Key Messages

• Countries are more consistently following guidelines for Voluntary National Review (VNR) reports and providing information on most aspects of 2030 Agenda implementation.
• Reporting suggests that leaving no one behind is becoming a defining consideration in implementing the SDGs. However, except for leaving no one behind, VNRs continue to pay limited attention to the transformative principles of the 2030 Agenda.
• While there is evidence of increased engagement with civil society organizations, results are mixed. It is particularly concerning that countries remain silent on closing civic space globally and ongoing attacks on human rights defenders and environmentalists.

The fourth in a regular series of reports commissioned by civil society organizations, this report provides an independent analysis of the 47 English, French, Spanish, Russian and Arabic Voluntary National Review (VNR) reports submitted in 2019 to the UN’s High-Level Political Forum on Sustainable Development (HLPF).

Prepared by the Canadian Council for International Co-operation, the report identifies 10 key pillars that we believe are essential to the effective implementation of the 2030 Agenda for Sustainable Development. It also recognizes emerging good practice and sets out a range of conclusions and recommendations with respect to how countries can both improve their implementation of the Sustainable Development Goals (SDGs) and use the HLPF as an opportunity for mutual peer learning, knowledge exchange and support. Importantly, the review also provides a comparative assessment of how VNR reporting is evolving over time through a comparison of analysis of the VNRs in 2016, 2017 and 2018 with findings for 2019.

This year’s report showcases positive trends with respect to reporting on leaving no one behind and stakeholder engagement. However, it also underlines the continued silence by member states in Voluntary National Review reports on the closing of civic space and discusses how this impacts the ability of all stakeholders to engage and implement the sustainable development goals.

Key Messages

• Impact investing, which seeks to generate positive, measurable social and environmental impacts alongside a financial return, faces challenges to better address the financing needs of the United Nations Sustainable Development Goals (SDGs).
• Blockchain technology offers solutions that are particularly promising to address the underlying challenges of the impact investing industry by converting non-financial value such as impact into digital tokens that can be tracked.
• Impact tokens describe a group of digital tokens used on a blockchain with the specific goal of unlocking investments for projects with positive social and environmental impacts in support of the SDGs.

The United Nations Sustainable Development Goals (SDGs) invite a range of public and private sector actors to support its agenda of ending poverty, protecting the planet and ensuring that all people enjoy peace and prosperity by 2030. They offer a solid framework for investors and corporations to follow and align their activities and investments accordingly. This has spurred a growth in impact investing, which is an investment approach seeking to generate positive, measurable social and environmental impacts alongside a financial return. However, according to a 2018 survey done by the Global Impact Investing Network (GIIN), the following barriers are still preventing impact investing from scaling up to better address the financing needs of the SDGs:

• Appropriate capital across the risk/return spectrum
• A common understanding of the definition and segmentation of the impact investing market
• Suitable exit options
• Sophistication of impact measurement practice
• High-quality investment opportunities.

Blockchain technology offers new investment and economic opportunities by enabling the transfer of value in a frictionless manner, providing trust as an immutable ledger and converting assets into digital tokens that can be programmed through smart contracts. Blockchain offers solutions that are particularly promising to address the underlying challenges of the impact investing industry. “Impact tokens” describe a group of tokens with the specific goal of unlocking investments for projects with positive social and environmental impacts. A review of over 200 projects that are either active or in development gleaned four key benefits of impact tokens: 

• Increasing trust between parties
• Promoting financial and social inclusion
• Improving data collection and accelerating monitoring, reporting and verification processes
• Incentivizing behaviours that promote sustainability.

Most of the reviewed cases focus on digitizing existing marketplaces, reducing transaction costs and creating new platforms for exchanging non-financial value such as impact, natural capital and data. This paper looks at some of the key characteristics of these tokens; how they can be applied in sectors such as agriculture, fisheries, education or energy; how they can provide verified proof of impact for investors; and, ultimately, how they can address each of the five barriers to upscaling impact investing.

Key Messages

• In this book, the IISD Earth Negotiations Bulletin team reflects on the successes, shortcomings and overall trends of international environmental negotiations in 2019.
• The year saw scientists rise as truth-tellers, with international scientific bodies producing a range of reports on climate change, biodiversity and the environment as a whole.
• The report concludes by looking to a busy environmental negotiations’ agenda for 2020 amid waning political will, rising nationalism and faltering support for multilateralism.

