Enhancing corporate sustainability in developing countries

The largest study of its kind into corporate sustainability practices is helping developing nations in South East Asia understand the impact of foreign direct investment (FDI) on their local communities.

Researchers from Swinburne University of Technology conducted interviews with 129 organisations to develop an FDI sustainability framework for six countries from the Association of Southeast Asian Nations (ASEAN).

“Our research focussed on Myanmar, Thailand, Indonesia, Laos, Philippines and Vietnam, as these countries are all huge recipients of FDI, particularly from European, American and Japanese corporations,” Swinburne International Business lecturer and lead researcher, Dr Donovan says.

 “In Australia, foreign organisations are heavily regulated in terms of what they can do when they invest here. However, countries like Laos have fewer regulations, essentially allowing profit-driven organisations more flexibility in what they do to contribute to local development and sustainability.”

“The private sector is always going to be financially motivated, so it’s imperative that developing nations have the right policies in place that direct FDI towards improving the social, environmental and economic development of their communities.”

While the study found a large number of organisations in the region demonstrated poor sustainability practices many large multinational companies, such as Coca Cola, Dow Chemicals, and Total E&P, had adopted world best practices.

“In Myanmar, for example, Coca Cola actively engages with the community, particularly with female entrepreneurs to get them involved in the supply chain,” Dr Donovan says.

“These are the organisations that set the standards really high for other foreign investors coming into ASEAN countries and can drive positive change through private sector engagement in development challenges.”

Dr Donovan and his team of researchers are working across these countries to implement the policy recommendations, including working with the Global Reporting Initiative Organization – the leading organisation globally in setting private sector sustainability principles and standards.

One of the key recommendations aims to mobilise broad support across all ASEAN countries for setting key sustainability standards for the entire region.

The three-year long project, Impact assessments: Maximizing the development value of inward FDI for local communities involvedover 50 researchers across 19 different countries. Over 800 interviews were conducted in 12 different languages.

For more information about the project and its outcomes, please visit: www.sustainability-assessment.org

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