WWF-UK: FDI and the Environment pg.2 WWF-UK: FDI and the Environment pg.3 Executive Summary

The past decade has witnessed a sea change in foreign investment policy as governments, particularly in developing and emerging nations, have removed many restrictions on financial flows in and out of their countries. The greater mobility of capital, coupled with extensive privatisation and greater globalisation in production, has resulted in a five-fold rise in private investment flows since 1990. Foreign Direct Investment (FDI)- investment by foreign companies in overseas subsidiaries or joint ventures- has a traditional reliance on natural resource use and extraction, particularly agriculture, mineral and fuel production. Though this balance has shifted in recent years, the poorest countries still receive a disproportionate amount of investment flows into their natural resource sectors. The past decade has also seen all trends of environmental degradation accelerate – for example, greenhouse gas emissions, deforestation, loss of biodiversity. Such patterns of environmental destruction have been driven by increased economic activity, of which FDI has become an increasingly significant contributor. Flows of natural resource based commodities and investment are predicted to rise faster than economi