Markets working to support sustainable development

Europe

The EU Forest Law Enforcement Governance and Trade (FLEGT) Process in Developing Countries

As part of the FLEGT process, the EU establishes bilateral Voluntary Partnership Agreements (VPAs) with developing countries to guarantee that wood exported to the EU is legal. In addition, the VPA supports partner countries in improving their own regulation and forest governance procedures.

The VPAs includes 3 main elements: 

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The OECD Declaration on International Investment and Multinational Enterprises

The Organisation for Economic Co-operation and Development (OECD) declaration is a policy commitment by member governments to: improve the investment climate; encourage Multi National Enterprises (MNEs) contributions to social and economic development; and minimise and resolve difficulties from their operations. The guidelines are supported by a network of National Contact Points (NCP's), agencies established to help governments adhere to the guidelines.

IFC Performance Standards on Social and Environmental Sustainability

The International Finance Corporation (the private sector investment body of the World Bank) has developed a set of Performance Standards to review the suitability of projects for direct financing. If a project is not expected to meet the standards over a ‘reasonable period of time’ then the IFC will not provide finance.

There are also several types of activity that the IFC does not finance e.g. production/trade of weapons, alcohol, tobacco, illegal products or activities.The Performance Standards are based on 8 areas:

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Extractive Industries Transparency Initiative (EITI)

The EITI seeks to set a global standard for transparency in oil, gas and mining and is applicable to national governments. The EITI has a number of principles and indicators that are predominantly centred on improving transparency and accountability in the extractive industries.

The EITI maintains the EITI standard, which was updated in May 2013. Countries implement the EITI Standard to ensure full disclosure of taxes and other payments made by producing oil, gas and mining companies. These payments are disclosed in an annual EITI Report. 

International Council on Mining and Metals (ICMM) Sustainable Development Framework

All ICMM members are required to implement the Sustainable Development Framework. This includes integrating a set of 10 principles and six supporting position statements into corporate policy, as well as setting up transparent and accountable reporting practices.

Principles

United Nations Global Compact

The UN Global Compact  (GC) was launched in July 2000 and is a commitment by companies to incorporating environment and development principles within their business structures. Open to any company, The UN Global Compact is a ‘practical framework for the development, implementation, and disclosure of sustainability policies and practices’.

The Equator Principles III

Financial Institutions that sign the Equator Principles (EPFIs) can ensure that the projects they fund are developed in a way that pays attention to social and environmental issues.

Scope

The Principles are global and they can be applied across all industry sectors through four financial products - these are: project finance advisory services; project finance; project related corporate loans; and bridge loans. Projects must have total project capital costs of USD 10 million or more. 

Equator Principles III

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United Nations Principles on Responsible Investment

The Principles on Resposible Investment (PRI) are designed to provide a framework for investors to consider issues around the environmental, social and governance (ESG) issues that can affect investment portfolios. They were launched by UN Secretary-General in April 2006 at New York Stock Exchange and state:

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