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Foreign direct investment (FDI) is considered to be a major catalyst in promoting sustainable development in developing countries. Benefits associated with FDI include economic growth, increased income, employment and technology transfer. Liberalisation policies have led to rapid growth in FDI flows in recent years. But not all countries have succeeded in attracting FDI, and for some who have, FDI has not brought the expected benefits to their economies. FDI can have negative impacts on sustainable development, such as environmental degradation, poor labour standards, crowding-out of domestic companies, and corruption. Thus recent approaches to FDI have focused on the quality of FDI rather than the quantity. But the notion of “quality” FDI is still narrow and focuses on the economic rather than the environmental and social dimensions of sustainable development. This paper discusses the main elements required for policies aimed at attracting quality FDI, and for providing a supporting framework for effective foreign corporate, social and environmental responsibility.