JournalofInternationalDevelopment J.Int.Dev. 13, 907±919 2001) DOI: 10.1002/jid.832 MANAGINGMULTINATIONALS: THE GOVERNANCE OF INVESTMENT FOR THE ENVIRONMENT PETER NEWELL* InstituteofDevelopmentStudies,UniversityofSussex,Brighton,UK Abstract: This paper explores the possibilities and limitations of different approaches to the regulation of transnational corporations in a context of globalization. Looking at environ- mental initiatives in particular, the paper considers the pros and cons of emerging public and privatestrategiesforpromotingcorporateresponsibilityfromadevelopmentperspective.The role of `civil regulation', litigation against companies, and international legal instruments are assessed in this light. It is argued that each of these approaches, while not necessarily complementary, has a role to play in promoting positive investment strategies and deterring irresponsible investment practices in developing countries. Copyright # 2001JohnWiley& Sons, Ltd. INTRODUCTION: THE REGULATION OF TNCS AND THE ENVIRONMENT 1 Transnational companies are increasingly critical players in development. Exporting best practiceandinitiatinggreatimprovementsintechnology,forsome,TNCsarekeyactorsin delivering sustainable development Schmidheiny, 1992). For others, the mobility of capital and the internationalization of production that make international investment possible, give companies unprecedented freedoms to locate their businesses where it is most pro®table to do so, often at the expense of communities and their environment Madeley, 1999). Of particular concern is the fact that developing countries often experience greater economic and political volatility which means that foreign investors tend to engage in ventures that will yield a high rate of return over a short period, often resulting in environmental devastation and social dislocation Sauermann, 1986). Copyright # 2001 John Wiley & Sons, Ltd. *Correspondence to: P. Newell, Institute of Development Studies University of Sussex, Brighton, UK. E-mail:P.Newell@ids.ac.uk 1 I use the term transnational companies here to denote the fact that control and decision-making is often concentrated within the western branches of these companies. Given that power, resources and authority are not diffusedthroughouttheorganizations,theterm`multi'exaggeratestheglobalscopeofthecompanyseeGilland Law, 1988).