IMPACT – Aligning investment with sustainability: A shared concern and ambition | Key takeaways of the EBSOMED conference

Written by Zoé Luçon, Expert ANIMA

In a context of global ecological emergency, even more true in the Mediterranean climate hot spot, a growing number of companies and business support organisations are ready to embark on the path of sustainable development.

The ANIMA network fully embraces this challenge and has made it a dedicated objective in its three-year strategy (2022-2024) “Channelling the private sector’s contribution to the SDGs and promoting impact investment”.

National regulations and international initiatives gradually pave the way for the private sector engagement and must now aim at allowing a systemic change. Among them, the Corporate Sustainability Reporting Directive, adopted by the European Union in 2022, represents a game changer for all the economic partners of Europe.

The international conference coorganised by the Union for the Mediterranean and ANIMA Investment Network with the support of the EBSOMED project and the Deutsche Gesellschaft für Internationale Zusammenarbeit – GIZ GmbH on 23^rd May 2023 in Barcelona allowed to take stock of the regulations that encourage companies to embark on the path of sustainable development, to present the strategies of the private sector and public agencies in this field, and to advocate for a concerted Euro-Mediterranean strategy to prevent the search for attractiveness towards investors from leading to a reduction in ecological and social requirements.

Context

Foreign investment flows to North Africa have dropped by more than 30% between 2019 and 2021, while they increased by 6% worldwide. The decrease in the European Union was even more alarming, reaching -65% between 2019 and 2021. In this context, there is a risk that countries concerned by the declines in foreign investment flows caused by COVID-19 become less careful about the quality of future investment projects as highlighted by Emmanuel Noutary (ANIMA Investment Network).

It is however essential for public authorities to avoid falling into the trap of short-sighted strategies of investment attraction. Focusing on the quality of future investment projects is more than ever a must for European and Mediterranean countries: ensuring investment contribution to the development of sustainable productive sectors, the creation of quality jobs, supporting efforts towards minimum environmental footprints allowing consistency with climate commitments are part .

As shown in the keynote presentation by Nathalie Hilmi (IPCC and Scientific Center of Monaco), the Mediterranean Region is particularly exposed to the consequences of climate change, already affecting our economies and daily lives, “hitting the most vulnerable ecosystems and people especially hard. Actions taken now will make a difference, but the options open to us to adapt are becoming more constrained and less effective with every increment of warming”.

Frameworks and regulations

International initiatives promoting voluntary approaches have developed over the past decades to mainstream investment projects towards sustainable development. Among them, OECD instruments on Responsible Business Conduct (RBC), presented by Marie Bouchard, offer recommendations for governments on the one hand, and guidance for companies to avoid and address negative impacts of their operations including in their value chain while contributing to sustainable development in the countries where they operate.

An updated version of these instruments was released in June 2023 and is available here.

At the national level, the support offered by policy frameworks regarding the adoption of sustainable business practices is still very limited. The entry into force in January 2023 of the Corporate Sustainability Reporting Directive – CSRD thus represents a major milestone: the European Union becomes the first jurisdiction to put financial reporting and sustainability reporting on an equal footing. Key elements of the EU sustainable finance framework and the CSRD were presented by Alexandra Kuxova, (DG GROW, European Commission):

CSRD establishes a digitalised sustainability reporting of business impacts and risks on sustainability matters for large companies, listed companies (except listed micro-enterprises) and non-EU companies with branches or subsidiaries in the EU exceeding at least 2 of the following criteria:

• Balance sheet total: EUR 20 million;
• Net turnover: EUR 40 million;
• Average number of employees during the financial year: 250.

The reporting will include a management report (xhtml format) and a mark-up of sustainability information in accordance with the digital taxonomy to be set out in Commission Delegated Regulation 2019/815 on European Single Electronic Format (ESEF), with the following timeline:

Public and private strategies and tools

Labels offer an operational approach for public or private organisations to measure and promote companies’ commitment to sustainable development and Corporate Social Responsibility (CSR). As underlined by several speakers, advantages for companies include an increased economic performance due to an optimised resource consumption, gains in terms of human resources motivation, enhanced innovation processes, a better management of non-financial risks, a recognition by the markets and a facilitated extra-financial reporting.

