US Secretary Antony J. Blinken at Blue Dot Network Discussion

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Antony John Blinken
Antony John Blinken
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Secretary Antony J. Blinken at Blue Dot Network Discussion

The USA,05 October 2021

Antony J. Blinken, Secretary of State

Paris, France

OECD

MS LACQUA: (In progress) discussion of the Blue Dot Network and how it can catalyze quality infrastructure investments to actually build back better. I’m Francine Lacqua, editor at large and anchor at Bloomberg and your master of ceremony for this high-level panel. Now, I am absolutely delighted to be joined by esteemed panelists Sharan Burrow, general secretary of the ITC, Mr. Yves Perrier, chair of Amundi, and joining us remotely, Brendan Bechtel, chair and chief executive of the Bechtel Group.

Now, before we begin our panel discussion momentarily, it is my great pleasure to welcome the honorable Anthony Blinken, Secretary of State of the United States and Mr. Mathias Corman, Secretary-General of the OECD. So please join me in standing up and giving them a very warm welcome. (Applause.)

SECRETARY-GENERAL CORMAN: Secretary Blinken, ministers, ambassadors, distinguished guests, colleagues, a very warm welcome to you all to the second meeting of the Blue Dot Network Executive Consultative Group. A special thank you to U.S. Secretary of State Tony Blinken, the chair of the 2021 OECD Ministerial Council meeting. A very warm welcome to the OECD and thank you for joining us here today.

Today’s meeting, the continuation of our conversation in June, seeks to provide insights on how the Blue Dot Network can help facilitate leverage and operationalize quality infrastructure investment in a trusted and inclusive way and in a way which supports the net-zero transition. We all know that to optimize the strength and the quality of the recovery and future growth, the world will need to fill a massive infrastructure investment gap. Quality infrastructure investment is central to the recovery plans of many countries.

The Blue Dot Network seeks to help bridge the global infrastructure investment gap by establishing a globally recognized symbol of market-driven, transparent, and sustainable infrastructure projects. It aims to support and attract investment into quality infrastructure through the establishment of a voluntary, private-sector-focused, government-supported certification scheme for infrastructure projects. It will promote, facilitate, and streamline the application of international standards and best practices, and thereby ensure a level playing field and contribute to building trust around quality infrastructure investment. Provides a common platform for ensuring projects are built consistent with our shared commitment to the environment and human rights, the rule of law, transparency, and market-based principles.

Importantly, the Blue Dot Network will help achieve many of the OECD’s core objectives, from environmental protection to ensuring responsible business conduct, high-quality infrastructure, governance, anti-corruption, gender equality, sustainable finance, as well as economic and social progress. We are home to many of the key international standards in these areas. We’re also continuing our drive to mainstream gender in infrastructure, most recently through our new G20 report on inclusion of women in infrastructure. And we have experienced promoting policies on quality infrastructure investment through our regional programs, including in Southeast Asia.

(In French.)

It is now my honor to introduce Secretary Blinken for this – for his opening remarks. Secretary Blinken, the floor is yours. (Applause.)

SECRETARY BLINKEN: Mathias, thank you so much, and good afternoon, everyone. It’s a great pleasure to be here, to be at the OECD, to be in Paris, and to be here for this discussion. And as you’ve heard, infrastructure is a major focus of governments, of private sectors, civil societies, all around the world, and for very good reason. It’s critical for economic growth, especially as the world works to recover from the economic crisis caused by the COVID-19 pandemic. Ports, airports, roads, trains, power grids, access to the internet – each is a building block for global trade, commerce, connectivity, opportunity. It’s directly connected to the climate crisis. Infrastructure that’s designed and built sustainably can reduce global carbon emissions significantly, and infrastructure designed to be resilient can better endure the flooding, the fires, the record-breaking temperatures, and larger, more frequent storms caused by the climate crisis that virtually every one of us in our countries has experienced of late.

And finally, last but not least, infrastructure is critical for people’s wellbeing. Hundreds of millions of people across dozens of countries don’t have access to roads or to services that should be available to everyone: reliable power, clean water. These are problems that the right infrastructure investments can help to solve.

So at this moment, when so many wealthy economies are due to replace or rebuild crumbling infrastructure constructed decades ago, and when so many developing economies are looking for partners to help them close the infrastructure gap, we have to do more to make sure that infrastructure is done right. Because too often, that’s not what’s happening. Too often, infrastructure is not built with sustainability, resilience, or climate in mind. It’s not held to the highest standards, so it’s less safe and less durable. It’s not done in partnership with local communities, so its social impact is mixed at best. Corruption is often a serious problem with big infrastructure projects, and we know that where corruption flourishes, labor rights, human rights, environmental protections are often ignored or violated.

