Adverse Impacts of Foreign Direct Investments on the Environment

Abstract

Climate change is an international problem that requires global collaboration and cooperation. African countries need almost $3 trillion in additional investment to address climate change and its negative impacts, highlighting the importance of FDIs in these countries. Although FDI inflows bring benefits such as the transfer of greener technology, which reduces environmental degradation, they can result in unfavorable environmental consequences. This study focuses on the environmental pollution caused by FDIs in Somalia and examines the negative impacts of this situation on the country's development. The objective of this chapter is to facilitate the implementation of ESG principles, offering insights from Somalia to suggest solutions for identified challenges. By integrating ESG principles, Somalia can attract sustainable investments, enhance governance, and improve social welfare. Recommendations are provided for policymakers, NGOs, and companies to balance economic growth with environmental sustainability and social equity, ensuring Somalia's long-term sustainable development.