Corporate social responsibility (CSR) is a significant factor in determining where multinationals do business, according to a survey for the World Bank Group’s CSR practice.

The survey found that 45.8% choose one country over another as a result of CSR issues. The results indicate that rather than FDI sparking a ‘race to the bottom’ of environmental and labour standards among others, investment does improve national conditions, particularly in the developing world.

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The study, Race to the top: attracting and enabling sustainable global business, was carried out by Political and Economic Link Consulting (PELC) and Ethical Corporation magazine. The aim was to examine how CSR issues influence the investment and purchase decisions of multinationals and how governments in the developing world can create environments that companies will find attractive, from a CSR perspective. The survey covered 107 multinationals in the extractive, agribusiness and manufacturing sectors.

Jonathan Berman, who conducted the research for PELC, said that, as well as determining where a company invests, CSR issues had caused 36.4% of respondents to withdraw from a country.

Of the firms surveyed, about 90% have board-approved policies on environmental management. Other issues that feature are labour rights, corruption, human rights, community health and land rights. The survey found that a company’s CSR approach can have a positive affect on local partners and the larger community; 82% of companies require these partners to adhere to their CSR codes or external codes.

Strong local regulation and enforcement of CSR is important in helping multinationals to conduct business: “Better enforcement of CSR laws is among the government roles most sought by respondents,” states the report. Investors also indicate that the extent to which a potential host country can project this image and enforce the law make it more attractive for further investment.

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