In 2019, a range of international scientific reports on climate change, biodiversity and the environment held dire warnings for the future of our planet. Yet, despite thousands of pages of evidence and rising global protests, intergovernmental political processes were deadlocked on many issues. Policy-makers could not mount a response that matched the science.

In The State of Global Environmental Governance 2019, the globetrotting Earth Negotiations Bulletin team reflects on the environmental negotiations they attended, including the precious bright spots, the troubling misses and the linkages between these international processes.

The report ends with a look ahead: 2020 is expected to conclude negotiations and establish new tools to address biodiversity, marine biodiversity in areas beyond national jurisdictions, and a post-2020 strategic approach to international chemicals management. With mounting pressure for action, the authors hold out hope that countries will regain the momentum recently lost.

Key Messages

• Federal fossil fuel subsidies in Canada reached at least CAD 600 million in 2019, but this figure does not include subsidies for which publicly available data was lacking, such as tax-related subsidies or potential subsidies related to the Trans Mountain pipeline and expansion.
• Subsidies have shifted from an emphasis on exploration to one on the development of infrastructure for fossil fuel production and exports (including for liquefied natural gas). 
• Fossil fuel subsidies undermine climate action objectives. The Canadian government should be transparent about the full amount of fossil fuel subsidies and accelerate subsidy phase-out to meet international commitments.

Canada has announced plans to achieve net-zero emissions by 2050 but is currently not on track to meet its 2030 emissions reduction target. Meanwhile, fossil fuel subsidies undermine federal action on climate change and divert important financial resources to polluting forms of energy.

IISD identified nearly CAD 600 million in federal fossil fuel subsidies in 2019. This figure does not include figures where data was lacking, such as for tax measures or potential subsidies related to Export Development Canada and the Trans Mountain pipeline expansion. 

Canada is currently undergoing a peer review of fossil fuel subsidies with Argentina as part of its G20 commitment to phase out inefficient fossil fuel subsidies by 2025. Progress on the peer review has been slow and needs a strong commitment to transparency. Canada should complete the peer review in 2020, release quantified information on all federal fossil fuel subsidies on an annual basis and commit to not introducing new fossil fuel subsidies.

Canada should also accelerate the phase-out of existing fossil fuel subsidies and develop a roadmap to meet or exceed the 2025 phase-out commitment.

We also recommend that Canada include subsidy reform as a key element of focus in the next Nationally Determined Contribution under the Paris Agreement. Fossil fuel subsidy reform would strengthen and support wider federal action on climate change and help Canada to meet its climate targets.

As the steward of its traditional territory for generations, Poplar River First Nation (PRFN) has an immense opportunity to undertake and lead on nature-based and land-management projects.

The community wants to maximize the potential of nature-based solutions to support climate and biodiversity co-benefits and create positive socioeconomic outcomes for both PRFN and Manitobans more generally. PRFN's successes could spur the adoption of nature-based solutions and innovative conservation efforts by other communities, including the 70% of Indigenous communities in Canada that are located in the boreal forest.

PRFN has been working for years on management planning for its traditional territory. A critical next step is for the community to develop third-party partnerships to pursue payments for ecosystem services (PES). Through PES, PRFN's forest management strategies can better contribute to community and regional socioeconomic and environmental well-being.

Entering into a PES agreement with potential funders is a way to ensure financial sustainability to support the community through socioeconomic and environmental stewardship. To illustrate how such an agreement might look, this study provides a working draft of a possible PES agreement between PRFN and a buyer of the goods and services. This agreement is drawn from several established national and international examples of PES agreement frameworks, and its main point of reference is the guidance documents from the Katoomba Group, an international working group dedicated to advancing payments for ecosystem services including watershed protection, biodiversity habitat and carbon sequestration.

Key Messages

• Negotiations at the World Trade Organization on fisheries subsidies include an important rule designed to eliminate the subsidies provided to illegal, unreported and unregulated fishing.  
• This rule could usefully build on existing definitions and obligations that governments have adopted under the international law of the sea. It could also flexibly reflect the variations in how governments control fisheries without introducing so much deference that the subsidy obligation becomes difficult to enforce. 

