their activities have on local communities in developing countries. These standards and norms are considered voluntary by definition because they are typically not state-sponsored or the product of public regulation. They fill a normative gap located between the state-centered focus of international law and the often inadequate or unenforced standards of the developing country hosts for MNE activities, but relatively little attention has been paid to mechanisms for ensuring compliance with them.

This article proposes a new Foreign Investor Accountability Mechanism (“the Mechanism”). The Mechanism will narrow the accountability gap by providing communities affected by foreign investment projects with an avenue for voicing their concerns and for holding MNEs accountable both to local and national laws that may apply. The Mechanism will also allow affected communities to enforce the various promises that MNEs make during project design, approval, and preconstruction phases, or to gain financing or the ‘social license to operate.’ These promises may include: commitments to follow international, industry-wide, or sectoral standards and norms; commitments made as part of corporate-wide social and environmental policies; and project-specific commitments made to secure host government approval or financing from financial institutions, such as the International Finance Corporation, export credit agencies, or private commercial banks.



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