The Role of Sustainable Development in Risk Assessment and Management for Multinational Corporations

By Hutton, R. Bruce; Cox, David B. et al. | Multinational Business Review, Spring 2007 | Go to article overview

The Role of Sustainable Development in Risk Assessment and Management for Multinational Corporations


Hutton, R. Bruce, Cox, David B., Clouse, Maclyn L., Gaensbauer, John, Banks, Britt D., Multinational Business Review


Abstract:

The nature and causes of international business risk fall into two categories-macro causes, such as competing political systems, conflict, and social unrest; and micro causes, such as changing market conditions and unstable economies. The mining and minerals sector faces especially high risk in both categories due to increasing exploration and production in developing countries. This paper presents a conceptual model for risk assessment and management integrating traditional financial valuation models and the principles of sustainable development utilizing corporate social responsibility as the strategic focus for decisions to reduce risk exposure. Examples of the model's application are provided from Newmont Mining's worldwide operations.

INTRODUCTION

In 1987, the World Commission on Environment and Development issued a report that served as the catalyst for the sustainability movement. Our Common Future (World Commission on Environment and Development 1987) laid out a "global agenda for change" recognizing the need for cooperation, coordinated political action, and the engagement of the private sector as a leader and major driver of innovative solutions for a broad array of environmental, social, economic, and security challenges. Because of stagnant economies, rising debt and a mismanaged environment, the 1980s were referred to as the "lost decade" in Latin America (Holliday, Schmidheiny, and Watts 2002). In the U.S., evidence was mounting that many corporations were experiencing high levels of growth and profitability through a variety of illegal and unethical practices. The subsequent market collapse at the end of the 1980s, referred to in the press as the "decade of greed," was a precursor to the market collapse at the turn of the century when society was witness to a $10 trillion worldwide loss of aggregate market value brought on by the now infamous cases of Enron, WorldCom, Adelphia and many others (Gordon 2002).

Today, companies continue to struggle to regain lost trust of customers, employees, shareholders, governments, and communities. Ãç response, a growing number of enlightened companies have begun contributing to sustainable development goals by adopting corporate responsibility strategies aimed at aligning the self-interest of the corporation with the greater public good in ways that add to the value of the firm and society.

This paper presents a conceptual model for risk assessment and management that utilizes the principles of sustainable development while being true to the finance/economic goal of maximizing firm value within the context and constraints of an increasingly complex and uncertain global environment. Examples are provided from the mining and minerals sector using the experiences of Newmont Mining, one of the world's largest gold mining companies.

LINKING SUSTAINABLE DEVELOPMENT AND CORPORATE RESPONSIBILITY

In 1983, the General Assembly of the United Nations created the World Commission on Environment and Development. While the early focus was on environmental concerns, it was quickly recogitized by the Commission that the environment does not exist independently from human actions, needs, and ambitions. A definition of sustainable development was needed that embraced an integrated interdisciplinary approach to global concerns and recognized the interdependency of economic development, environmental integrity, and social justice. In the past, attention focused on the impacts of economic growth on the environment. The equally important issue recognized by the Commission was the ecological stresses on the ability to maintain and grow economically. Per Lindblom (1985) commented, "The problems of today do not come with a tag marked energy or economy or carbon dioxide or demography, nor with a label indicating a country or a region. The problems are multi-disciplinary and transnational or global. The problems are not primarily scientific and technological. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Role of Sustainable Development in Risk Assessment and Management for Multinational Corporations
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.