This policy brief explores some of the legal questions that have emerged in the negotiations at the World Trade Organization (WTO) about a new rule that would prohibit subsidies from being provided to fishers that have engaged in illegal, unreported and unregulated (IUU) fishing. The brief discusses how IUU fishing could be defined in the context of a WTO agreement with reference to the Food and Agriculture Organization of the UN's International Plan of Action on IUU fishing and explores the flexibility inherent in the plan. 

The brief examines the various options for who might make a determination of IUU fishing and under what due process conditions. This is a crucial step in the construction of a WTO rule because an IUU determination would trigger a WTO member's obligation to stop subsidizing. It argues that a broad approach that allows governments to make determinations in whatever capacity is relevant in a particular circumstance (e.g., in their capacity as coastal or flag states) would help to ensure that the discipline is effective. It also argues that due process conditions should be drafted to apply to the process by which determinations are made to ensure fairness vis-à-vis other members but should not apply to a government's choice of what circumstances warrant a determination. The brief also reviews options that would limit the application of the prohibition and suggests that clarity regarding the duration of the subsidy prohibition might be helpful. 

Key Messages

• Assets under management with an environmental, social and governance impact (ESG) mandate are growing exponentially.
• While sustainable investing has become a significant trend in the financial sector, there are some notable challenges ahead, including how to integrate sustainability considerations in passively managed portfolios tracking non-ESG indices and the lack of relevant capacities at financial institutions.

Sustainable investing has come a long way. It was not long ago when this new way of investing was still considered to be niche, at times confused with philanthropy. Over the years, financial market participants have gained a better understanding of the value proposition of incorporating ESG considerations in asset allocations and recognized the potential in the increasing client demand for values-based investing.

The heightened interest and pace of adoption by the financial industry is a powerful sign that the time for sustainable investing has arrived. Most financial professionals in developed countries have now become familiar with this investment approach and have shifted from asking “whether to do it” to “how to do it.”

By 2036, global assets worth USD 160 trillion are expected to be managed under some type of sustainable investing mandate. This would mean a close to 100% ESG integration in fund management. The report discusses potential drivers behind generating the level of demand needed from private and institutional investors to enable this exponential growth.

The report also covers some of the major trends that will shape sustainable investing in the years to come. Climate risk will certainly take centre stage in the financial industry. Even market participants who have not yet bought into the idea of sustainable investing are exploring how climate change would impact their portfolio companies.

The Sustainable Development Goals (SDGs) will also play an important role in providing guidance to the financial industry on what the most pressing global environmental and social challenges are and which areas investors should focus on when integrating ESG considerations into their portfolios.

Finally, innovative financial instruments will also be needed to address the world’s various sustainability challenges. Indeed, financial innovation in sustainable investing has been accelerating in recent years, trying to meet the diverse needs of investors and projects alike.

Key Messages

• The report examines the impact of kerosene subsidies and reform from a gender perspective in Nigeria and finds that they did not work well for poor women. None of the households surveyed reported paying the official price for kerosene when it was subsidized. In periods of fuel shortages, hardships increased for women as they queued for hours and sometimes all day to get fuel. 
• It finds that women were negatively impacted by reforms when the kerosene subsidy was removed in 2016, as higher kerosene prices from reforms stressed household incomes. 
• The report recommends against returning to subsidizing kerosene. Given the high dependence of households on fuel wood for cooking, financing support for clean-burning cookstoves may be necessary in the interim to provide cleaner alternatives.

The report examines from a gender perspective the impact of kerosene subsidies and their reform in Nigeria. Its research included secondary data, household surveys (1,000 households in 2017) and focus group discussions. 

The report finds that kerosene subsidy did not work well for poor women. None of the households surveyed reported paying the official price for kerosene when it was subsidized. Instead, households paid between two and six times the official sales price. Women also queued for hours and sometimes all day to get fuel, often resorting to informal dealers with the attendant problems of higher prices and health dangers of using adulterated fuel.

The report finds that women were negatively impacted by reforms when the kerosene subsidy was removed in 2016 and prices increased. Survey results found that women generally pay for kerosene and firewood. Higher prices for kerosene might therefore have a greater effect on women’s budgets and incomes. In Lagos, women coped with price increases mostly by saving fuel or shifting expenditures within their budgets. In rural areas, women appeared to have fewer financial strategies and resorted to using inferior fuels, especially firewood. Half of the households in Imo and 18% of households in Lagos said they would use more biomass to cope with price increases.

