Ministerial Round Table on 21st Century Global Investment Policymaking
Statement by UN High Commissioner for Human Rights Michelle Bachelet
25 October 2018
Excellencies, colleagues and friends,
I am pleased to be here today, to discuss a key issue: how we can harness private sector investment as we deliver the transformational 2030 Agenda and at the same time, ensure that human rights are not undermined in the process.
Today, human rights are rightly recognized as integral to sustainable development and financing. The SDGs and the Addis Ababa Agenda for Action have cemented this new thinking into international commitments. We must now fully incorporate this global consensus into investment laws and policies.
As we know, in all investment processes, there are legal obligations, which must always be present. On the one hand, States should ensure that the human rights and access to justice of the people affected by investment decisions are fully taken into account. In the other, Investors must respect these rights and honour their own responsibilities, including due diligence, guided by the UN Guiding Principles on Business and Human Rights.
Increasingly, the right thing to do is also seen as the smart thing to do. Investors are taking into consideration environmental, social and governance criteria, in the quest for positive impact as well as long-term profit. The recent report on Human Rights Due Diligence, produced by the UN Working Group on business and human rights, shows this new reality clearly.
So, my message to you as ministers is this: Attracting high quality long term investment should be the strategy of any government, but the invitation must promote a “race to the top”, avoiding what in many cases has been “a race to the bottom”. States’ human rights obligations should not be overlooked in the quest for investment. If they are, the results are policy incoherence, poorer long-term returns, and slower progress towards desired development and wellbeing.
States can take some very practical steps to enhance policy coherence and sustainable investment and development. A fundamental first step is to integrate investment policy into national development strategies, as highlighted in UNCTAD’s Policy Framework for Sustainable Development.
Regarding policy coherence, the States as economic actors can do much more in “leading by example”. Almost 25% of the world`s largest companies are State Owned and many of these are funded by State owned banks or development banks. The commitment to implement the UN Guiding Principles on Business and Human rights should also be integrated into the actions and policies related to these companies.
Additional measures are also needed: Investment must be “responsible”, as the Rwanda-UAE Bilateral Investment Treaty, or BIT, recognizes. A State’s own human rights obligations can be reflected in investment treaties; Norway is an example. Investors’ responsibilities can be integrated, as they are in Colombia’s model BIT and the Morocco-Nigeria BIT of 2015. The EU’s mandatory sustainability impact assessment for all Free Trade Agreements, which explicitly includes the UN Guiding Principles, is yet another positive approach. All countries have the capacity to adopt and implement these important measures.
We can also ensure that all domestic and international frameworks governing investment recognize that States have a right and a duty under international law to protect the public interest.
Increasingly, the measures I have mentioned have become an integral element in many country’s development strategies. As former President of Chile, I can mention that during my government we actively sought foreign investment that would provide capital and technology for our economic development, but always in accordance with a regulatory framework that safeguards the environment and the public interest.
One sector that has truly benefitted from this investment strategy has been renewable energy. As of December 2013, installed renewable capacity represented 6.3 % of the energy mix in Chile. By June 2016, this amount doubled, reaching 12.65% of total electrical capacity. The objective is that by 2025, renewable energies make up 20% of the energy matrix. This dramatic change is a result of the increasing participation of foreign companies in the renewable market attracted by the stability of the legal framework, but it`s also due to political will and the decision by the State of Chile.
It is true that International Investment Agreements have the potential to deliver significant benefits and transform lives, including in infrastructure sectors like energy, transport and water, promoting sustainable development and delivering on the SDGs.
However, large infrastructure projects are laden with unassessed human rights risks, for communities, workers, and society at large. The gender dimension is often ignored. If these and related risks are not identified and addressed, the G20’s efforts to facilitate investment by creating an infrastructure asset class may unwittingly create a house of cards.
These risks are explored in more detail in our new publication “The Other Infrastructure Gap: Sustainability”, which we have produced in cooperation with the Heinrich Böll Foundation, and will be available in November. It goes to the very heart of what we are discussing here; that finance and investment facilitation policies should be put to the service of sustainable development; not the other way around.
Infrastructure needs have been estimated at about 90 trillion US dollars between now and 2030 to deliver the SDGs. Policies that prioritise responsible investment can help countries tap into billions, if not trillions, of investor dollars.
Under investment law more generally, States should be given the policy space to implement industrial, environmental, health, gender equality and other social policy measures in line with their international obligations.
I believe that UNCTAD’s International Investment Agreements (IIAs) reform agenda provides an excellent framework for addressing these problems and promoting more responsible and sustainable investment.
Excellencies, friends and colleagues,
All investment policies framed at the global level, as well as at the national level, must face the same level of scrutiny. In the rush for scaled-up investment, we must not forget or unwittingly undermine the vital role and legitimacy of the State - already under increasing strain from many directions.
It is important that each State integrate human rights more explicitly and systematically into its investment laws and policies. Each State is responsible for not losing sight of its treaty and international obligations. Each State should remember that its duties cannot be suspended for the purposes of securing investment.
The next 12 years will throw up many challenges as we deliver the SDGs. I hope you will return to your countries inspired not just to achieve this transformation, but also to use the tools and mechanisms that can guarantee that human rights are an integral part of the process.