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*Karl P. Sauvant, PhD* *Resident Senior Fellow* *Columbia Center on Sustainable Investment* Columbia Law School - The Earth Institute, Columbia University 435 West 116th St., Rm. JGH 825, New York, NY 10027 | p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask] | w: www.ccsi.columbia.edu | t: @CCSI_Columbia <https://twitter.com/CCSI_Columbia> "Emerging Markets and the International Investment Law and Policy Regime", "Sustainable FDI for Sustainable Development", "Towards an Investment Facilitation Framework: Why? What? When?", "Beware of FDI Statistics!", "Towards an Indicative List of FDI Sustainability Characteristics", “The Importance of Negotiating Good Contracts", "A New Challenge for Emerging Markets: the Need to Develop an Outward FDI Policy”, "China Moves the G20 toward an International Investment Framework and Investment Facilitation", "The Next Step in Governance: The Need for Global Micro-regulatory Frameworks", and "The Evolving International Investment Law and Policy Regime: Ways Forward" *are* available at https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=2461782 and http://www.works.bepress.com/karl_sauvant/. View this email in your browser <https://mailchi.mp/law/perspective-227?e=763bcf158c> 哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看：http://ccsi.columbia.edu/ publications/columbia-fdi-perspectives. *Columbia FDI Perspectives* Perspectives on topical foreign direct investment issues No. 227 June 4, 2018 Editor-in-Chief: Karl P. Sauvant ([log in to unmask]) Managing Editor: Marion A. Creach ([log in to unmask]) *MNEs and the Sustainable Development Goals: what do first steps reveal?* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=f57e287974&e=763bcf158c> * <#m_-2896646852278939720__edn1> by Rob van Tulder and Jan Anton van Zanten** <#m_-2896646852278939720__edn2> Lisa Sachs, Jeffrey Sachs and Nathan Lobel argued that companies “need to look beyond profits” because they are increasingly evaluated on their contributions to society.[1] <#m_-2896646852278939720__edn3> This argument primarily emphasizes ethical and reputational considerations for multinational enterprises’ (MNEs) involvement in sustainable development. In this view, MNEs should mitigate risks by minimizing “doing harm.”[2] <#m_-2896646852278939720__edn4> This argument can be complemented by looking at sustainability challenges as an opportunity for companies to “do good” and create positive change. In other words, companies need to look beyond *short-term* profits. Identifying *longer-term* opportunities that can reap a sustainable profit is intimately related to diverse areas of sustainable development. Such development is defined as serving the present and future needs of the (growing) world population, rather than only serving the demands of existing (effective) markets. The challenge then becomes to redirect business models in a sustainable direction: from a basis of present profits to a source for future profits; from a narrow view of short-term shareholder value to a broader view of business serving the needs of people and the planet. The 2015 Sustainable Development Goals (SDGs) provide an excellent framework for developing business models founded on positive societal contributions. The SDGs also provide the most coherent sustainable development framework to date. They break with the prior sustainable development discourse that particularly stressed the role of governments as donors. The UN agreed that companies’ efforts are critical in reaching the SDGs. The business logic is clear: achieving the SDGs can unlock US$12 trillion in business opportunities annually.[3] <#m_-2896646852278939720__edn5> Can a joint global agenda trigger the focused attention of MNEs, and are their initial responses aimed at risk mitigation or opportunity identification? MNEs’ first steps are supportive. Many were actively involved in the design of the SDGs. In 2016, 87% of CEOs believed that the SDGs provide an opportunity to rethink approaches to sustainable value creation.[4] <#m_-2896646852278939720__edn6> International organizations like the Global Reporting Initiative and the Global Compact are developing tools to support companies to “materialize” this ambition, i.e., integrate it in their strategies.[5] <#m_-2896646852278939720__edn7> In the authors’ study of the nature of frontrunner MNEs’ initial engagement with the SDGs, the targets supporting SDG 16 (peace, justice and institutions) received the highest scores, showing that companies acknowledge that they cannot do business in a failing society. But they mainly envisaged their contribution to this SDG through internal, governance-oriented policies. Indeed, most of the targets that MNEs actively engage with can be implemented throughout their (value-chain) operations, such as reducing pollution. More importantly, companies currently focus primarily on SDG sub-targets that “avoid harm.” For “doing good” targets, such as providing public goods like infrastructure, multi-stakeholder partnerships are critical, yet MNEs’ engagement is low. Amongst the MNEs studied, European MNEs engage with substantially more SDG targets, making them more supportive for the SDGs’ integrative ambitions. MNEs in industries with greater negative social and environmental externalities are more involved with SDG targets that help them avoid doing harm. These patterns point to a relatively conservative use of the SDGs as a future-oriented agenda. The potential of the SDGs to move away from “avoiding harm” and use the SDGs to “do good” (and reap longer-term benefits) is not yet achieved. This does not imply that companies do not want to use the SDGs to align their business models with societal needs. It shows how difficult it is to unlock the transformational potential of the SDGs. Three lessons can be drawn for policy makers: - The SDGs that companies engage least with have high degrees of “public good” and “doing good” characteristics; the success of these SDGs thus depends on a more active stance of governments and requires additional (smarter) financial arrangements. The Addis Ababa Action Agenda is an example of shaping innovative development-financing solutions. - SDGs that require cross-sector partnerships tend to receive less attention, which jeopardizes the SDGs’ ultimate achievement; governments and civil-society organizations should enhance corporate involvement in the SDGs, for example, by inviting companies to partner for SDGs. - The relevance of the SDGs for future-oriented corporate strategies remains fragile though. It has to be considered whether MNEs’ relatively defensive use of the SDG agenda will hamper their effectiveness in achieving the SDGs’ transformational ambition. Devising policies for unlocking future business opportunities seems imperative. The SDGs intend to “transform our world.” Selecting and partnering with companies that are most interested in “doing good” is most likely to achieve this. ------------------------------ *** <#m_-2896646852278939720__ednref1> *The Columbia FDI Perspectives are a forum for public debate. The views expressed by the author(s) do not reflect the opinions of CCSI or Columbia University or our partners and supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed series.