Investment, Enterprise and Development Commission, thirteenth session
14 November 2022
Madam Chair,
Excellencies,
Distinguished delegates,
Ladies, and gentlemen,
It is my pleasure to address you at the opening of the 13th session of the Commission on Investment, Enterprise and Development. This is the first session of the Commission since UNCTAD 15. It is therefore particularly important as we thrive to deliver on the Bridgetown Covenant at particularly challenging times.
Today's session comes at a critical juncture. The world is in a context of cascading crises, marked by vicious cycles, cascading inequalities, and chronic instability. A pandemic that is still not over. A changing climate that is hitting us harder every year. A cost-of-living crisis which is increasing poverty and hunger at alarming speed. And rising interest rates, which are drying up liquidity in the developing world at record pace and leaving little room for investment in the future that is precisely that we are discussing today.
UNCTAD’s latest research published in the Global Investment Trends Monitor shows a downward trend for Foreign Direct Investment. The rapid growth of FDI flows in 2021 was maintained until the first quarter of this year but it was interrupted in the second, when they were down 31 per cent less, 7 per cent less than the equivalent last year.
This reflects a shift in investor sentiment due to the multiple crises, as well as fears of a coming recession.
This SDG investment shortfall of $2.5 trillion for developing countries estimated by UNCTAD in 2015 has now swelled to a $4.3 trillion abyss in the wake of the pandemic and the war in Ukraine. This means we urgently need to scale up the mobilization of public and private finance towards investment to bridge that gap.
To this end, UNCTAD promotes the global approach, which engages the entire spectrum of investment-development stakeholders. In this effort, capital markets, can have a decisive impact. According to this year’s World Investment Report, sustainability-themed financial products reached a very high number, $5.2 trillion in 2021, a huge jump from $800 billion in 2017 almost more than six-fold. In 2021, sustainable bonds issued by developing economies alone reached $130 billion, more than triple its level in 2020. And these products helped channel much needed capital into sustainable infrastructure, sustainable housing, renewable energy, and other sectors that are critical for the achievement of the SDGs.
These positive developments show that institutional investors have started to act on climate, environmental, social, and public health challenges that are increasingly integrating sustainability into investment decisions. Governments from both developed and developing economies are also stepping up their efforts to support the growth of sustainable finance by putting in place necessary regulatory frameworks, standards, and sustainability disclosure requirements. This is all good news.
However, much remains to be done to realize the full potential of the capital markets in financing sustainable development. Despite its rapid growth in recent years, sustainable finance is still at an early stage of growth. Most products are self-claims, without widely accepted standards and necessary third-party verification, facing severe green-washing and credibility challenges. Developing economies, particularly the least developed ones, remain largely absent and have yet to benefit from the sustainable finance market.
To address these challenges, UNCTAD has been working very closely with upstream players from the investment value chain to create an enabling ecosystem to support the growth of sustainable finance and bring more credibility, accountability, and consistency to the market.
As part of these efforts, UNCTAD will launch today the online platform of the UN Global Sustainable Finance Observatory. The Observatory is dedicated to addressing challenges arising from the fragmentation in sustainability standards, the complexity in disclosure, the proliferation of benchmarks and the self-declaration of sustainability.
By doing so, it aims to contribute to building a future global financial ecosystem in which sustainable development, as defined by the SDGs, is fully embedded into the business model and investment culture. More details about the Observatory will be presented to you at the launch this afternoon. James Zhan, Director of the division of investment will share that with you. But let me tell you we are excited about this initiative, and we really hope to count on your partnership to make it a success.
Madam Chair,
Distinguished Delegates,
Let me share some words on the topic of science, technology, and innovation – which are an integral part of this commission.
The pandemic revealed both the critical role, but also the widening gaps of STI around the world. Thanks to STI, we had vaccines against COVID at record speed, and a lot of collaboration for that to happen. But we also saw how access to the internet became a major dividing line in the fate of billions of people around the world, especially let me mention 1.3 billion children who according to UNICEF had no internet at their homes when COVID hit and therefore lost access to education almost completely
These technological divides have revealed the fact that digital and socio-economic inequalities are becoming increasingly intertwined. Now, as the war in Ukraine has also exposed geopolitical challenges concerning technology, trade and food and energy security are also there.
UNCTAD Technology and Innovation Report finds that each wave of technological change has brought inequality in new shapes. This is the case, for example, with data.
Data is becoming an increasingly important economic and strategic resource. If well managed, data can help us overcome some of our global development challenges, such as climate change and pandemics. If badly handled, they can lead to infringements of human rights, generate unequal development outcomes, and undermine the functioning of the Internet.
Many developing countries are concerned that they will become mere providers of raw data to global platforms, while having to rely on the foreign knowledge and digital intelligence obtained from their data.
At the same time, the data governance context is one of tension in high fragmentation.
We see an urgent need to develop a more balanced approach to global data governance to find common ground for data to work for people and the planet. Ultimately, we think that the goal should be to enable data to flow as freely as necessary and possible, while being able to address the development objectives.
In our Digital Economy Report we have stressed that the United Nations needs to play a key role in this process.
While everyone on this planet has a stake in the outcome of science, technology, and innovation efforts, not every country or every population group are participating equally in defining the course of the technological race. We have heard too often that poor communities and countries are being left behind.
It is necessary for countries to set up the required institutions and create the necessary incentives for the emergence of a strong, development-oriented national system of innovation that can lead to more prosperous, inclusive, and sustainable societies as DTL has been telling for a long time.
Madam Chair,
Distinguished Delegates,
This year, beyond the UN Global Sustainable Finance Observatory which we are very excited about, we bring many important deliverables to this Commission – it simply could not be otherwise.
This Commission will host the 2022 UNCTAD Investment Promotion Awards, which annually celebrate excellence in national efforts made to attract investment in sustainable development. This year’s awards will be granted to the best performing investment promotion agencies in the field of agribusiness.
Tomorrow you will be presented with the conclusions of the Multi-year Expert Meeting on Investment, Innovation and Entrepreneurship for Productive Capacity-building and Sustainable Development. The meeting focused on identifying best practices in investment policies that contribute to the climate and environmental goals of the 2030 Agenda.
We will also be presenting to you the conclusions from a recent expert meeting on “Revisiting development strategies for Small Islands Developing States in the post- pandemic landscape” like the Bridgetown Covenant ask from us.
And during this Commission, you will also hear a report on the 39th session as the Chairperson has already announced to you the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting. This is especially important because it is precisely what we have said before. So, the 39th session was very successful, and I am pleased to report an unprecedented number of participants in an across-the board acknowledgement for our work in this area.
Madam Chair,
Distinguished Delegates,
In the current context of crisis and the slowdown in foreign direct investment, this Commission provides a unique opportunity for member States and investment and development stakeholders to make a difference, turn back the tide, put development investment back in the center of the international policy agenda.
I therefore thank you all for being here.
I thank my team and the two directors that are with us here today on this opening for the great work that has been done, and I wish you a very productive, engaging, but above all impactful meeting ahead.
Thank you.
