Leveraging ESG for promoting Responsible Investment and Human Rights
By Danish and Daniel Uribe
The growing integration of Environmental, Social, and Governance (ESG) principles into investment frameworks and corporate reporting reflects a heightened recognition of the interplay between business operations and human rights. This Policy Brief examines the evolution of ESG investing, particularly its role in promoting responsible investment and embedding human rights considerations throughout business practices and supply chains. While ESG frameworks hold promise for enhancing corporate accountability and sustainability, challenges persist in effectively linking ESG criteria with human rights standards. It also shows that disparities in ESG reporting criteria and methodologies, compounded by a lack of shared understanding, pose obstacles to meaningful engagement with human rights responsibilities. The Policy Brief also delineates between ESG investing and reporting, highlighting distinct objectives and practices. While ESG investing aims to mitigate financial risks associated with environmental, social, and governance factors, ESG reporting focuses on evaluating firms’ exposure to ESG risks. The Policy Brief underscores the limitations of ESG frameworks in identifying and preventing human rights impacts comprehensively, emphasising the need for complementary measures such as mandatory human rights due diligence. Finally, the paper considers the need for greater coherence and consistency in ESG frameworks to foster responsible investment, promote human rights, and advance sustainable development goals.
This Policy Brief discusses issues concerning trade, intellectual property, and technology transfer that are most relevant for consideration at the 13th World Trade Organization (WTO) Ministerial Conference (MC13) in February 2024 and inclusion in its outcomes.
The following recommendations are proposed:
TRIPS non-violation and situation complaints: MC13 Decision on the scope and modalities of non-violation and situation complaints under the Agreement on Trade related Aspects of Intellectual Property Rights (TRIPS). A second option is to extend the moratorium.
TRIPS, diagnostics and therapeutics for COVID-19: MC13 Decision that extends the MC12 TRIPS waiver Decision (only applicable to vaccines) to diagnostics and therapeutics
Relationship between TRIPS and the Convention on Biological Diversity: to be addressed in the MC13 Outcome Document
Follow up to the MC12 Declaration on the WTO Response to the COVID-19 Pandemic and Preparedness for Future Pandemics: to be addressed in the MC13 Outcome Document
Relationship of trade and technology transfer: include in the MC13 Outcome Document to reinvigorate and give direction to the Working Group on Trade and Technology Transfer (WGTTT) and increase attention in all relevant bodies on how the WTO can promote technology transfer
How the EU’s Carbon Border Adjustment Mechanism discriminates against foreign producers
By Peter Lunenborg and Vahini Naidu
In April 2023, the European Parliament adopted the final text of the Carbon Border Adjustment Mechanism (CBAM) and revisions to the European Union (EU) Emissions Trading System (ETS). One of the stated objectives of CBAM is to create a level playing field for selected sectors in the EU market and to protect against the risk of ‘carbon leakage’. Based on an analysis and comparison between the legal texts of CBAM and ETS, this paper finds that CBAM discriminates against foreign producers in favour of EU domestic producers in many areas including with regard to the scope and type of emissions covered, free allocation of allowances, exemptions under EU ETS not mirrored in CBAM, buying and selling of ETS allowances in comparison with CBAM certificates, verification, penalties, authorization, use of credits from the Carbon Development Mechanism (CDM) and guarantees.
The paper also provides a brief overview of how the CBAM and ETS align with WTO rules, highlighting the potential discrepancies in the implementation as they apply to foreign and EU producers respectively. The paper provides several suggestions on how to make EU’s CBAM more WTO-compatible and a recommendation for further legal research.
U-turn by the U.S. Trade Representative to rein in the Big Tech Digital Trade Agenda
15 November 2023
The landmark shift by the U.S. Trade Rrepresentative to set aside four proposals to ensure “policy space” for the U.S. is a welcomed development under the Joint Statement Initiative (JSI) negotiations on E-commerce on the side lines of the WTO. This decision validates the positions taken by governments in the Global South for the last seven years. There remain several provisions in the negotiating text that will be detrimental to the development of domestic digital industries in developing countries.
