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Long-term and sustainable financial investment

The Financing for Development agenda has emphasized the importance of long-term “stable private financial flows to developing countries” since the Monterrey Consensus (para 25.) At the same time, there has been a growing focus on the incorporating environmental, social and governance (ESG) factors in investing. The Addis Ababa Action Agenda brings these two strands together, emphasizing that sustainability and stability of the financial system are mutually reinforcing. Yet, to date, capital markets remain short-term oriented.

Combatting money laundering/terrorist financing

A number of inter-governmental and regional bodies currently monitor and publish information on country performance relating to Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT) for their members, the most prominent of which is the Financial Action Task Force (FATF).

International tax cooperation overview

The Addis Agenda notes that international tax cooperation should be scaled up in a way that is universal in approach and scope and fully takes into account the different needs and capacities of all countries. While for many years international tax cooperation focussed on the conclusion of bilateral tax treaties, which had the principle aim of reducing double taxation, in recent times such cooperation has increasingly looked at setting tax norms to close loopholes and limit the ability of multi-national enterprises (MNEs) to avoid paying taxes.

Private sector efforts and initiatives on environmental, social and governance factors

Investor incentives often tend to not be aligned with environmental, social and governance (ESG). Sustainable or green investments should , in theory, be attractive to long-term funds, since the risks associated with climate change are a potential long-run liability. However, the short-term nature of investment horizons sometimes impedes the incorporation of longer-term environmental risks into firms’ risk/return analysis.

International efforts to combat tax avoidance and evasion

Tax avoidance is a legal practice, and internationally involves tax planning and arbitrage across borders. Tax evasion is an illegal action that is, in most countries, characterized as a crime. To combat both tax avoidance and evasion, increasing the availability of information for tax administrations has been at the core of the recent initiatives in international tax cooperation.