Insights @ CEM Magazine

Recent research by Ferretti, Manivannan, and Marques examines why voluntary sustainability standard organizations (VSSOs) spread unevenly across low- and middle-income economies. Drawing on a study of 131 agrifood VSSOs across 152 countries, the paper shows that these standards are more most commonly found not in institutional “voids” but in countries with stronger local trade, financial, and social protection institutions. The findings suggest that VSSOs are most active where domestic institutions help firms access export facilitation, technical support, and credit for standards adoption and upgrading within global value chains. Surprisingly the strength of environmental stewardship institutions is not significantly associated with VSSO diffusion. For policymakers, the implication is clear: attracting VSSOs and supporting sustainable upgrading may depend less on filling institutional voids alone and more on strengthening the local support system that enable companies to comply with and benefit from sustainability standards.

This brief examines how multinational companies (MNCs) can play an important role in climate action in emerging markets, overcoming the political roadblocks and country-specific barriers – such as inconsistent regulations or lack of technology – that have stalled global coordination. Drawing on recent research by Allen, Barbalau, Chavez and Zeni, it identifies four key features that position MNCs uniquely to address the climate challenge: their size and reach, resources and technology, collaborative networks, and superior access to capital. Together, these features enable MNCs to act as conduits for transferring the resources necessary to finance the climate transition. Although MNCs have been major contributors of global emissions, their extensive and efficient internal markets for governance, financing, and technology allow them to diffuse best practices and clean technologies more efficiently than piecemeal government regulation. By designing the right public and private incentive mechanisms, decision-makers can realign MNC objectives and harness their potential to decarbonize the economy.

This policy brief examines whether China's Belt and Road Initiative (BRI) is primarily building new infrastructure through greenfield investments (where a company starts a new operation from the ground up) or acquiring existing assets through mergers and acquisitions (M&As). Analyzing outward foreign direct investment data from 2005 to 2021, Valderrey, Trigos, and Kaltenecker reveal that M&A is the dominant entry mode for most significant projects, challenging the widespread perception of the BRI as primarily a series of greenfield investments from Chinese enterprises. While energy investment policy remained remarkably steady over the entire period, the finance and transportation sectors experienced significant fluctuations, particularly following the formal announcement of the BRI in 2013. For managers and policy makers in emerging market, these findings suggest that Chinese engagement often involves shifting ownership of existing local assets, requiring sharpened skills in legal, cultural, and environmental negotiations to ensure mutual benefit.