Karl P. Sauvant and Evan Gabor, “Facilitating Sustainable FDI for Sustainable Development in a WTO Investment Facilitation Framework: Four Concrete Proposals”, Journal of World Trade, vol. 55 (2021), pp. 261-286. This is a revised version of Karl P. Sauvant and Evan Gabor, “Advancing Sustainable Development by Facilitating Sustainable FDI, Promoting CSR, Designating Recognized Sustainable Investors, and Giving Home Countries a Role”. Discussion paper presented at an Expert Workshop on “Opportunities and Challenges of Establishing an International Framework on Investment Facilitation for Development in the WTO” organized by the Bertelsmann Stiftung, the German Development Institute, the International Trade Centre, and the World Economic Forum, Geneva, 11 December 2019. An excerpt was reprinted under the title “Incentivising Sustainable FDI: Creating a Special RSI Category would Increase the Developmental Impact of FDI”, in FDI Intelligence, Dec. 2021/Jan. 2022, pp. 98-99.
Abstract
Foreign direct investment (“FDI”) can be an important vehicle for development. However, in recent years, the focus has not just been on development generally, but sustainable development specifically. Thus, this article focuses on how countries can increase levels of FDI geared toward projects likely to contribute as much as possible to their sustainable development—in other words, how countries can increase flows of sustainable FDI. To that end, and in light of the WTO’s ongoing negotiations on a multilateral framework for Investment Facilitation for Development, this article first discusses the notion of “sustainable FDI” and then outlines four issues and related concrete proposals whose implementation through an investment facilitation framework for development would help to ensure that commercially viable FDI makes a best-effort contribution to sustainable development: (1) How can governments encourage sustainable FDI? (2) How could governments promote corporate social responsibility (“CSR”)? (3) How could one create the special category of “Recognized Sustainable Investor” to incentivize international investors to implement their CSR commitments and engage in sustainable FDI? (4) What role can home countries play in facilitating outward FDI flows, especially the flow of sustainable FDI? Looking at the question of a multilateral framework from the perspective of its objective—namely “for development”—is particularly important as this objective should guide the negotiations of such a framework.