Session 8: Sustainability in international business strategy

Question 1

What is Global Sustainability?

Answer 1

The ability to meet the needs of the present without compromising the ability of future generations to meet their needs.

Question 2

Does international businesses have a greater or lower impact on the environment that their domestic counterparts?

Answer 2

They have a greater impact on the environment because of their global reach and scale

Question 3

How do MNCs contribute to environmental waste?

Answer 3

• Resources are extracted in one location, products are manufactured in another, and sold elsewhere.
• This leads to waste generation and disposal along the global supply chain.

Question 4

What economic incentive exists for them to address it?

Answer 4

MNCs often have little economic incentive to exceed the minimum environmental regulations imposed locally.

Question 5

What is the issue with MNEs and their climate commitments?

Answer 5

MNE’s carbon emissions are high, but climate commitments are low.

Question 6

What is one responsability that the multinationals and businesses have?

Answer 6

Human rights abuses

Question 7

What are the key provisions of the European Climate Law and the Directive on Corporate Sustainability Due Diligence?

Answer 7

European Climate Law:
* Enshrines the European Green Deal goal of a climate-neutral economy by 2050.
* Sets an intermediate target: reduce net greenhouse gas emissions by at least 55% by 2030 (compared to 1990 levels).
* Aims to achieve net zero emissions through emission cuts, green technology investments, and environmental protection.

Directive on Corporate Sustainability Due Diligence (Effective 25 July 2024):
* Promotes sustainable, responsible corporate behavior across global value chains.
* Requires large EU-operating companies to assess, track, mitigate, and remediate adverse human rights impacts.
* Imposes sanctions for non-compliance.

Question 8

Sustainable practices as those that:

Answer 8

1. At minimum do not harm people or the planer and at best create value for stakeholders.
2. Focus on improving environmental, social and governance (ESG)
3. Performance in the areas in which the company has an environmental or social impact

Question 9

What does ESG means?

Answer 9

E = Environmental
S = Social
G = Governance

Question 10

What does environmental critiria includes?

Answer 10

The energy of the company takes in and the waste it discharges, the resources it needs, and the consequences for living beings as a result.

Question 11

What does Social Critiria addresses?

Answer 11

The relationships your company has and the reputation it fosters with people and institutions in the communities where you do business

Question 12

What does Governance means?

Answer 12

Is the internal system of practices, controls and procedures the company adopts in order to govern itself, make effective decisions, comply with the law, and meet the needs to external stakeholders.

Question 13

What are the key elements of the business case for sustainability?

Answer 13

• Inclusive Business Models: Create value for all stakeholders and benefit society.
• Risk Management: Enhance through investments in certifications.
  * Innovation: Drive new ideas and solutions.
• Customer Loyalty: Build trust and long-term engagement.
• Employee Engagement: Attract and retain talent through sustainable practices.

Question 14

What the majority of companies engage with?

Answer 14

SDGs

But typically for PR and reporting purposes

Question 15

What means Global Supply Chains?

Answer 15

The cross-border organization of the activities required to produce goods or services and bring them to consumers through inputs and various phases of development, production and delivery.

Question 16

Why do MNEs sometimes get away with behaving irresponsibly?

Answer 16

CSI at home is penalized more than CSI abroad.

Question 17

How does location affect penalties for corporate social irresponsibility (CSI)?

Answer 17

• People respond more strongly to risks or harms in their own environment than in foreign markets.
• MNEs may face less scrutiny and consequences for irresponsible behavior in international host markets compared to their home market.

Question 18

What modern slavery refers?

Answer 18

Situations of exploitation that a person cannot reufe or leave because of threats, violence, coercion, or deception.

Question 19

What are some examples of modern slavery?

Answer 19

Cobalt artisanal mining

Question 20

What are the main challenges MNCs face regarding sustainability and lower-tier suppliers?

Answer 20

• MNCs sometimes place orders exceeding suppliers’ capacity or impose unrealistic deadlines.
• First-tier suppliers often ignore the sustainability practices of their own suppliers.
• Lower-tier suppliers are difficult to govern due to the lack of direct contractual relationships.
• They are less visible, receiving little media, NGO, or stakeholder attention.
• Lower-tier suppliers are usually least equipped to meet sustainability requirements.
• MNCs often lack detailed information about who their lower-tier suppliers are, their locations, and their capabilities.

Question 21

What are the best practices?

Answer 21

• Map the connections and interdependencies in their supply networks
• Evaluate first-tier suppliers by using sustainability performance indicators that capture their equirements for lower-tier supplies.
• Offer training to suppliers and provide some incetives for implement sustainability practices.
• Colaborate with competitors and major suppliers to debelop and disseminate industrywide sustainability standards.
• Collaborate with international NGOs that share the same goals.