1 / 11

Multinational Corporations

Convergence of Environmental Practices and Standards in Cross-Border Transactions: Why Local Matters Less. Multinational Corporations. Multinational corporations are cross-border arbiters of conduct and migrate uniform practices Lowest common denominator is not a viable option

dana
Download Presentation

Multinational Corporations

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Convergence of Environmental Practices and Standards inCross-Border Transactions:Why Local Matters Less

  2. Multinational Corporations • Multinational corporations are cross-border arbiters of conduct and migrate uniform practices • Lowest common denominator is not a viable option • Reputational concerns and instantaneous flow of information are creating defacto international norms • Inefficiency of multiple practices in multiple jurisdictions supports a rise to the top rather than a race to the bottom

  3. Private Equity Market • Consolidates assets and standards • Provides a mixing zone for management practices • Seeks quicker turnaround and exit strategy • Ease of transaction, IPO or acquisition, puts premium on uniformity and absence of surprise • Provides a bridge to international finance markets, further standardizing the approach to environmental diligence

  4. Global Financial Markets • Expectations for diligence in securities, mergers and acquisitions and secured financings are increasingly uniform, commoditizing both processes and results • Ease of information assessment and need to avoid impediments to a transaction create a global market for consistent data • It is easier to do more than to explain why you did less or to amend public disclosure, contract schedules or purchase price in the face of a surprise • Contaminated collateral is an international pariah • U.S. and EU contaminated land standards drive assessments worldwide

  5. Global Financial Markets Global Debt and Equity Offerings 1991 - > $1 trillion 2002 - $4.26 trillion 2003 - $5.32 trillion 2004 - $5.69 trillion 2005 - $6.5 trillion

  6. Environmental Consulting Infrastructure • Consulting firms and due diligence infrastructure are consolidating • Stated business purpose of consolidation is to offer “one stop shopping” in multiple jurisdictions • Net effect is move toward centralized management, practices, evaluation techniques and QA/QC • Educational and training infrastructure reinforces global trends • Experience in command and control jurisdictions or sophisticated regulatory regimes offers currency in the marketplace • This enhances uniform practices and rigor

  7. Globalization of Standards • International standards and practices in environmental management reinforce the global playing field • EMAS • ISO 14001 • ASTM E-1527 • Regional compacts have further diminished the importance of national boundaries • Practices in the developed world have cross-whipsawed; EU has led on certain issues, Canada on others, the U.S. on others

  8. Corporate Governance • Corporate environmental governance requirements after worldwide ethics scandals increases the demand for systematized and uniform practices and data • SOX “fairly present” certifications put all management through same data gathering process • Environmental line reporting is a worldwide function • Senior management report to the same court of world opinion • All mistakes can be Googled forever

  9. Stakeholder Initiatives in the Global Market • Stakeholder initiatives have sped adoption of multinational guidelines • These are not detailed blueprints for doing business, but they establish a global business climate in the public market • Equator Principles • 2003 – 4 original signatory banks • 2005 – 39 signatory banks • 2006 – Rapid spread of internal policies exceeding Equator baseline. Movement started with EU-based banks • CERES Funds • 1999 - $200 Billion • 2005 - $ 5 Trillion • ISS 2006 Proxy Voting Guidelines cover Kyoto, CAFOs, nuclear plants etc. • Other coalitions among NGO groups place long-term capital behind common agendas

  10. Wave Tank • Cross-jurisdictional effects have multiplied over the past 10 years • EU trailed U.S. on legacy liabilities but Environment Act and EU Directives have put “polluter pays” on comparable footing for diligence purposes • U.S. trails the world on Kyoto and GHG credits – but emission credit trading and need for certainty for infrastructure capex will ultimately lead U.S. to close the gap

  11. Wave Tank • Litigants seek cross-border access to the most favorable jurisdictions (often the U.S.) to address environmental harms anywhere in the world • Most business enterprises know that they will be either buyers or sellers or both • Recognition of value in EMS uniformity at high level, for both ease and appearances • Growing appreciation of environmental management as belle-weather for smart decisions and corporate stewardship • Implementing “world class” standards is both an investment and insurance

More Related