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.
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.
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.
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 responses for fostering South-South and Triangular Cooperation in response to the food crisis in the area of trade
By Peter Lunenborg
The Russia-Ukraine conflict since 24 February 2022 and the various sanctions imposed on Russia are having tremendous global repercussions, including on developing countries. This world is already experiencing multiple crises such as COVID-19 and measures in response to the virus including lockdowns, money printing and increases in government debts, conflicts and tensions in other parts of the world as well as climate change and extreme weather events such as extreme flooding or droughts. The conflict is compounding and aggravating these shocks.
In the short to medium term, prices in particular for energy (oil, gas), derived products (fertilizers) and food (in particular cereals) will remain elevated. Availability might also suffer. As a result, food insecurity is and will remain a serious concern in the near and medium term. Policy actions are required to mitigate any potential famine(s) which may arise and to build resilience for the future.
This paper explores concrete options for developing countries to address food insecurity in the short, medium and long term, including purchase policies, better implementation of WTO rules and increase in domestic investment in wheat and fertilizers production.
DATA FOR DEVELOPMENT: HOW TO LEGALLY CHARACTERIZE DATA?
SOUTH CENTRE’S CONTRIBUTION TO THE eTRADE FOR ALL LEADERSHIP DIALOGUE OF THE UNCTAD eCOMMERCE WEEK 2022
Radical technological changes have always challenged pre-existing legal frameworks as demonstrated, for instance, by the commercialization of computer software independently from hardware and the use of genetic information to develop biotechnological innovations in various areas such as health and agriculture. The emergence of big data is a new and outstanding example of such situations. With the growing digitalization of multiple activities, ranging from education and health to ‘smart farming’ and the supply of the most diverse goods, the production and storage of data have exploded. Individuals, businesses and governments are generating an immense amount of data and this will only continue to grow in the future. Yet, the legal characterization of data is still a matter of considerable divergencies and debate. Policy makers and scholars are still searching for legal approaches suitable to address the complex relationships among producers, processors, controllers and users of data…
Climate change and trade: what policies for environmental goods and services?
Carlos Correa, Executive Director, South Centre
International conference on “Climate Change and Sustainable Development”
26-27 March 2022, Cairo, Egypt
While the importance of protecting the environment in the context of trade policies is firmly recognized, a key question is the extent to which trade disciplines aimed at protecting the environment can reach their intended or declared objectives and affect the trade interests and economic growth prospects of developing countries. Developing countries are also among the most affected by climate change and, hence, they have a major interest in international action to address it. However, the intensification of environmental threats faced by developing countries is not of their making, and advancing an agenda -with no evidence that it would lead to reduced emissions- is likely to just disadvantage the developing world which has the least responsibility historically for today’s climate-related damages. Given this history, as well as the tight external constraints imposed on their efforts to mobilize resources, developing countries cannot be expected to either successfully mitigate climate change or adapt to climate change, without significant financial and technological support. The South Centre has been assessing the policy implications that the initiatives on trade and environmental sustainability will have for the Global South.
Investment facilitation policies can support States’ efforts to achieve sustainable development, but they cannot be considered in isolation. This session will raise some considerations on the Structured Discussion on Investment Facilitation discussion in the WTO and bring additional perspectives on the need to safeguard the right of countries to adopt the necessary measures to articulate and apply policies designed to achieve inclusive, equitable, fair and sustainable development and enabling and advancing sustainable investments that add value to the developmental process of host States.
