Enforcing Minimum Africa Trade In-Value Added Standards to Align with SDGs, Nairobi Declaration and the Just Energy Transition”
As leaders in the global economy, G7/G20 Heads of State and global institutional investors, have a fiduciary responsibility to uphold ethical standards and promote sustainable practices. Embracing Environmental, Social, and Governance (ESG) principles is not just a moral imperative but also a strategic imperative for long-term economic stability and prosperity.
Therefore, endorsing and adopting the policy recommendation to regulate thresholds against low levels of ‘trade in value-added’ goods (TIVA) as an anti-ESG and punitive discriminatory trade practice, is crucial for advancing human rights, promoting equitable economic development, the just transition, and ensuring the sustainability of investments, people and the planet.
Promoting Human Rights:
By regulating low levels of trade in value-added goods from global value chains, G7 Heads of State and global institutional investors can actively address the ‘S’ in ESG’ and combat conventional, unjust, exploitative, systemic discriminatory international trade practices and promote human rights in supply chains.
Ensuring that investee and portfolio companies have a significant portion of their value-added goods supply chains sourced from Africa, encourages fair labour practices, protects workers’ rights, and fosters inclusive industrial economic growth across the continent and equitable access to global markets.
Fostering Economic Development:
Prioritizing high-value TIVA from Africa over low-value raw materials is instrumental in fostering sustainable economic development and green industrialization on the continent in line with the African Union’s Nairobi Declaration (Africa’s Green Investment Deal), the asset-owner-led African Green Infrastructure Investment Bank (AfGIIB), the African Continental Free Trade Area (AfCFTA), the Africa Green Industrialisation Initiative (AGII) and the African Unions 5% Infrastructure Investment Allocation Agenda.
By incentivizing investments in value-added production and green technology manufacturing, this policy recommendation promotes local job creation, green industrialization, skills development, and technology transfer, ultimately contributing to poverty reduction, sustainable development goals, and Africa’s just energy transition at industrial scale.
Enhancing Investment Returns:
Embracing ESG best practices, including the promotion of value-added trade, not only aligns with ethical considerations and institutional investor-public partnerships (IIPPs) best practices but also enhances market-appropriate investment returns for long-term investors.
Companies with diversified, greener, and resilient supply chains are better equipped to navigate market volatility, regulatory changes, climate change, landed cost advantages and reputational risks.
Therefore, integrating TIVA-ESG threshold criteria into investment decision-making processes can lead to more sustainable, competitive, and profitable outcomes for public and private investors and stakeholders.
Mitigating Systemic Risks:
Addressing the inequities and vulnerabilities inherent in the current global trade practices affecting Africa is essential for mitigating systemic risks and promoting financial stability.
By promoting inclusive sustainable economic growth and transforming extractive industries into green industrial globally competitive value chains, G7/G20 Heads of State and global institutional investors can contribute to building more resilient and sustainable economies, less susceptible to external shocks and geopolitical tensions, whilst earning market appropriate returns from increased access to the $10trn and growing global green industrial economy, which will be valued at a quintillion dollars this century.
Demonstrating Leadership:
Endorsing and adopting the policy recommendation to regulate trade in value-added goods as an ESG and sustainability imperative, sends a powerful signal of leadership and commitment to responsible long-term investing and sustainable development.
As stewards of global capital and sovereign assets, global institutional investors and G7/G20 Heads of State, have the influence and leverage to drive positive change and shape the future of global commerce and the global green industrial economy, in alignment with best sustainability and ESG principles.
In conclusion, endorsing and adopting the policy recommendation to regulate trade in value-added goods as an ESG and sustainability imperative, is not only ethically imperative, but also strategically beneficial for Heads of State and global institutional investors.
By promoting human rights, fostering economic development, enhancing investment returns, mitigating systemic risks, and demonstrating leadership, this TIVA-ESG policy recommendation aligns with the broader objectives of the sustainable development goals, the Paris Agreement, the Nairobi Declaration, and the just energy transition, to enshrine inclusive prosperity for all stakeholders.
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Appendix 1 – Investors Board of Trustee Template for Special TIVA Resolution
Resolution of the Board of Trustees of [Insert Institution]
Preamble:
The Articles of Agreement of (Insert institution) outline the institutions’ purposes. In recognition of the global climate just transition and trade inequality emergency for Africa and the industrial climate investment opportunities affecting our beneficiaries, we, the Board of Trustees of [Insert Institution], hereby resolve to expand the existing purpose within our Agreement, specifically in [Insert Relevant Article], to include the following:
Resolution:
“The purpose of this institution shall include the promotion of sustainable economic development and social progress among its beneficiary members, both individually and collectively.
This includes explicit commitments to enforce Trade in Value Added (TIVA) standards. These standards mandate that a minimum threshold of value-added goods for finished products must originate from Africa. This is to ensure that investments and client companies do not engage in practices where raw materials extracted from Africa are indiscriminately processed and add value outside of the continent.
We, the Board of Trustees, adopt this resolution in recognition of the critical linkages between trade, human inequality, trade discrimination, SDG 10, climate change, social equity, the just transition, obligations under the Task Force for Inequality-related Financial Disclosures (TIFD), and the long-term development goals of our members.”
Appendix 2 – Template for the Terms of Reference for the Board TIVA Committee
Purpose:
The primary purpose of the Committee is to assist the Board in setting and enforcing TIVA Threshold targets and overseeing their implementation through regular reviews.
The Committee provides strategic guidance to management on the direction and objectives appropriate for achieving these targets and monitors performance against them.
Responsibilities & Duties:
To fulfill its responsibilities, the Committee shall undertake the following activities, along with any other tasks it deems necessary or appropriate:
- Establishing and Periodically Reviewing TIVA Threshold Targets:
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- Define strategic objectives, targets, and key performance indicators (KPIs) relating to TIVA thresholds.
- Set specific portfolio targets to align with Africa TIVA goals, including:
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- TIVA threshold ratios and absolute targets.
- Specific annual targets investments relating to low-income and least-developed countries.
2. Guidance on Strategic Green Industrial Infrastructure Investments in EMDEs:
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- Review and recommend business plans, budgets, and results in relation to the institution’s strategic priorities and TIVA threshold targets.
- Engage actively with management to ensure that corporate performance indicators, instruments, and incentives align with the institution’s objectives on TIVA thresholds and scope 3 decarbonization (covering direct and indirect emissions).
3. Monitoring Performance Against TIVA Targets:
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- Periodically review management’s performance against TIVA targets based on quarterly reports.
- Evaluate occasional management reports on special topics or strategic themes related to TIVA thresholds and green industrial infrastructure investment trends and opportunities and provide feedback.
Meetings:
The Committee shall meet as often as necessary, but no less than once per quarter, to effectively carry out its responsibilities.
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