The Ethical Challenges of the UN's Clean Development Mechanism

Candace A. Martinez, J. D. Bowen

Research output: Contribution to journalArticlepeer-review


This paper examines the ethical implications of the Clean Development Mechanism (CDM), the United Nation's climate change initiative that provides incentives to countries and firms in developed countries to motivate investments in greenhouse gas reduction projects in developing countries. Using the tenets of agency theory, we present a solid waste management project in El Salvador as an illustrative example of how the CDM can produce a disproportionately high social cost for the most marginalized populations in the developing world. We suggest that the UN needs to reformulate the CDM so that it more effectively aligns the divergent goals of multiple actors and upholds the UN's principles for sustainable development, including ethical firm-level behavior. By providing incentives for environmental, economic, and social value creation, the CDM would not only promote ethical norms for profit-seeking firms that participate in the program but also reinforce the UN's twin pro-poor and environmental objectives.

Original languageEnglish (US)
Pages (from-to)807-821
Number of pages15
JournalJournal of Business Ethics
Issue number4
StatePublished - Nov 2013
Externally publishedYes


  • Agency theory
  • Clean Development Mechanism
  • El Salvador
  • Ethics
  • Solid waste management
  • United Nations

ASJC Scopus subject areas

  • Business and International Management
  • General Business, Management and Accounting
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Law


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