New ITC guide lays out the business case for sustainable investment

28 June 2021
ITC News

Guidance to invest sustainably in markets. Four companion guides complement the handbook by listing the mandatory sustainability requirements in Ethiopia, Kenya, Mozambique and Zambia.

Caring for the environment and local communities is good for business – and that’s just one reason international investors should embed sustainability in each step of their operations. With COVID-19 putting more pressure than ever on small firms, sustainable investment is critical.

Yet investors lack information on sustainability requirements and best practices.

A new International Trade Centre (ITC) publication, The Business Guide for Sustainability in Foreign Investments, fills that gap. It offers social, environmental and economic practices for international investors entering new markets in developing countries around the world and explains how to comply with both the legal and voluntary requirements. The report is based on extensive research in Ethiopia, Kenya, Mozambique and Zambia, where ITC’s Partnership for Investment and Growth in Africa (PIGA) works to attract foreign direct investment with a high developmental impact.

Four national guides accompany this global investment handbook for business. They offer an overview of regulations and institutions specific to investment in agroprocessing and light manufacturing in Ethiopia, Kenya, Mozambique and Zambia .

‘Managing sustainability in foreign investments can translate into a triple win for social development, economic growth and environmental sustainability. But it’s not always easy,’ said ITC Executive Director Pamela Coke-Hamilton.

Sustainable businesses and economies are more resilient to natural disasters, political unrest and health epidemics such as COVID-19, according to the report. Improving working conditions and local community ties help companies improve efficiency, develop a more capable and loyal workforce, and perform better.

Environmental requirements, labour laws

Governments increasingly push companies to comply with environmental and social legislation and improve related reporting. Sustainable investment practices support the environment and workers, create long-term business foundations and help lead firms meet evolving government compliance requirements. For both supplier firms and lead firms, voluntary standards often boosts competitiveness.

The companion guides for Ethiopia, Kenya, Mozambique and Zambia offer specifics for investors to obtain an environmental licence for their project. These include an environmental impact assessment and annual environmental audits to prevent pollution, tackle climate change and manage resources efficiently. Failure to comply with these requirements can lead to closure of a business as well as imprisonment and fines.

The same is true of labour laws, which cover everything from fair pay to labour conditions and work hours – factors that can help retain staff and reduce costs stemming from high turnover and repeated training. The guide says ‘there is a strong financial case’ for firms to invest in their workers by providing reasonable pay and skills training.

Businesses can go beyond the legal requirements and offer other benefits to employees, such as meals, transportation, housing and education. ‘Besides increasing the satisfaction and productivity of workers, these services can have the added value of improving community relations,’ the publication says.

The handbook and companion guides were developed under the framework of the PIGA project, which is funded by the United Kingdom’s Foreign, Commonwealth & Development Office.