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Narrowing the Accountability Gap: Toward a New Foreign Investor Accountability Mechanism

August 2009

Citation: 39 ELR 10803

Issue: 8

Author: Natalie L. Bridgeman and David B. Hunter

I. Introduction

This Article addresses the "accountability gap" in foreign investment projects and proposes the creation of a Foreign Investor Accountability Mechanism (the Mechanism) to ensure that multinational enterprises (MNEs) may be held accountable to the social and environmental standards to which they have agreed.

MNEs have adopted an ever-increasing number of standards, guidelines, principles, norms, and best practices (hereinafter standards and norms) to address the environmental and social impacts of their investments. However, a number of barriers often prevent implementation of those standards and norms in the countries where these investments are located (host countries). Barriers include weak host country regulatory authority capacity, lack of political will, lack of leverage over violators, and corruption. In addition, investment treaties, host government agreements, foreign policy pressure from home country governments, and jurisdictional challenges may further weaken the ability of host countries to enforce laws, norms and standards. In home countries (generally speaking, the OECD countries where MNEs are headquartered), a similar gap exists, with limited remedies available for project-affected people and, where available, challenges in enforcement. Thus, MNEs operate in a "norm-rich" environment that lacks effective governance structures for monitoring or enforcing compliance with their commitments.

Natalie L. Bridgeman is an Independent Consulting Attorney and Director of Accountability Counsel in San Francisco, California. David B. Hunter is an Associate Professor of Law and Director of the Program on International and Comparative Environmental Law at the American University Washington College of Law.

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