* ** <#m_-2896646852278939720__ednref2> Rob van Tulder ([log in to unmask]) is Professor of International Business at the Rotterdam School of Management (RSM), Erasmus University Rotterdam, and Director of the Partnerships Resource Centre; Jan Anton van Zanten ([log in to unmask]) is a PhD candidate at RSM and a Consultant at Steward Redqueen. This *Perspective* is based on a longer-term research project on the adoption of the Sustainable Development Goals into the strategic portfolio of global 500 companies. The authors distributed a survey among 350 European and North American “Global 500” companies asking for the extent and manner of their contribution to SDG targets, concentrating on SDG targets that are most relevant to companies (59 out of 169 SDG targets). These targets were characterized as aiming at “doing good” or at “avoiding harm,” to capture corporate intentions. 81 complete responses were received and included in the analysis. See Jan Anton van Zanten and Rob van Tulder, “Multinational enterprises and the Sustainable Development Goals: an institutional approach to corporate engagement,” *Journal of International Business Policy *(forthcoming). The authors would like to thank Nathalie Bernasconi, Sol Picciotto and an anonymous reviewer for their helpful peer reviews. [1] <#m_-2896646852278939720__ednref3> “Corporations need to look beyond profits,” *Columbia FDI Perspectives*, no. 208, September 11, 2017. [2] <#m_-2896646852278939720__ednref4> For an elaboration, see R. van Tulder with A. van der Zwart, *International Business-Society Management: Linking Corporate Globalization and Responsibilities* (London: Routledge, 2006). [3] <#m_-2896646852278939720__ednref5>AlphaBeta, “Valuing the SDG prize,” January 2017. <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=855c358310&e=763bcf158c> [4] <#m_-2896646852278939720__ednref6> Accenture and UN Global Compact, “Agenda 2030: a window of opportunity,”* The UN Global Compact-Accenture Strategy CEO Survey 2016* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=8094d04fa6&e=763bcf158c> . [5] <#m_-2896646852278939720__ednref7> GRI, UN Global Compact and WBCSD, “The guide for business action on the SDGs.” <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=621dcdbbdd&e=763bcf158c> *The material in this Perspective may be reprinted if accompanied by the following acknowledgment: “Rob van Tulder & Jan Anton van Zanten, ‘MNEs and the Sustainable Development Goals: what do first steps reveal?,’ Columbia FDI Perspectives, No. 227, June 4, 2018. Reprinted with permission from the Columbia Center on Sustainable Investment (**www.ccsi.columbia.edu <http://www.ccsi.columbia.edu>**).” A copy should kindly be sent to the Columbia Center on Sustainable Investment at **[log in to unmask]* <[log in to unmask]>*. * For further information, including information regarding submission to the *Perspectives*, please contact: Columbia Center on Sustainable Investment, Marion A. Creach, [log in to unmask] *Most recent Columbia FDI Perspectives* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=4873c79272&e=763bcf158c> - No. 226, Khalil Hamdani, “Investment facilitation at the WTO is not investment *redux*,” May 21, 2018 - No. 225, Michael J. Enright, “To succeed in China, focus on interests rather than rules,” May 7, 2018. - No. 224, Axel Berger, “What’s next for the investment facilitation agenda?” April 23, 2018. *All previous FDI Perspectives are available at **http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/ <http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/>**. * *Other relevant CCSI news and announcements* - *Save the Date: September 27-28, 2018:* This year, CCSI’s Annual Columbia International Investment Conference (CIIC) is on “Multinationals in the Age of Sustainable Development: New Thinking on the Role of International Investment Agreements.” The Conference, taking place alongside the 73rd Session of the UN General Assembly in New York, will build on a multi-year effort to identify guiding principles and practical approaches for aligning international investment treaties with the Sustainable Development Goals (SDGs). Additional information will be posted shortly on our website here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=6fa6ad79a7&e=763bcf158c> . - CCSI is still accepting applications on a rolling basis for our upcoming executive training: Investment Treaties and Arbitration for Government Officials <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=eabb807d6d&e=763bcf158c> (July 30-August 9, 2018). The program is designed to equip participants with the necessary skills, analytical tools, and frameworks to address relevant challenges and opportunities, and to encourage a rich dialogue about best practices from around the globe. *More information about the training, including the brochure and application, is available at the link above.* - In January 2018, The *Yearbook on International Investment Law and Policy* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=db908b450a&e=763bcf158c>*2015-2016 <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=8cfabfbf09&e=763bcf158c> *was released*.* The *Yearbook* monitors current developments in international investment law and policy, focusing (in Part One) on trends in foreign direct investment (FDI), international investment agreements, and investment disputes. Part Two, then, looks at central issues in the contemporary discussions on international investment law and policy. This volume includes a chapter by CCSI's Lisa Sachs, Lise Johnson and Jesse Coleman, with CCSI Fellow Kanika Gupta. *For more information, please see our website here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ea03deb2f6&e=763bcf158c>.* Karl P. 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