Summary

Transnational corporations (TNCs) refer to businesses that cross over borders, armed with capital as well as products, processes, marketing methods, trade names, skills, technology, and most importantly management. TNCs have drawn the interest of political scientists and specialists of international relations as they reflect a new, transnational, or even global economic reality. The shift towards trade liberalization and the expansion of market economies have enabled TNCs to grow in size and expand their operations all over the world. Thus, they also affect the natural environment. Three hypotheses or ideas have been put forward by various authors about TNCs’ relationships with the global environment: TNCs as “dirty industries” hypothesis, pollution haven hypothesis, and “business advantage of environmental standards hypothesis.” TNCs are said to operate in some sort of a political and legal vacuum, which they try to shape by defining private environmental standards and at the same time take advantage of this very vacuum to the detriment of the environment. However, they are obliged to deal with other actors such as environmental groups, governments, and consumers. TNCs are engaged in various environmental initiatives and activities relating to environmental protection, including voluntary initiatives, often mandatory environmental reporting, and private certification standards. Given their impact on the environment, it is important to engage TNCs in a global environmental governance processes and for states to adopt restrictive measures and foster international collaboration in order to regulate TNCs which neglect their environmental and social responsibilities.