BigFintechs and International Governance, Policymaking and the United Nations Sustainable Development Goals: the SDGs in the International Governance of Finance

The Dialogue on Global Digital Finance Governance Paper Series, Technical Paper 3.2, 2021

University of Hong Kong Faculty of Law Research Paper No. 2021/31

25 Pages Posted: 2 Jul 2021

See all articles by Kuzi Charamba

Kuzi Charamba

University of Hong Kong

Douglas W. Arner

The University of Hong Kong - Faculty of Law

Artem Sergeev

The University of Hong Kong - Faculty of Law

Date Written: June 2021

Abstract

Digital finance platforms - "BigFintechs" (BFTs) - have significant impacts, both positive and negative, on the path towards achieving the United Nations Sustainable Development Goals (SDGs). At present, however, there is no systematic or holistic international governance framework that manages potential negative impacts or effectively encourages positive impacts. As such, this Technical Paper of the UN Taskforce on Global Digital Finance Governance provides an overview of the ways in which a select set of SDGs are reflected in international governance and their potential lessons and implications for the governance of BFTs. The paper begins by discussing the international human rights system — a well-established ‘hard law’ framework — as it touches on almost the full range of the SDGs. From this, we turn to several other SDGs where there has been significant focus and where well-developed international approaches have emerged. In particular, we consider the international frameworks addressing, in turn: decent work and economic growth (SDG 8); gender equality (SDG 5); climate change (SDGs 12, 13, 14 and 15); and peace, justice and strong institutions (SDG 16).

We begin with the international human rights law (IHRL) framework because of its unique complementarity to the SDGs. Analysis shows that more than 90 per cent of the SDG targets are intrinsically linked to specific provisions of international and regional human rights instruments and labour standards. However, while IHRL is typically associated with state-based actors, we discuss the important shift that is currently taking place as IHRL broadens its applicability to private actors as well, thus including BFTs. The growing movement and imminent applicability of mandatory corporate human rights due diligence is a significant shift for which many companies are unprepared, and few understand. At present, most companies do not appreciate the true nature and extent of their human rights impacts. We discuss some of the implications that transplanting or subsuming notions of state obligation may have on current notions of corporate (social) responsibility and what this could mean for BFT corporate strategy in relation SDG impacts.

On the matter of decent work and economic growth (SDG 8), we discuss recent developments and issues of concern that are both internal and external to BFT operations. As BFTs hail from a wide expanse of sectors such as e-commerce, social media and ride hailing services, the challenges to labor and their working conditions are equally as complex and varied. Internally, pertinent labor issues can include the hazardous nature of workplace environments, such as warehouses and call centers; the contestation over the right to be considered a ‘worker’ rather than an independent contractor (in the ‘gig economy’), and the ensuing labor protections that are associated with the former; and the application of artificial intelligence (AI) to supervise labor in sometimes discriminatory ways. To highlight, we discuss the UK Supreme Court’s recent decision on Uber’s driver policies and the labor union decision at Amazon. With regards to external challenges, we discuss the issues of modern slavery and supply chain due diligence, and how they arise in the context of BFTs. In all cases, we highlight the need for BFTs and regulators to strike a balance between protecting vulnerable workers while developing appropriate governance frameworks that can fulfil the tremendous potential of platform-based business models.

Our coverage of climate change (SDGs 12, 13, 14 and 15) complements Technical Paper 3.1. Whereas Technical Paper 3.1 presented some of the initiatives being pursued by prominent regulators, such as the European Commission, in this paper we broaden that scope to consider governance initiatives by the private sector as well. We situate BFTs within the sustainable finance context as either financiers or issuers and present relevant frameworks such as the Equator Principles (EPs) and the United Nations Principles for Responsible Investment (PRI). In so doing, we highlight how we are currently in a relatively nascent stage in the development of international governance ‘green’ and sustainable capital markets. This development will require considerable effort and alignment of purpose and initiative across both the public and private sectors.

Finally, we provide an overview of governance initiatives pertaining to SDG 16 (peace, justice and strong institutions). The primary international governance frameworks in this domain are those for anti-money-laundering (AML), countering the financing of terrorism (CFT) and anti-corruption/anti-bribery.

This discussion of how a range of existing approaches and their relationship to the SDGs are reflected in the international governance of BFTs demonstrates the significant impact that BFTs have in our drive towards achieving the SDGs. However, the discussion equally highlights that much work is still required if we are to effectively manage that impact. Given the potential of BFTs’ platform-based model to offer catalytic opportunities for economic development, particularly in developing countries, it is important for policymakers and regulators to develop appropriate governance frameworks that are infused with the right principles and values.

Keywords: BigFintechs, UN Sustainable Development Goals, ESG Regulations, Sustainability and Human Rights

Suggested Citation

Charamba, Kuzi and Arner, Douglas W. and Sergeev, Artem, BigFintechs and International Governance, Policymaking and the United Nations Sustainable Development Goals: the SDGs in the International Governance of Finance (June 2021). The Dialogue on Global Digital Finance Governance Paper Series, Technical Paper 3.2, 2021, University of Hong Kong Faculty of Law Research Paper No. 2021/31, Available at SSRN: https://ssrn.com/abstract=3870867 or http://dx.doi.org/10.2139/ssrn.3870867

Kuzi Charamba (Contact Author)

University of Hong Kong ( email )

Faculty of Law, Pokfulam Road
Pokfulam
Hong Kong
Hong Kong

Douglas W. Arner

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Artem Sergeev

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

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