How International Investment Agreements Can Better Contribute to Sustainable Development by Reflecting the U.N. Global Compact Principles

Abstract

Purpose

This chapter proposes that social clauses within International Investments Agreements shall explicitly refer to the Global Compact initiative to be more effective at engaging foreign investors with the sustainable development policies of recipient States. Therefore, it analyzes the interaction between investment treaties and sustainability, evidencing an ongoing trend aimed at including corporate social responsibility provisions into these instruments, in order to address social goals from the perspective of foreign investors and Transnational Corporations.

Design/methodology/approach

The argument of this chapter relies mostly on literature review, but it also takes into account evidence provided by some selected International Investment Agreements. It is out of these sources that I infer that the Global Compact initiative can contribute the most to engage investors with the promotion of sustainable development goals within States recipient of Foreign Direct Investment.

Findings

The main finding of this chapter is that labor and environmental provisions in International Investment Agreements should make explicit reference to the U.N. Global Compact initiative. Certainly, because of its universality, legitimacy, and flexible implementation, this initiative constitutes the best approach for helping host States to achieve their sustainable development goals without losing their allure for foreign investors.

Practical implications

Although there are some International Investment Agreements whose labor and environmental clauses call for the voluntary adoption of corporate social responsibility provisions among foreign investors and Transnational Corporations, none of them makes explicit reference to the U.N. Global Compact initiative nor reflects the universal scope of its 10 principles. Thus, this chapter could serve as a departing point to discuss the inclusion of the U.N. Global Compact principles within International Investment Agreements.

Originality/value of the chapter

Even though there is literature about the inclusion of instruments of corporate social responsibility in International Investment Agreements, the originality of this chapter consists in approaching this subject matter from the perspective of the U.N. Global Compact initiative.

Citation

Tamayo-Álvarez, R. (2015), "How International Investment Agreements Can Better Contribute to Sustainable Development by Reflecting the U.N. Global Compact Principles", The UN Global Compact: Fair Competition and Environmental and Labour Justice in International Markets (Advances in Sustainability and Environmental Justice, Vol. 16), Emerald Group Publishing Limited, Leeds, pp. 145-157. https://doi.org/10.1108/S2051-503020140000016021