Opening Remarks by Angel Gurría
23 October 2019 - OECD, Paris
(As prepared for delivery)
Dear Minister Diouf Sarr, dear Directors-General Rioux and Gonzáles, ladies and gentlemen,
Welcome to the 2nd OECD Roundtable on Investment and Sustainable Development. We are particularly happy to be launching the first ‘FDI Qualities Indicators: Measuring the sustainable development impacts of investment’ and would like to thank the Netherlands and Switzerland for their support.
Let me begin with briefly outlining the recent work we have been doing to promote sustainable development and how the FDI Qualities Indicators report complements it.
First, since publishing our first How’s Life? report in 2011, we have been systematically looking beyond the averages and beyond financial outcomes, to document how inequalities affect the sustainability of growth and well-being over time. This is also demonstrated in our Inclusive Growth Framework report which was published last year.
Second, continuing the legacy of the 2017 OECD Action Plan on the SDGs, the OECD is putting its data and rigour at the service of both governments and business to support good practices and standards. Earlier this year, for example, we mapped critical linkages between inclusive and sustainable growth aspects of the SDGs in our 2019 edition of the Policy Coherence for Sustainable Development report, as part of the OECD’s contribution to the UN ECOSOC High-Level Political Forum.
And third, recognising the importance of connecting with business, last August we launched the Business for Inclusive Growth (B4IG) Platform at the G7 Summit in Biarritz, to unite governments and businesses behind a broad-based, sustainable growth agenda.
The FDI Qualities Indicators are therefore a welcome addition to this work as they bring another dimension to measuring private investment – they look at the FDI from a perspective of destination economies. In this vein, the report aims to support the OECD Policy Framework for Investment and the OECD Guidelines for Multinational Enterprises as well as contribute to the well-being measurement framework led by the Statistics Directorate.
This report we are launching today comes at a particularly important juncture. Current global investments are insufficient to bridge the SDG financing gap. They are dwarfed by the damage from the use of oil, gas and coal – at an estimated cost of nearly USD 5.3 trillion globally. Today, governments continue to spend over USD 500 billion on fossil fuel subsidies rather than supporting the SDGs, as shown by the OECD’s Global Outlook on Financing for Sustainable Development report.
“Greening” FDI is therefore an integral part towards a low-carbon and climate-resilient economic system. These FDI Qualities Indicators, and concretely this report, can help us advance in this direction focussing on five areas of the 17 SDGs: productivity and innovation; employment and job quality; skills; gender equality; and the carbon footprint.
The report shows that, on the one hand, we are seeing some signs of progress. The Indicators shed light on greenfield FDI flowing to sectors that emit less CO2 (than the total economy average). In fact, in most OECD and developing countries, FDI in renewables is growing faster than FDI in fossil fuels. For example, in 2003, FDI in renewables was virtually non-existent; now, it accounts for more than 60% of all FDI in the energy sector in the OECD; and an even greater share of 80% in the BRICs.
On the other hand, however, the Indicators reiterate the risk of widening the productivity-wage gap. This is well-documented by our Inclusive Growth Framework report. The Indicators also bring more granularity to this issue by showing, for example, that in some cases – particularly in developing economies – the productivity and wage premium of foreign firms and skilled workers could hamper positive FDI spillovers, including through supply chain linkages between foreign and domestic firms. While job creation tends to be stronger in countries with a larger share of medium- and high-tech sectors, FDI is associated with low job security and low participation of women in most of the countries studies.
One reason is that greenfield FDI tends to be concentrated in activities with higher risks of job insecurity and occupational injury, particularly in construction and manufacturing sectors that are also more exposed to changes in trade and labour market regulations. However, in general, the new indicators suggest no striking trade-offs between economic, social and environmental impacts of FDI but further analysis is warranted.
We very much hope that this report will begin to bring these important issues up for consideration to policymakers at a more granular, micro-level.
Ladies and Gentlemen:
The quality of our investments are defining the quality of our lives, the brightness of our future, the well-being of our children and grandchildren. And the message is clear: It is time to shift investments away from carbon. This is the only way to combat climate change and reverse environmental destruction. In the words of Greta Thunberg: “If solutions within this system are so difficult to find, then maybe we should change the system itself.”
I invite you all to seize the opportunity of this Roundtable and to reflect on the insightful findings of these Indicators. As you forge ahead, you can continue to count on the OECD to support you in providing evidence-based analysis and in enhancing co-operation between investment and development. Thank you.