The conference highlighted the examples of “Label RSE” established by CGEM in Morocco in 2007, presented by Hamza Fekak, “Label RSE Tunisie” launched by Confédération des Entreprises Citoyennes de Tunisie (CONECT) in Tunisia in 2012, presented by Sadok Thabet, and “Label Engagé RSE” developed by the French standardisation association AFNOR in 2017, and presented by Mélodie Merenda. AFNOR also launched Responsibility Europe, a network of CSR labels sharing the same values and methodological requirements, in response to a “proliferation of CSR labels” which makes it difficult to identify robust methodologies as put by France Stratégie, Commitments required to join this Responsibility Europe CSR Label are available here.

Responsibility Europe extends beyond the borders of the European Union and CONECT is currently assessing the feasibility to work towards an integration of this network with the support of CLUSTER4GREEN project. The relevance of establishing a regional cooperation to align CSR labels’ methodologies and/or ink partnerships with similar initiatives in North Africa and Europe was highlighted by the Federation of Egyptian Industries (FEI) as well, which plans to create a CSR label as explained by El Sayed Torky, and by the Cercle d’Action et de Réflexion autour de l’Entreprise – CARE (Algeria), represented by Ali Harbi, who mentioned a similar initiative.

Data analytics solutions helping financial actors align with SDGs were also presented by Daniel Torrents (AIS group).

Focus on the practices of investment promotion agencies

Monitoring the impact of investments is a key practice for investment promotion agencies to align projects with local and national sustainability priorities and strategies and to prioritise public support towards companies providing the most positive impacts. Digital tools facilitate the evaluation and comparison of business projects’ sustainability performance and help develop knowledge in order to better anticipate the impacts of investment projects.

Under its ACP Business-Friendly programme which supports value chains through inclusive policies, investment promotion and alliances, United Nations Industrial Development Organization – UNIDO implements a Digital Investment Profiling System. Tamer Tandogan presented this Digital platform for investment demand/supply brokerage, allowing to promote investment projects, monitor their performance, manage aftercare services, ensure collaboration with stakeholders and provide intelligence services in terms of policy and planning.

A high level of commitment to CSR prevails within trade and promotion organisations (TPOs) as shown by the benchmark of 19 European TPOs conducted by Business France and presented by Marine Simon. However, agencies strategies and tools are mostly in the process of being formalised – less than a third of respondents already have a CSR framework document. Outlooks of sustainability strategies were provided by Natalie Farrugia (Malta Enterprise), Assia Bensaad (Moroccan Agency for Investment and Export Development – AMDIE, (Morocco) and Carmen González (ACCIO) for Catalonia’s ambitious targets regarding the creation of sustainable and innovative activities.

ANIMA, which has worked on sustainable investment since 2010, finally presented IMPACT RATING, an online tool providing a questionnaire allowing to score the sustainable development impact of companies. The questionnaire and scoring methodology, developed by a consortium of public, private and civil society organisations, are granted international recognition including the support of the European Union, ITC and UNEP-MAP and the label of the Union for the Mediterranean.

The digitalisation into IMPACT RATING online tool, supported by EBSOMED and CLUSTER4GREEN projects in 2022-20023, allows any business support organisation -agency, business federation & hub, chamber of commerce, to customise his online rating tool available in SaaS mode and to use it as the backbone of an investment strategy, a SME support programme or a Sustainability Awards, as highlighted below.

As new ways of thinking and acting must be invented to face unprecedented challenges, ANIMA Investment Network, together with its partners the Union for the Mediterranean, the European Commission with the EBSOMED project and GIZ, is extremely grateful to the 80 organisations and 15 countries who shared insights during the “Aligning investment with sustainability” conference to forge a common understanding and join forces to drive change towards a responsible business landscape and a sustainable future for the Euro-Mediterranean Region.

Aligning investment with sustainability: A shared concern and ambition for the 80 organisations and 15 countries – Albania, Algeria, Bosnia, Egypt, France, Greece, Jordan, Lebanon, Malta, Morocco, Monaco, Palestine, Poland, Spain, Tunisia, Turkey- represented on May 23^rd 2023 in Barcelona

Replay available at Aligning investments with sustainability – YouTube