Women want to switch to cleaner modern energy sources. In Lagos and Imo, most women stated that switching to a preferred cooking fuel would enable them to save time spent on cooking. Yet, when asked what kind of government support they preferred, households do not prioritize energy subsidies over other kinds of support. Households chose jobs, health, financial support and education: their priorities and needs should be considered in policy development. This raises the question of whether the billions spent on an inefficient subsidy system might not be better spent on social protection programs. 

Kerosene subsidies did not work well, so the report strongly recommends against returning to subsidizing kerosene. Given the realities of most households’ high current dependence on fuel wood for cooking, financing support for clean-burning cookstoves may be necessary in the interim to provide cleaner alternatives. This is particularly relevant for low-income women predominantly using biomass for cooking in order to reduce their immediate exposure to indoor air pollution. Longer-term measures to address energy access can include investments in electrification infrastructure and renewable energy, supporting women's education and exploring affordable energy pricing for low-income households. 

Cover photo: Spaces for Change | S4C, Nigeria

Key Messages

• Kerosene subsidies are not working well for poor women in Bangladesh: households pay above the official price for the fuel, women are particularly exposed to harmful kerosene fumes, and almost all households want to shift to solar or grid-based electricity.
• Reallocating kerosene subsidies to grid- or off-grid alternatives would help the transition to clean energy—but it must be done carefully. Those continuing to use kerosene can ill afford the extra expense: households would reduce food and other expenses to pay higher kerosene prices.
• Potential kerosene price increases would appear to impact women and men equally. Both men and women need to be consulted on subsidy changes because women do most of the cooking and household chores, but men tend to make the decisions on energy purchases and buy the fuel. 

The report examines from a gender perspective the impact of kerosene subsidies and their reform in Bangladesh. Its research included secondary data, household surveys (630 households in 2017) and focus group discussions.

The research found that potential kerosene price increases would appear to affect men and women equally in Bangladesh. In case of a kerosene price shock, women overall do not seem to be more vulnerable than men, with 74% of households reporting that all members would be equally affected. Because men purchase kerosene, a price increase may affect the income of men more than women.

Households are not experiencing the full benefit of the kerosene subsidy. Subsidizing kerosene is problematic because the fuel is easily diverted to illegal uses, and rent seeking frequently occurs along the supply chain, pushing up prices. More than 80% of surveyed households did not know that the official price is BDT 65 per litre, and 95% of households were not aware of the subsidy at all. In 2016, we found that the official price cut from BDT 68 to 65 per litre was not passed on to consumers.

Where households do receive subsidy benefits, continuously subsidizing kerosene can lock these households into using kerosene, though there are cost-comparable cleaner lighting alternatives available. The survey found that fuel costs families around BDT 210 per month, and solar PV lamps are available for around BDT 1,550 or BDT 65 per month (assuming a two-year life span). More advanced solar home systems with multiple light points can be available for slightly higher prices. These could be affordable for households if subsidies for solar lamps to replace kerosene lamps in very poor households could be considered alongside grid and mini-grid electrification efforts.

Kerosene subsidy reform needs to be handled carefully. In Bangladesh, poor families use kerosene for lighting. Any increase in the price of kerosene thus needs to be handled with care, especially if households have no opportunity to switch to electricity via solar or the grid for lighting needs.

This negotiating brief was prepared for the Geneva Seminar held on January 29, 2020, on the Joint Statement Initiative (JSI) devoted to electronic commerce, which involves a group of World Trade Organization (WTO) Members.

It covers the history of e-commerce-related discussions in the WTO context from the late 1990s to the present, as well as the latest developments in the negotiations under this JSI. 

This material was produced as part of the Umbrella Grant on New WTO Issues. This material has been produced with funding by UK aid from the UK Government. The Umbrella Grant is a project of the Trade and Investment Advocacy Fund (TAF2+), and implemented by the International Institute for Sustainable Development, in consortium with CUTS International, Geneva; BKP Economic Advisors; and InterAnalysis. The papers for the Geneva Seminars benefited from the review of our editorial oversight committee, including Nathalie Bernasconi-Osterwalder, Rashid Kaukab, Julien Grollier, Susan Joekes, Julian Mukiibi and Marília Maciel.

Views expressed in the publication are the author’s own and do not necessarily reflect HM Government’s official positions or those of TAF2+.