At a time when others are driving an approach to infrastructure projects and developing economies in which overseas companies import their own labor, extract resources, fail to consult with communities, end up driving countries into debt, we’re here today because we’re championing a different approach. Rather than race to the bottom, we together, with likeminded government, private sector, and civil society partners, we want to spark a race to the top for quality, sustainable infrastructure around the world.

And that’s exactly where the Blue Dot Network comes in. It’s a certification for infrastructure projects based on existing standards developed by the OECD, the G20, multilateral development banks, industry members. We’re not asking anyone to jump through any new or arbitrary hoops. It’s entirely voluntary and open to all countries and all projects that meet the standards. It’s centered on the climate crisis by certifying projects that are resilient to climate change and align with the Paris climate goals. And it aims to reduce the corruption that so often undermines what would otherwise be quality projects.

Here, I also want to mention a new project that the United States Department of State is funding at the OECD that seeks to address the problem of corruption in infrastructure development. We’re creating a toolkit of practical ways to prevent, to detect, to respond to corruption, including through training and help with capacity building for organizations that are particularly vulnerable to it like, for example, government offices responsible for public procurement and companies bidding for contracts. We’re grateful to the OECD for being our partners in this endeavor.

Often, there’s a perceived trade-off between infrastructure projects that are sustainable, responsible, equitable and projects that are cheap and fast. Some countries may feel that they don’t have a choice, that they can’t afford to do infrastructure right. But in fact, even though sustainable infrastructure projects may cost more on the front end, it’s worth it over their life cycles, because the economic, the environmental, the social benefits often end up being substantial, and so do the costs of cheaper, less sustainable projects. It pays to invest in projects that meet the highest standards. The Blue Dot Network exists to help countries and investors realize and achieve that.

We also know that investors and other stakeholders are looking for reassurance that projects are high quality before committing resources to them. And here, we believe that the Blue Dot Network certification will help those kinds of projects attract the investment they need to actually get off the ground.

So I want to thank our partners for this initiative. It’s still early days, but we’ve done good work together to hammer out how the Blue Dot Network will certify projects to make sure stakeholders across sectors are consulted from the very start. And thank you again to the OECD. Its Trust in Business team, the executive consultation group of more than 160 representatives from business, from civil society, from academia that the OECD helped organize, that will help ensure that the Blue Dot Network is both effective and efficient. And thank you to Secretary-General Corman, who helped launched our advisory group as one, I think, of your very first acts as secretary-general.

The Biden administration believes deeply in the notion that the world’s major democracies have an opportunity to show real global leadership on this issue. That’s also the idea at the heart of the Build Back Better World partnership that we announced at the G7 summit this past June. We’re grateful that the OECD shares this commitment, too: turning around the global economic crisis, rising to the challenge of the climate crisis, strengthening governance, making essential services available to more of the world’s people. These are some of the most urgent problems, but also opportunities facing our world, and infrastructure is directly connected to each and every one. So that does make this a huge opportunity. If we make progress here, we can make progress broadly with an impact that will last for decades to come. Thanks so much for listening. (Applause.)

MS LACQUA: Thank you so much, Secretary. Now, let’s go straight to the panel. And I’d love to first call on Sharan Burrow. You’re all members, all the panelists, all members of the Blue Dot Network Executive Consultation Group. So what do you see, Sharan, as the main benefits of this network certification for your stakeholders?

MS BURROW: Well, this project has incredible potential because infrastructure means jobs – it’s that simple – and we need jobs. In a world where governments have lost sight of the social and economic benefits of full employment, then this is one way to ensure a just recovery. But those jobs have to be good jobs, they have to be quality jobs, and they have to be sustainable if we’re going to meet the test of transition and just transition.

So if this project is designed right, if it has genuinely standards at its heart across governance, across environment, and across social standards – those human and labor rights Secretary Blinken talked about – and if in fact the assessment is embedded in the design and the project – so from the government responsibility down to the project level, with workers and their unions involved in the monitoring, not simply putting aside the construct to auditing firms who’ll tell you what you want to know, but built-in safety, rights, and commitment – then this can de-risk and build confidence in vital infrastructure projects.

So we’re happy to join, happy to see that the standards are embedded, and look to the due diligence and the compliance frame.

MS LACQUA: Thank you. Yves Perrier, what do you see as the benefits to your industry?

MR PERRIER: Firstly, I want to say that in Amundi we have been committed through to this question for a long time. Since the creation of the company more than 10 years ago, we have defined one of the four pillars to be a responsible investor. That’s my first point.