Side Event to the 46th Session of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG-III) on Investor-State Dispute Settlement (ISDS) Reform
“Cross-cutting issues at the centre of developing countries’ concerns during the 46th UNCITRAL WG-III Session: Developing Countries’ Efforts Towards ISDS Reform”
Co-organized by the South Centre, Curtis, Mallet-Prevost, Colt & Mosle LLP, the Columbia Centre on Sustainable Investment and the International Institute for Sustainable Development (IISD)
Side Event to the 46th Session of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG-III) on Investor-State Dispute Settlement (ISDS) Reform
“Cross-cutting issues at the centre of developing countries’ concerns during the 46th UNCITRAL WG-III Session: Damages at the Core of Discussion”
Co-organized by the South Centre (SC), Columbia Centre on Sustainable Investment, the International Institute for Sustainable Development (IISD) and the International Institute for Environment and Development (IIED)
Foreign Investment Flows in a Shifting Geoeconomic Landscape
By Danish
The economic shocks from the pandemic and rising geoeconomic tensions have triggered an accelerated restructuring of foreign investment flows in global value chains. As the previous determinants of foreign investment are rapidly changing, many new risks and opportunities abound for developing countries looking to attract FDI into their economies. This paper therefore looks at some of the important issues affecting foreign investment flows to developing countries both now and in the future. It then lays out some policy imperatives which can help countries ensure that the inbound foreign investment is responsible, sustainable and contributes to achieving the national development priorities.
Least Developed Countries and Their Progress on the Sustainable Development Goals
By Peter Lunenborg
This Research Paper reviews Least Developed Countries’ (LDCs) collective progress on the implementation of the Sustainable Development Goals (SDGs), based on the available data on the indicators for the 169 SDG targets. It makes recommendations for LDCs and other States to consider advancing in relevant UN processes as well as the WTO’s.
LDCs made progress on 28% of the SDGs. This collective progress shows that these countries are far from achieving what were deemed achievable goals in 2015. With respect to trade-related SDGs, LDCs have not made progress on any of the five trade-related SDGs that mention LDCs specifically.
This paper does not delve into the causes of this gap, but it suggests that international cooperation and, particularly, the developed countries’ assistance, has been insufficient to address the needs of a large part of the world population that still lives in poverty and without hope of a better future. However, the Doha Programme of Action (DPoA), a development framework with targets specifically for LDCs -which overlap with SDG targets- appears to dilute several original SDG targets, in particular those in SDG 17 (Partnerships for the Goals).
Value Addition or Trade Misinvoicing: Coal Trading in the Asia-Pacific
By Manuel F. Montes and Peter Lunenborg
Statistics on coal trade between India, Singapore and Indonesia suggest that trade misinvoicing is used as a vehicle for illicit financial flows. At present this practice is not well addressed by the Organisation for Economic Co-operation and Development’s tax standards. Asia-Pacific countries should intensify cooperation on this issue. Other international organizations with a mandate in this area could also play a role, for instance the World Trade Organization. Ultimately, increased cooperation would help to achieve Sustainable Development Goal 16.4 which inter alia aims, by 2030, to significantly reduce illicit financial flows.
Policy Dilemmas for ASEAN Developing Countries Arising from the Tariff Moratorium on Electronically Transmitted Goods
By Manuel F. Montes and Peter Lunenborg
This paper examines the policy dilemmas facing developing countries in ASEAN in working within, and participating in, international negotiations toward making permanent the WTO tariff moratorium on duties applicable to electronically transmitted goods. In the context of ASEAN’s countries’ trade-oriented development strategies, the analysis considers the moratorium’s impact on tariff revenues, economic performance, and industrial development prospects. The paper presents estimates of tariff impacts and studies the national policy implications of the moratorium. An extension of the moratorium would establish a special regime for a class of goods whose components are contentiously defined but with a potential of being an important source of tariff revenue and of having an impact on industrial development in the future for developing ASEAN countries. This special regime for electronically transmitted goods cannot be justified as a global public good and is unnecessary. The removal of the regime would restore national space in developing ASEAN countries and allow them to obtain tariff revenues from the trade of these goods and to upgrade domestic capabilities in participating in the digital economy.
Preserving Regulatory Space for Sustainable Development in Africa
By Roslyn Ng’eno
Investment has an important role for achieving sustainable development in developing countries. Although international investment agreements (IIAs) can serve as instruments to promote such objective, protection oriented IIAs have undermined the ability of States to regulate in the benefit of the community. Likewise large financial reparations imposed by arbitral tribunals have increased the threat of regulatory chill in the face of major global challenges. Strengthening the right to regulate of States and addressing regulatory chill are key matters to consider in the reform of IIAs and the international investment regime.
