Global Scotland: trade and investment strategy 2016-2021

Chapter 6: Trade, Sustainable Development and Responsible Business

As highlighted in the Trade and Investment Evidence Discussion Paper, there is a growing demand from citizens and consumers and from NGOs and Governments for a responsible approach to business which considers human rights and economic, social and environmental impacts. Similarly, consideration of the impact of trade on sustainable development, especially in developing countries, has led many international bodies and institutions such as the UN, the EU and the OECD to put forward a range of strategies and statements, with associated programmes and initiatives, aimed at promoting development through trade. For example, the United Nations Conference on Trade and Development has stated that trade remains ‘the most reliable and productive way of integrating into the global economy and of supporting the efforts of poorer countries to become less aid dependent’ ^[27] . Meanwhile, the EU’s recent ‘Trade for All’ Strategy ^[28] commits to using trade policy to:

• Promote inclusive and sustainable growth in developing countries;
• Ensure responsible management of supply chains;
• Promote fair and ethical trade schemes;
• Promote and defend human rights; and to
• Fight against corruption and promote good governance.

As outlined in Chapter 2, trade has a positive role to play across the UN’s Sustainable Development Goals and in supporting Scotland’s role as a Good Global Citizen and promoting responsible business as part of a broader approach to ‘Policy Coherence for Development’.

Working with partners, the Scottish Government is already taking a range of actions across this agenda. For example:

• Our support for the UN Guiding Principles on Business and Human Rights ^[29] , the Ruggie Principles, is being taken forward through Scotland’s National Action Plan for Human Rights ( SNAP) ^[30] ;
• Scotland’s annual £9m International Development Fund has supported grassroots development projects in Malawi and other priority countries. This includes support for the Malawi Renewable Energy Acceleration Programme ( MREAP) is contributing to technology transfer in the areas of renewable energy and climate change whilst enabling schools, health clinics and households across rural Malawi to gain access to sustainable energy;
• Working with the Scottish Fair Trade Forum, we are reaching more people than ever before with the message that choosing to buy Fairtrade products really does make a difference to people’s lives; and
• We are working closely with the social enterprise sector in Scotland to produce a 10 year social enterprise strategy reflecting Scotland’s position as a global leader in responsible business ^[31] . This focus will contribute to sustainable economic growth domestically, build the profile and impact of social enterprise across the world, and in doing so enhance Scotland’s reputation and attractiveness to others.

This Strategy seeks to build on and extend this work by:

• Helping business play its part in promoting and respecting human rights;
• Working with priority partner countries to support development through trade; and
• Internationalising Scotland’s world leading approach to social enterprise.

Human Rights

The Scottish Government recognises that businesses have a crucial role to play in both preventing and remedying breaches of human rights. States, rather than the private sector, have the principal responsibility for respecting and protecting human rights. However by taking positive action - for example by actively managing the risk of being party to human rights abuses - businesses can exert a very direct influence through their trade and investment decisions.

Scotland’s National Action Plan for Human Rights ( SNAP) commits partners to the development of an action plan to implement the UN Guiding Principles on Business and Human Rights in Scotland. To inform this work, the Better World SNAP Action Group, involving the Scottish Government, Scottish Human Rights Commission, Amnesty International and Scottish Enterprise, has commissioned a national baseline assessment which will be completed later this year. The assessment will help partners and business understand the current position in Scotland in respect of the Guiding Principles and provide a robust basis from which to identify good practice and gaps in information, advice and support.

Following consideration of the baseline assessment and engagement with business and other stakeholders we will develop further proposals, including, for example:

• Action to raise awareness among businesses, and those who advise them, of their legal obligations in relation to human rights;
• Development of advice, training and support for Scottish businesses, in order to help identify and implement enterprise-appropriate actions which support and promote human rights in Scotland and overseas
• Inclusion of key information on human rights responsibilities and good practice in to our Digital First approach to supporting exporters; and
• Mechanisms to support sharing of good practice across the business community

Supporting Development through Trade

Starting with the signing of the Cooperation Agreement between Malawi and Scotland in 2005, Scotland’s approach to international development and associated funding has developed over the last decade.

The Scottish Government’s recent consultation on refreshing our international development policy seeks views on how we might retain the most effective elements of current international development work and how we might target and focus the International Development Fund and other work to achieve maximum impact. In particular, it asks how we might encourage better trade and investment links with our priority partner countries to support sustainable growth.

The responses to the consultation will inform specific action in this area which could, for example, include:

• Working through the enterprise agencies and business organisations in Scotland to help businesses from priority partner countries make connections with potential customers;
• Using trade as a way of facilitating knowledge and technology transfer between Scotland and priority partner countries; and
• Learning from countries such as Denmark, Sweden and the Netherlands, establishing a ‘Good Growth Fund’ to help Scottish businesses support and deliver responsible investment and development in priority partner countries.

Internationalising Social Enterprise

Scotland’s social enterprise sector, blending economic growth with social purpose, is thriving. Social enterprises across Scotland own and manage land, harness renewable energy for communities, create employment, provide support to the most vulnerable, and provide an increasingly diverse range of products and services. In fact, there are more than 5,000 social enterprises active across the country with a combined annual income of £3.6bn, supporting over 112,000 jobs, and contributing nearly £1.7bn of Gross Value Added to the Scottish economy ^[32] . As well as being part of the fabric of communities, this places the sector among Scotland’s key industries and at the leading edge of the international social enterprise movement.

This has been achieved through long term collaborative working between the sector and the Scottish Government, underpinned by supportive policy and legislation and investment in the sector’s development.

Building on Scotland’s leadership and support for the Social Enterprise World Forum, a broader international role for the sector is taking shape through, for example, the ‘franchising’ of Scotland’s Social Enterprise Academy in South Africa and Australia and an International Social Enterprise Programme which supports five international social enterprises to base their global headquarters in Scotland. Furthermore, a small but growing number of Scottish social enterprises are already operating internationally. Indeed, research indicates that 7% of Scottish social enterprises are already collaborating with international partners, contributing to the development of international projects, or selling overseas and that around 5% have exported or licensed goods or services to overseas markets in the last financial year.

This strategy signals a commitment to stepping up that process of internationalisation and associated support as a key element of Scotland’s approach to trade and investment. This will often entail SDI supporting social enterprise businesses in the same way as it supports ‘traditional’ businesses. However, there is also a need to consider the distinct nature of the social enterprise sector and the opportunities for overseas growth and investment. The Scottish Government and its enterprise agencies will therefore work with the sector to develop and deliver an International Social Enterprise Strategy for Scotland aimed at expanding activity in international markets; growing the sector’s international footprint and revenues; sharing learning and experience; and raising Scotland’s profile and reputation as one of the best places in the world for social enterprise.

This focus on human rights, trade for development and internationalising social enterprise signals the start of a wider and deeper approach to trade, international development and responsible business. Looking ahead, we will engage with business and other stakeholders to consider what more might be done to ensure our approach to trade and investment supports the Sustainable Development Goals and Scotland’s role as a Good Global Citizen.