Amid ongoing blame-game between the developed and developing nations on who should pay for increasing carbon footprints, a study has pointed out that a fifth of carbon dioxide emissions come from multinational companies’ global supply chains which in effect outsourced to poorer parts of the world.
The study, which is published in Nature Climate Change, mapped the emissions generated by multinationals’ assets and suppliers abroad and found that the flow of investment is typically from developed countries to developing ones . “Hence emissions be assigned to countries where the investment comes from, rather than countries where the emissions are generated,” said the study.
Mapping the global flow of investment, researchers from UCL and Tianjin University found steady increases in investment from developed to developing countries. For instance, between 2011 and 2016 emissions generated through investment from the US to India increased by nearly half (from 48.3 million tons to 70.7 million tons), while in the same years emissions generated through investment from China to south-east Asia increased tenfold (from 0.7 million tons to 8.2 million tons).
In contrast, the study found that carbon emissions from multinationals’ foreign investment fell from a peak of 22 per cent of all emissions in 2011 to 18.7 per cent in 2016. Researchers said this was a result of a trend of “de-globalisation”, with the volume of foreign direct investment shrinking, as well as new technologies and processes making industries more carbon efficient.
The findings by UCL and Tianjin University holds immense importance amid the ongoing blamegame between the developed and developing nations on the increasing climate change threat owing to the green house gas emission.
The research shows the impact that multinationals can have by encouraging greater energy efficiency among suppliers or by choosing suppliers that are more carbon efficient.
Professor Dabo Guan (UCL Bartlett School of Construction & Project Management) said: “Multinational companies have enormous influence stretching far beyond national borders. If the world’s leading companies exercised leadership on climate change - for instance, by requiring energy efficiency in their supply chains - they could have a transformative effect on global efforts to reduce emissions.
“However, companies’ climate change policies often have little effect when it comes to big investment decisions such as where to build supply chains.
“Assigning emissions to the investor country means multinationals are more accountable for the emissions they generate as a result of these decisions.”
Lead author Dr Zengkai Zhang, of Tianjin University, said: “Multinationals are increasingly transferring investment from developed to developing countries.
This has the effect of reducing developed countries’ emissions while placing a greater emissions burden on poorer countries. At the same time it is likely to create higher emissions overall, as investment is moved to more ‘carbon intense’ regions.”