Second point, I will say that what we are living, the energy transition, I prefer to call it an industrial revolution because it concern the supply of energy, the products, and the way the products are manufactured. And this transformation will be key to meet the objective of net-zero in 2050, and it will entail massive height of traditional assets and huge investment to build this new infrastructure, to build this this new way of manufacturing, and so on. And the assessments are not – it depends, but it’s something of a 1, 3, or 4 trillion barrier of investment.

And so the key question on the financial point of view is to find the funding of this investment. And this investment of the term of maturity are long term, their return – there is incertitude. We have to be honest. And so we need to make this big shift of money in order to finance this. And that’s the reason why, to make the shift of money, we have to have the good framework in order to assess what is really green infrastructure and what is not. One of the danger of the present monetary policy is that it fuels the money everywhere, but what we need is that the money is fueled in the direction of the managing of this industrial revolution, and especially in emerging countries, because we know that the battle for the climate change will be mainly in China, in India, in all the emerging countries – will need more energy, and at the same time to decarbonize strongly this energy.

MS LACQUA: Thank you so much. Mr. Bechtel, what do you see the benefits, of course, as joining this network?

MR BECHTEL: (Inaudible) Secretary Blinken for shining a spotlight on this hugely important issue. Infrastructure broadly is a driver of sustainable and inclusive economic development. Bechtel is enthusiastically supportive of Blue Dot and of raising high-quality infrastructure standards around the world. As the Secretary said, billions of people around the world do not have access to clean water, to digital connectivity. This is exactly the kind of thing that we think Blue Dot can make a huge difference in.

Of course, how and through whom these needs are met has profound implications. The question is urgent, not just because of our shared global decarbonization goals, but also because the developing parts of the world have choices. They have choices about how they’re going to develop their economies and improve the quality of life for their people. And they can choose to put ESG right at the heart of those development plans, and I think Blue Dot Network really helps provide a framework to do that.

We all know that good things happen when responsible governments and communities and contractors come together to try to work together on high quality infrastructure. For example, high quality approaches to infrastructure include at their core building local skills and capacity and engaging local people in the development of their resources and economy. It’s something we care deeply about, training local people wherever we do projects around the world, and in many cases offering the opportunity for them to travel around the world with us and work on projects in other places.

I would also add that high quality infrastructure is not just about building a physical asset. It’s about designing and building a positive legacy of positive social impact, of environmental strength, and of inclusive economic development. These benefits are core to our value proposition as an American engineer and constructor, so we’re really excited about what Blue Dot represents for us.

But success is going to require partners in government and in communities and other industry players who are just as invested in the success of this kind of inclusive, equitable, economic development. We think Blue Dot is going to provide a really important framework for helping decision makers illuminate all of these choices, as they’re making these tough development decisions, and take into account a broader, more inclusive complete picture when it comes to thinking about value.

We hope Blue Dot’s just the start, and we’re really excited about the Biden administration’s Build Back Better World agenda and all the announcements that are coming this week about the way the OECD is bringing coalitions of government and communities and industry together. So thank you.

MS LACQUA: Thank you so much. Secretary, so to what extent should the Blue Dot Network actually be viewed as a response to China’s Belt and Road Initiative?

SECRETARY BLINKEN: Well, first, let me just thank all of our colleagues for being here and for the both important remarks and insights that that they’ve made and shared. And, Brendan, it’s great to be with you virtually. Thank you for taking part in this.

Fundamentally, this is about what we’re for, not what or who we’re against. And what we’re for, which you’ve heard very eloquently described by virtually everyone, is a race to the top when it comes to infrastructure, making sure that these investments are made with quality in mind, with communities in mind, with environmental impact in mind, with the rights and responsibilities of all of the stakeholders, including labor, in mind. And so we have an opportunity through this something that is purely voluntary, that’s based on existing standards established by the OECD, by the G20, and others to actually accelerate that race to the top, and to do it in a time when it couldn’t be more needed and more necessary for the reasons that we’ve all described.

And the interesting confluence of challenges and crises is also a confluence of opportunity, because we’re at a point where, in the already developed world, infrastructure needs to be revisited because so much of it is old, antiquated, and crumbling. We have vital needs in the developing world for infrastructure to really genuinely connect people. And as a result of both COVID and the need to build back better, as well as the climate crisis, a moment that we can’t lose to do this in a way that meaningfully jumpstarts our economies and creates greater resilience and adaptation to the existential challenge of our time, which is the climate crisis.

So that’s fundamentally what this is about. And I think as we’ve also heard from our colleagues, what Blue Dot offers, among many things, is an ability to really be a further magnet for investment, for giving a clear international accepted seal of approval that I think will inspire and raise confidence in those seeking to channel their funds for investment in infrastructure. So I share the – I think the optimism about this project and also see the real potential, but again, to come back to the – fundamentally about what we’re for and what we’re for together.

