G20 discusses sustainable business practices in investment agreements with the private sector

TRADE AND INVESTMENT WG

According to a report by the United Nations Conference on Trade and Development (UNCTAD), provisions aimed at preserving the regulatory space for sustainable development are present in more than 90% of the recent international investment agreements of G20 and invited countries, which shows how relevant the issue has become.

One of the main objectives of the public policies is to achieve sustainable development. Because by promoting sustainable business practices, governments ensure that citizens’ needs are met without compromising the resources for future generations. On October 22nd, the side event Sustainable Business Practices in Investment Agreements addressed the issue during the last technical meeting of the Trade and Investment Working Group, held in Brasília.

According to a report by the United Nations Conference on Trade and Development (UNCTAD), provisions aimed at preserving the regulatory space for sustainable development are present in more than 90% of the recent international investment agreements of G20 and invited countries, which shows how relevant the issue has become.

Marcela Carvalho, executive-secretary of the Foreign Trade Chamber (Camex), which is part of the Ministry of Development, Industry, Trade and Services (MDIC), explained that the theme of sustainable development was practically absent from international investment agreements before 2010. “This tendency has changed since then, and today’s event was a joint session with Business 20 (B20), the G20 business group, on sustainable business practices and investment agreements and how these practices actually affect or can benefit the productive sector and investors and what are the difficulties in complying with these requirements in international agreements,” she said.

According to Ambassador Philip Fox-Drummond Gough, director of the Economic and Financial Department of Itamaraty, the event was crucial to the debate on how the private sector can contribute to defining the broad lines of investment agreements. Moreover, this dialogue helps because some countries prefer to maintain their own regulatory space. Therefore, there is some difficulty in having specific rules that could end up hindering the space for public policy-making, even if they are sustainability rules.

“We are redefining certain parameters, and contributions from the private sector are fundamental to this. The G20 is a fundamental forum for these discussions, and I think the event was very productive in this sense. We are also discussing responsible business conduct and how to include it in the final text of the ministerial meeting,” he said.

Successful experiences

The Johannesburg Stock Exchange Sustainability Index in South Africa is an initiative that evaluates companies based on their Environmental, Social and Governance (ESG) performance. Environment, social and governance are three terms that emerged in the financial market to measure the impact of sustainability actions on companies’ performance. 

Xolelwa Mlumbi-Peter, South Africa’s Ambassador to the World Trade Organization (WTO), commented on the country’s Constitution and the emphasis placed on the right to a clean environment. She spoke about the green taxes implemented as an incentive for the private sector to adopt sustainability principles. This includes the tax on carbon emissions, for example, as well as on electricity generated from non-renewable sources.

“We believe that it is not solely the government’s responsibility to promote sustainability on the continent. Our companies must also take part, so we modernize our investment and our scenario so that we can promote sustainable investments.”

Reuben East, Deputy Director of the Investment and Government Procurement Division at Global Affairs Canada, began his remarks by saying that Canada is deeply committed to incorporating sustainability principles into its international investment agreements.

“We have measures to regulate key areas of sustainability, such as the environment, public health, gender equality and indigenous rights. All of this, in our view, is fundamental to sustainable development,” said Reuben.

He cited as an example the initiatives that encourage companies to consider the appointment of women to leadership positions in top management and on boards of directors. And thus promote a balance in percentages when it comes to gender diversity.

Translated by PGET-UFSC

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