Multinational enterprises (MNE) are not just failing at their sustainability targets, but they’re also contributing to making climate change worse, according to a study published in the journal International Business Review. The authors warn that there is an urgent need for these enterprises to re-evaluate their strategies to follow the United Nations Sustainable Development Goals.
A team of researchers from the University of Surrey, UK, found that many multinational enterprises favour profit instead of sustainable practices. This work shows that while enterprises may seem to adopt sustainable measures, these are only superficial. They rarely engage in sustainable innovations, nor do they analyze case studies from various countries, including both advanced and emerging economies. MNEs are known to invest in environmentally friendly initiatives, such as renewable energy projects, but these efforts just serve as marketing tools rather than a genuine commitment to the environment.
During this study, the team interviewed multiple industry leaders, analysed sustainability reports, and examined innovation practices. It turned out that many companies are not using local stakeholder knowledge or addressing specific regional sustainability challenges, undermining their potential impact.
“Our findings challenge the notion that multinational enterprises (MNEs) are inherently beneficial for sustainable development. Many are simply ticking boxes rather than innovating in ways that truly address the pressing challenges faced by local communities,” said Dr Shasha Zhao, Senior Lecturer in International Business and Innovation and lead author of the study at the University of Surrey.
Many companies expressed genuine frustration over MNEs’ lack of engagement. One local entrepreneur remarked, “It feels like they come here to take rather than to give. We need meaningful partnerships that consider our unique challenges.”
This disconnect between MNEs’ stated strategies and their actual practices raises many questions regarding their accountability toward sustainability. The authors suggest that a collaboration involving local communities and stakeholders is the way to create innovations that genuinely contribute to solving social and environmental issues.
“This is a wake-up call. To be part of the solution, they must engage deeply with local contexts and move beyond superficial commitments to sustainable innovation. Multinational Enterprises are uniquely positioned to drive positive change. By integrating sustainable practices and fostering innovation ecosystems, companies can address pressing issues such as climate change, political instability, and social inequality,” concluded Dr Zhao.
Zhao S, Peerally J, De Fuentes C, Gonzales-Perez M (2025) The determinants of multinational enterprises’ sustainable innovations. International Business Review, https://doi.org/10.1016/j.ibusrev.2024.102318