The regulation of transnational corporations: An assessment of the alternatives and the role of multilateral development banks

There has been an increase in actions against parent transnational corporations (TNCs) for environmental harm caused by their affiliates in developing countries. Corporate and legal analysts suggest a number of methods for ensuring that affiliates in particular and TNCs in general are held accountable for environmental harm. These suggestions include the use of host state regulation, voluntary codes, home country regulation, and liability regimes. For various reasons, these suggestions have not proven effective. Multilateral Development Banks (MDBs) offer a number of financial services and enter into joint contracts with TNCs. MDBs can use this contractual opportunity to ensure that TNCs internalise costs thus reducing environmental harm. Victims of TNC environmental harm will have compensation and an avenue for redress of wrongs.