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September 12, 2010

Investment and Enterprise Responsibility Review: UNCTAD report calls for upgraded corporate social responsibility practices to protect public interest



World Investment Forum of the United Nations Conference on Trade and Development (UNCTAD) has just concluded in Xiamen, China.

Welcoming more than 1,800 participants, including 460 senior officials from 120 countries, the UNCTAD Secretary General, Dr Supachai Panitchpakdi officially opened the Forum, pointing to the distinctive status of the World Investment Forum 2010 as the key international event of the investment community involving global leaders, senior policy-makers, corporate executives, investors, investment promotion agencies, and investment experts from all over the world.

Transnational corporations (TNCs) play an ever more important role in sustainable development as conduits of capital, technology, and management know-how. Increasingly, TNCs are being called upon to address broader Environmental, Social and Governance (ESG) issues. At the same time large globally active investment institutions are becoming increasingly aware of the potential impact of a range of non-financial issues (e.g. climate change, human rights, corporate governance practices) on an investment proposition.

The World Investment Forum (WIF) is the global forum on investment and development issues organized by the United Nations Conference on Trade and Development (UNCTAD). Held biennially, the forum aims to strengthen international cooperation in the interest of promoting international investment and its contribution to economic growth and development.


WIF 2010 brings together all investment stake-holders, including governments, businesses, international organizations, investment promotion agencies (IPAs), civil society, and international investment experts and practitioners from across the world.

Organized by UNCTAD in partnership with the Ministry of Commerce of China, WIF 2010 is supported by a range of international partners and sponsors, including the World Association of Investment Promotion Agencies, the International Chamber of Commerce, the United Nations Global Compact and the Principles for Responsible Investment.

There, UNCTAD presented its "Investment and Enterprise Responsibility Review".

This Review, the first of its kind, finds that the world's largest Transnational Corporations (TNCs) and private investment institutions frequently publish information on their social and environmental polices, but that there is wide variation in how such firms and institutions adopt, implement, and report on such matters, undermining the comparability and usefulness of the information.

The study recommends that corporate reporting and investor responsibility standards be upgraded to ensure the public interest is being served.


This review of the current state of practices in the area of Corporate Social Responsibility (CSR) among the world's 100 largest TNCs and Responsible Investment (RI) among the 100 largest institutional investors reveals a number of important insights:

1. Private policy at a large enough scale can have an impact similar to, or greater than, public policy. As a result, CSR has emerged as an important area of soft law self-regulation (or 'soft-regulation'). CSR can present policy makers with new options and tools for addressing key development challenges.

2. Most large TNCs now recognise the importance of CSR yet the standard of communication varies widely. There is a role for policy makers to enhance the quality of communications. Various policy options exist such as supporting the harmonization of CSR reporting, and mandating such standardized reporting through stock exchange listing requirements.

3. Responsible investment practices (efforts by investors to incorporate ESG issues into investment decisions and to engage with investee companies to encourage ESG practices) have become common features of the world's 100 largest pension funds. Regulators can work to strengthen the mechanisms through which institutional shareholders are able to influence the ESG practices of the companies in which they invest, while also encouraging investors to formally articulate their stance on ESG issues in public reports.

4. At least basic climate change related information is now reported by most large TNCs. However significant inconsistencies and inadequacies among company reports undermine the comparability and usefulness of this information. Unless reporting is produced in a consistent and comparable manner, it is difficult for policy makers, investors and other stakeholders to use it to make informed decisions. Policy makers could promote an internationally harmonized approach to the way companies explain, calculate and define climate change related emissions.

5. A number of voluntary initiatives are taking a leading role in designing and facilitating CSR and responsible investment instruments, encouraging improved corporate communication on ESG issues and creating important benchmarks, based on universally agreed principles. Policy makers can become involved in these initiatives with the aims of promoting sustainable development goals and identifying useful tools to complement government rules.

World Economic Forum

Meanwhile, World Economic Forum has released its Global Competitiveness Report 2010-2011. Switzerland tops the overall rankings. The United States falls two places to fourth position, overtaken by Sweden (2nd) and Singapore (3rd).

World Economic Forum

Photo: Peter Brabeck-Letmathe, Chairman of the Board, Nestle, Switzerland; Member of the Foundation Board of the World Economic Forum; Global Agenda Council on Water Security, speaks during the session 'Rebuilding Water Management' in the Congress Centre of the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland, January 30, 2010 (© World Economic Forum/Remy Steinegger.

World Economic Forum

Photo: Yvan Allaire, Chair of the Board of Directors, Institute for Governance of Public and Private Organizations (IGOPP), Canada; Global Agenda Council on the Role of Business, speaks during the session 'Rethinking Values in the Post-Crisis World' at the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland, January 27, 2010 (© World Economic Forum/Remy Steinegger).

World Economic Forum

Photo: Queen Rania Al Abdullah, H.M. Queen Rania Al Abdullah of the Hashemite Kingdom of Jordan; Member of the Foundation Board of the World Economic Forum; Global Agenda Council on Education Systems captured during the session 'Rebuilding Education for the 21st Century' at the congress centre at the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland, January 30, 2010. (© World Economic Forum/ Michael Wuertenberg).

According to the WEF report, in addition to the macro-economic imbalances that have been building up over time, there has been a weakening of the United States' public and private institutions, as well as lingering concerns about the state of its financial markets. The Nordic countries continue to be well positioned in the ranking, with Sweden, Finland (7th) and Denmark (9th) among the top 10, and with Norway at 14th. Sweden overtakes the US and Singapore this year to be placed 2nd overall. The United Kingdom, after falling in the rankings over recent years, moves back up by one place to 12th position.

The People's Republic of China (27th) continues to lead the way among large developing economies, improving by two more places this year, and solidifying its place among the top 30. Among the three other BRIC economies, Brazil (58th), India (51st) and Russia (63rd) remain stable. Several Asian economies perform strongly, with Japan (6th) and Hong Kong SAR (11th) also in the top 20. In Latin America, Chile (30th) is the highest ranked country, followed by Panama (53rd) Costa Rica (56th) and Brazil.

Several countries from the Middle East and North Africa region occupy the upper half of the rankings, led by Qatar (17th), Saudi Arabia (21st), Israel (24th), United Arab Emirates (25th), Tunisia (32nd), Kuwait (35th) and Bahrain (37th), with most Gulf States continuing their upward trend of recent years. In sub-Saharan Africa, South Africa (54th) and Mauritius (55th) feature in the top half of the rankings, followed by second-tier best regional performers Namibia (74th), Botswana (76th) and Rwanda (80th).

View All Countries Rankings in the Global Competitiveness Report 2010-2011

Get the Full Report

The World Economic Forum, based in Geneva, Switzerland, is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.

While the United Nations Conference on Trade and Development (UNCTAD) is a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues. UNCTAD has 193 member States and is headquartered in Geneva, Switzerland.

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Edited & Posted by the Editor | 1:01 PM | Link to this Post

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