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The world's least developed countries (LDCs) are the logical place to look for the emergence of more environmentally sustainable systems of production. Through their direct investments, according to David Wallace, western multinationals can play a major role in achieving this. In this report, Wallace draws attention to the inadequacy of official development assistance as a means of encouraging sustainable development in LDCs and emphasizes the need to ""green"" the large and rapidly increasing flows of FDI. He identifies key areas for further exploration: the policies available to LDCs for encouraging investors to engage in efforts to create a sustainable economy, the strategic perspectives which allow multinationals to view such efforts as a source of competitive advantage, and the opportunities for official development bodies to leverage their limited resources through support for such initiatives. A Volume of RIIA Energy & Environment Programme's Trade and Environment Series Not available through Brookings in the UK and Europe