CHAPTER I:T HE L ARGEST T RANSNATIONAL C ORPORATIONS AND C ORPORATE S OCIAL
R ESPONSIBILITY
A. Introduction
Transnational corporations play an ever more important role in sustainable development. For many years, UNCTAD has highlighted the important development role that TNCs can play as conduits of capital, technology, and management know-how. Increasingly, TNCs are being called upon to address broader environmental, social and governance issues. From climate change, to human rights,to labour practices,to international bribery -there is a broad range of issues with which TNCs are confronted. For more than a decade, TNCs have been reacting to these issues with new policies and practices to address their social and environmental responsibilities. Past studies have examined this trend. UNCTAD provided an initial look at this subject in the WIR99and continued to address this issue in a number of publications, including subsequent issues of the WIR, as well as in its series on international investment agreements and its work on international accounting and reporting issues.
The purpose of this chapter is to provide an analysis of the voluntary enterprise policies on corporate social responsibility (CSR) that have been adopted by the world’s largest TNCs. There are a number of challenges in this type of analysis, the principle one being the attempt to compare and quantify qualitative aspects of enterprise policies. Not all polices are equal in scope or detail. As detailed in the methodology section below, this chapter makes use of best practice analytical tools currently employed by the investment community. These tools provide a snapshot of what enterprise policies exist and how these policies compare to one another.
B.Methodology
1. Sample studied and source of data
The study sample is comprised of the 100 largest non-financial TNCs identified in UNCTAD’s WIR08.8These100 companies are evaluated on a range of criteria covering the three categories of environmental, social and governance (ESG) issues which comprise the core subjects of CSR.The companies are then ranked on the basis of their ESG practices, based on measurements of their ESG policies and practices undertaken by the research firm EIRIS.9The EIRIS measurement methodology is used to rank enterprises for inclusion in popular equity indices. While quantification of qualitative aspects of corporate policy and practice has inherent challenges and limitations, and the credibility and comparability of corporate reporting in these areas is still evolving, the EIRIS methodology is considered by stock exchanges, investors and fund managers to be an example of current best practice in this area.