Countries are increasingly aligning investment agreements with sustainability objectives, a shift hailed by G20 ministers gathering in Brazil.
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Recent international investment agreements (IIAs) increasingly feature considerations to facilitate financing into areas crucial to the Sustainable Development Goals (SDGs), says a new report produced by UN Trade and Development (UNCTAD) at the request of the Brazilian presidency at the Group of 20 (G20).
The bloc comprises the world's largest economies accounting for around 85% of global GDP and 75% of world trade.
In support of the priorities of the current G20 presidency on “Sustainable development in investment agreements”, the new report maps and analyzes IIAs concluded by G20 members and 15 other invited countries.
Its recommendations help inform discussions and foster cooperation on investment facilitation, in line with each country’s unique policy frameworks and priorities.
The G20 Trade and Investment Ministerial Meeting, convened on 24 October in Brasilia, Brazil, speaks highly of the UN Trade and Development report.
“The report offered key background for the Investment Track exchanges on an international investment policy environment that contributes to sustainable development and will serve as a meaningful reference for countries when designing future investment agreements,” says Ambassador Philip Fox Drummond Gough of Brazil, who co-chairs the G20 Trade and Investment Working Group (TIWG).
Shaping investment policies in line with sustainability goals
The report is based on UN Trade and Development data on over 1,700 agreements and integrates additional information from the Organization on Economic Cooperation and Development.
It informed the TIWG deliberations throughout 2024 and will continue to serve as a repository of participating countries’ approaches to future discussions on IIAs and sustainable development.
“UNCTAD played a key role in G20 deliberations on international investment policies and agreements. Our report provides a strategic tool for shaping investment policies in line with sustainability goals,” says Deputy Secretary-General Pedro Manuel Moreno representing UN Trade and Development at the G20 ministerial meeting.
“This can help G20 countries and developing countries in devising investment agreements that are conducive to promoting and facilitating sustainable investments.”
Need to shore up investment for sustainable development
The rise of sustainable development considerations seen in recent IIAs signals an evolution in investment policymaking across the world’s leading economies.
However, earlier agreements which lack such considerations continue to account for over 85% of IIAs enforced by G20 and invited countries.
Calls to align investment treaties with sustainable development objectives, including the protection of the environment, are gaining fresh momentum as the world gears up for the United Nations climate change conference COP 29 set for November in Baku, Azerbaijan.
With tight financing conditions in 2023, the number of international project finance deals - crucial for funding infrastructure and public services such as power and renewable energy - fell by a quarter, UN Trade and Development has warned.
This triggered a 10% reduction in investment in SDG-related sectors, most notably impacting agrifood systems, and water and sanitation. These sectors registered fewer internationally financed projects in 2023 than in 2015, when the global goals were adopted.