According to a recent study from the University of Surrey, Multinational Enterprises (MNEs) are not merely falling short of achieving global sustainability targets. Still, they also actively contribute to the problems they purport to solve. The study stresses the urgent need for MNEs to overhaul their innovation strategies to align with the United Nations Sustainable Development Goals (SDGs).

The researchers discovered that many MNEs prioritize profits over sustainable practices. By examining case studies across various countries, including developed and emerging economies, the study points out that MNEs often need to adopt more compliance measures instead of engaging in substantial, sustainable innovations. Despite investments in environmentally friendly initiatives like renewable energy projects, these efforts are frequently employed as marketing tactics rather than sincere commitments to sustainability.

Extensive interviews with industry leaders, analysis of corporate sustainability reports, and scrutiny of innovation practices within various ecosystems revealed that many firms need to harness local stakeholder knowledge or tackle specific regional sustainability challenges to limit their potential impact.

Dr Shasha Zhao, Senior Lecturer in International Business and Innovation at the University of Surrey and the study’s lead author, remarked, “Our findings challenge the assumption that Multinational Enterprises are inherently beneficial for sustainable development. Many are merely ticking boxes rather than genuinely innovating in ways that address the urgent challenges facing local communities.”

The study also revealed many companies’ dissatisfaction with MNEs’ lack of genuine engagement. A local entrepreneur commented, “It feels like they come here to take rather than to give. We need meaningful partnerships that address our unique challenges.”

This discrepancy between MNEs’ declared commitments and their actual practices calls into question corporate accountability and the efficacy of existing sustainability frameworks. The research advocates for a more collaborative approach that includes local communities and stakeholders, which is essential for MNEs to develop innovations that genuinely contribute to addressing social and environmental issues.

Dr. Zhao added, “This is a wake-up call. To truly be part of the solution, MNEs must deeply engage with local contexts and transcend superficial commitments to sustainable innovation. Multinational Enterprises are uniquely positioned to drive positive change. By integrating sustainable practices and fostering innovation ecosystems, these companies can tackle pressing issues like climate change, political instability, and social inequality.”

More information: Shasha Zhao et al, The determinants of multinational enterprises’ sustainable innovations, International Business Review. DOI: 10.1016/j.ibusrev.2024.102318

Journal information: International Business Review Provided by University of Surrey