Visible carbon emissions vs. invisible value-added: Re-evaluating the emissions responsibility of multinational enterprises in global value chains

Abstract

Transnational investments led by multinational enterprises (MNEs) promote the redistribution of environmental and economic costs across countries, making value-added attribution and carbon emissions responsibility “mismatched” between developed and developing economies. This study focuses on the evaluation of the “real” emissions responsibility of different economies by matching the value-added and the carbon emissions generated by MNEs through a factor income-based accounting framework. We find that from 2005 to 2016, developed economies' “real” value-added were underestimated by 287.23−766.50 billion USD, and emissions were underestimated by 415.37−489.63 Mt. under the existing accounting framework, while the value-added and emissions of developing economies were significantly overestimated. The cumulative net carbon transfer from developed economies to developing economies through MNEs' investment was as high as 1800.80 Mt. from 2005 to 2016, and if we monetize these transferred emissions, we will get a capital pool worth 26.61 billion USD, which can be provided as an incentive fund to tackle with climate change in developing economies. Our study provides a new perspective on emissions responsibility sharing among developed and developing countries, emphasizes the role of MNEs in global emission generation, and encourages MNEs to pledge their emission reduction goals as global agents in the fight against climate change.