<p>The context of financial globalization taking shape during the recent years describes a partial shift towards the South-South investment paradigm, where emerging economies are gradually transformed from FDI-receiver to FDI-sender countries. The operational practices of multinational enterprises originating from emerging economies with regard to respect for labour rights and environmental protection standards have been recently the subject of discussion. Emerging MNEs are considered to see an opportunity in less stringent labour and environmental regulations in middle or lower-income economies, in order to deploy investment projects. The aim of the present study is to check the hypothesis whether emerging MNEs’ foreign investment motives are driven by even laxer regulatory frameworks in host economies, compared to their source investment partners, in terms of labour and environmental standards. Our methodological choice is based on the principles of the Knowledge-Capital (KK) model, while we employ PPML estimations and country-pair fixed effects for twenty selected emerging economies during the 2009–2022 period. The empirical findings suggest that there is a clear difference in terms of fundamental and technical ILO conventions ratified between investment partners, but this “institutional gap” shows signs of narrowing as bilateral foreign investment is enhanced. As regards the environmental aspect, we provide evidence that foreign investment activities come along with an “exchange” in terms of a negative carbon footprint between investment partners.</p>