Global sustainability under uncertainty: How do multinationals craft regulatory policies?

Multinational corporations (MNCs) are increasingly mindful of the significance of sustainability transitions and the need for operations that are energy efficient and environmentally sound. Achieving sustainability under conditions of uncertainty entails the involvement of multiple stakeholders in initiating and carrying out sustainability‐focused initiatives. Using longitudinal analysis of Royal Dutch Shell's sustainability policies, we developed an integrated model to elucidate how uncertainty influences sustainability policies in the specific context of MNCs. We identified three phases in the evolution of Shell's sustainability innovation: a self‐reflective phase (2000–2003) characterized by intense pressure from climate advocacy groups, an investment phase (2004–2006) for which the MNC attempted to rise to the waste disposal and pollution challenge through renewable sources of energy, and a reorganization phase (2007–2010) to streamline operations. We also uncovered themes that influence how regulatory policies are crafted: responding positively to the “community's voice,” risk spreading through joint ventures, revenue transparency for government accountability, and reporting innovation that confronts hard truths. The practical implications are outlined.