Foreign direct investment (FDI) is one of the driving forces binding countries into closer economic interdependence. The rapid increase in FDI flows has generated considerable debate about its environmental implications, in particular the impacts on environmental quality in the investment host country. A broader issue is the role of FDI in promoting sustainable development. To date, much of the debate has been polemical in nature. This volume moves the debate forward by analysing in a clear and considered manner the key issues in the FDI and environment relationship. Empirical evidence from OECD and non-OECD countries is presented and the strengths and weaknesses of policy and institutional frameworks that guide investors' environmental behaviour are discussed. In addition, the emerging role of voluntary commitments on the environment is examined. Best practices in this area are highlighted. The papers were presented at the OECD Conference on Foreign Direct Investment and the Environment held in January 1999 in The Hague.