ANALYSIS – SDGs increasingly conditioning FDI

The economic crisis brought about by Covid-19 has affected foreign direct investment, with a filtering process favouring North over South and a prioritising of the Sustainable Development Goals.

The health crisis, and its economic fallout, has weakened businesses. Consequently, to prevent them falling in the hands of predators, most governments have moved to protect their strategic industries.

A European Union Directive dated March 2019 already set out the principle of filtering foreign direct investment (FDI) projects post-evaluation. During the crisis, this vetting of projects prior to approval increased, with the addition of some fifty or so filtering mechanisms over the course of 2020. A means towards de-globalisation, the vetting allows FDI to be oriented according to several criteria, including its contribution not only towards the UN’s Sustainable Development Goals (SDGs) but also towards helping increase a country’s resilience and conformity with domestic economic policy. “Consideration of sustainable development goals is becoming more and more an issue for investment promotion agencies (IPAs),” indicated OECD economist and FDI network manager Alexandre de Crombrugghe during an EBSOMED* webinar at the end of October 2021.

“Today, a balance is starting to be found between the need to protect businesses and the desire to continue opening up to outside markets,” emphasizes Emmanuel Noutary.

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