Promoting Responsible Business Conduct through Trade and Investment in the Middle East, North Africa and Türkiye

Executive summary

Governments are key actors for the promotion of responsible business conduct (RBC). By taking action across different policy areas, they can encourage businesses to align their activities with the needs of people and the planet and provide an enabling environment for them to do so. Trade and investment are among these areas, as policies and agreements in these fields can reinforce legal and policy frameworks at the core of the enabling environment for RBC and directly orient companies towards responsible practices.

In Egypt, Jordan, Morocco, Tunisia and Türkiye (MENA+T Programme Countries), governments increasingly turn to their trade and investment policies and agreements as means for aligning business conduct with development objectives. This flows from the recognition that private sector involvement is essential to address some of the region’s sustainability-related challenges. It is also linked to the fact that, in an evolving global trade and investment landscape, aligning business activities with social and environmental goals is often perceived as important to maintain and extend trade and investment relationships.

Trade and investment promotion and facilitation policies in MENA+T Programme Countries gradually support the promotion of RBC

In recent years, overarching strategies and laws on trade and investment promotion and facilitation adopted in the MENA+T region have begun incorporating considerations relevant for RBC, providing a basis to use government action in these fields to promote RBC. Drawing on this, all five countries have started using some of their tools and services for exporters and investors to encourage them to adopt responsible practices. The extent of this use, however, depends on countries and the type of support provided. Overall, MENA+T Programme Countries tend to resort more to the support granted to investors than to the one given to exporters to encourage RBC. While all of them offer some sort of financial support to exporters, only a few have processes to identify and address social and environmental adverse impacts linked to their activities. Similarly, most trade promotion agencies (TPAs) have yet to integrate RBC considerations in the non-financial support provided to exporters. By contrast, investment incentives are increasingly aligned with broader environmental or social objectives. Likewise, a majority of investment promotion agencies (IPAs) in the region incorporate some RBC considerations in their functioning through sector and project prioritisation. Efforts to promote RBC via direct services for investors, however, are still limited.

The use of trade and investment agreements by governments in MENA+T to promote and enable RBC is slowly rising

More than 30% of the over 500 agreements screened for this report integrate provisions that contribute to promote and enable RBC. These are provisions that enshrine the parties’ commitments regarding key policy areas for RBC (human or labour rights, the environment, and anti-corruption) and that can reinforce legal and policy frameworks and intergovernmental collaboration in these areas. Around 80% of the agreements signed by MENA+T Programme Countries since 2010 include this type of provisions, with a clear acceleration in recent years. Provisions with environmental commitments have grown the fastest, followed by those on labour rights, and anti-corruption. Another type of clauses relevant for RBC promotion also appeared in a few agreements concluded by these countries in recent years: clauses that “speak” directly to businesses and encourage them to observe RBC principles and standards. Although their inclusion is still limited, they tend to have specific features, often going beyond merely encouraging the adoption of responsible business practices to establish binding obligations for investors. Their potential for the promotion of RBC will, however, depend on implementation, which remains untested in the region.

National Contact Points for Responsible Business Conduct (NCPs) in the region are making nascent efforts to promote policy coherence between RBC, trade and investment

Building on their location within ministries in charge of trade or investment and institutional arrangements that facilitate engagement with relevant government entities, MENA+T NCPs have taken initial action to reinforce policy coherence and promote RBC through trade and investment. In recent years, all of them have to some extent engaged and co‑operated with, shared relevant information among, or been consulted by, trade and investment officials with a view to integrating RBC considerations in trade and investment policies and agreements. Their ability to support government efforts to enhance policy coherence is, however, restrained by a number of challenges, including low awareness and limited technical capacity regarding RBC among relevant government entities, weak co‑ordination across government, as well as insufficient NCP resources.

Egypt, Jordan, Morocco, Tunisia and Türkiye could consider harnessing trade and investment policies and agreements further to incentivise responsible business practices

Following the initial efforts made by their NCPs, MENA+T Programme Countries could take actions to enhance the use of these policies and agreements as levers for RBC. This includes strengthening the awareness, understanding, and technical capacity of trade and investment officials on RBC and how they can promote responsible business practices through their areas of work. It also entails consolidating the engagement and co‑operation among these officials and NCPs through more systematic information-sharing and co‑ordination. Giving more visibility to the NCPs and reaffirming their role across government, alongside cross-regional dialogue and peer learning, would also support the implementation of existing measures and inform future approaches to promoting RBC through trade and investment.