The 8th Annual CSR Roundtable, convened at the ILO office in Geneva on 13 December 2018, was focused on investment and sustainable business practices. Moderated by Ambassador Nozipho Joyce Mxakato-Diseko, of the Permanent Mission of South Africa to the United Nations Office and other International Organisations at Geneva, the event brought together ten government delegates, sixteen international organization representatives, 2 corporate sector attendees, three NGO representatives and one university delegate. The Roundtable took place in the form of an open discussion under Chatham House rules. This was a unique opportunity for attendees to share the experience of their respective organizations and deliberate on how investment issues are and should be intersecting with the world of sustainable business practices. The event was organized in two main sessions. During the morning session, participants engaged with the topic of portfolio investment and finance. During the afternoon session, discussion focused on foreign direct investment, mergers and acquisitions.
Session I: Portfolio Investment and Finance
The morning session addressed the integration of social and environmental issues within investment instruments and practices and explored a range of existing initiatives intended to promote investment in the Sustainable Development Goals (SDGs). A few participants observed that the concept of ‘fiduciary duty’ has, in recent years, been seen to be evolving to the point where some investors and jurisdictions are interpreting this duty in a broader sense, beyond narrow profit maximization, to also include the promotion of sustainability factors that are in the interests of beneficiaries. Participants observed a shift in focus in the market from shareholder value to stakeholder value and noted the significant progress made towards transforming finance into “sustainable finance”. However, one attendee explained, the biggest challenge in the way of accelerating this process is a persisting dichotomy between business as usual and CSR/sustainable practices. “We need to work towards greening the business as usual”, rather than reinforcing the distinction between these two modes of envisaging capital allocation. One way of overcoming this dichotomy, some participants explained, is a re-examination of financial risks to incorporate the consequences of climate change. This can be done by forging a common understanding among all market participants of what sustainable finance/economic activities mean and a more integrated interpretation of their impact on the wider society. The discussion converged on a number of opportunities in the evolution to a more sustainable finance sector. One participant indicated that stock exchanges have a considerable convening power to bring all other investment and finance stakeholders together in promoting ESG investment. Another attendee pointed to the key role that emerging markets have played in the fight against climate change. Given their acute perception of urgency about climate related risks, emerging market actors can be a key catalyst for further progress towards greening the business sector.
Session II: Foreign direct investment and mergers and acquisitions
The afternoon session explored the relationship between social and environmental issues and foreign direct investment (FDI) decisions. The participants took the opportunity to discuss the latest developments in the inclusion of social and environmental issues into FDI decision making, including updates on the CSR dimension of international investment agreements and arbitration cases. The conversation also touched upon the role of FDI in promoting investment in the SDGs. The participants converged their interventions towards a focus on two main instruments: public-private partnerships (PPPs) and international investment agreements (IIAs). During the discussion on the contribution of PPPs, attendees generally recognized that attracting private sector participation in projects aimed at accomplishing the SDGs can be useful because such PPPs can bring additional investment resources, technology and skills. It’s important to bring all stakeholders to the table in order to implement long-term solutions. For example, in the labour field, there is a tripartite relationship between workers, employers and governments. However, the participants introduced a few caveats to the discussion about the opportunity of public-private partnerships. One attendee stated that “it is a responsibility of the state to look out for the vulnerable in society” and argued that it would be unrealistic to expect the private sector to shoulder the task of ending hunger, for instance. During the discussion on IIAs, participants discussed recent trends in IIA development, including references to social and environmental factors. It was observed that sustainable development-oriented IIA reform has made significant progress, however, much work remains to be done to modernize the existing stock of “old-generation” IIAs.
Documents discussed in the 2018 CSR Round-Table
- Sustainable Stock Exchanges (2018) Report on Progress
- Sustainable Stock Exchanges (2018) How securities regulators can support the Sustainable Development Goals
- PRI, UNEP-FI et al (2015) Fiduciary Duty in the 21st Century
- UNCTAD (2018) Investor-State Dispute Settlement: Review of Developments in 2017
- UNCTAD (2015) Investment Policy Framework for Sustainable Development