MS LACQUA: Thank you so much. Sharan, how can the Blue Dot Network actually support jurisdictions, particularly in low-income countries that may not have the capacity to actually meet the best-in-class standards to ensure that they’re not left behind?

MS BURROW: Well, if you think about the OECD working with governments and particularly their procurement departments, that’s a good start. But have a look at the spread of companies. Most of them will be international companies who are going to deliver major – as the lead contractor, at least, going to deliver major infrastructure. And that – that’s vital that they know what standards and what compliance mechanisms they have to face.

And if I can come back to the point about compliance, auditing has now become more than an $80 billion industry, but it fails us. Rana Plaza was ordered to – just before it caught on fire and the disaster. The Brazilian dam actually – they would have, with BHP and Vale, they would have avoided that $6 million cost because – if they’d listened to the safety warnings of unions before the event. And if you look at current projects, I just picked out a couple, but the maglev line in Japan is a $52 billion project. It has a national standard for constructive labor relations. It involves regular safety and operational meetings between labor and management, and so far it’s on time and it’s indeed got confidence.

These – this is what we need. If you look at the OECD house, you have indeed got the due diligence guidance. You have got a complaints process which people can use. But if you use the standards and the guidance, the ILO standards, the global standards for labor rights, if you use the governance standards of the OECD, and of course, while our – we all accept that our environmental standards aren’t up to the task today, but if you meet the test of the Paris Agreement and just transition, for which there are ILO guidelines, then we’re well on our way to saying these are good, safe, integrated industrial relations standards with environmental overlay that we can trust.

And can I say: This is really important to us not just for the workers on the job, but indeed for our pension funds. We have $40 trillion under joint trustee management invested in the global economy. There’s massive amounts of money in infrastructure and there should be more of it, frankly. But we need the confidence of this. And I would say to the constructors – I can just pick out one. NL has a framework agreement with industrial, with its unions. We’ve committed ourselves to working in partnership with a company like that to decommission coal-fired power stations, but to invest in the community and the workers to see they’re not stranded.

We need more of that. There’s only three of those lead construction companies that you have in the executive group that have these kind of agreements. Dialogue, standards, compliance across the ESG range – critical, and it will build this project into something that all governments, whether they’re from poorer countries or richer countries, will work together to want to be part of.

MS LACQUA: Thank you so much. Yves Perrier, how can this network actually meaningful allocate capital to where it needs to be, and also put us on a better path towards net zero?

MR PERRIER: I think that, as I mentioned before, the key question is to allocate the good level of capital to this infrastructure project, but be sure that the – this infrastructure project are in line with the objective of net zero, which mean quality of the assessment to – that mean that we have the good standards, the good reportings about this. And I believe that the partnership between financial investors and public authorities is key.

And in Amundi we have two examples of this. We have three years ago launch – in partnership with the IFC, subsidiary of the World Bank – the first green bond funds to finance infrastructure on emerging countries. A fund of $1.5 billion. And standards were defined in common, and the way infrastructure project were selected was in common.

A second example: We launched a fund with the European Investment Bank in order to create a bond market for small and medium companies in Europe, just the same approach. And finally, we had a partnership with the Asian Investment Infrastructure Bank to define the framework with – that they use in order to invest in these – their different projects. And I can tell you that the day we announce this partnership, they announce at the same time that they stop coal – to finance coal project.

That mean that the cooperation between public organization – like OECD, European Investment Bank or others, World Bank and so on – and investors is key to correctly assess a project and also to give confidence for investors to put their money in this fund. And we will need a real market of these bonds where – who finance these funds considering the level of money, which is huge.

But the definitions, to be clear – because one of the risk is that everything will become green. Then if everything is green, nothing is green.

MS LACQUA: Thank you so much. Brendan Bechtel, can you give us a sense of actually how this also helps with, for example, certain contractors to avoid some of the risks of operating international?

MR BECHTEL: So certification is an excellent starting point in allowing contractors to operate with lower risk internationally but leading to better outcomes. This is a core part of our business; we always want to do the right thing. We want to hold ourselves and our partners accountable to the highest standards. It’s a lot of the things that Sharan already covered really eloquently, so I don’t think I need to be redundant.

I would like to maybe – the – Secretary Blinken framed the benefits of Blue Dot Network in a very positive and optimistic way. I might sharpen the case for change and say that without Blue Dot Network, the felt experience of competing around the world right now is quite different. So what we see is the conscientious contractors actually have a disadvantage, and that the playing field is tilted towards the race to the bottom that Secretary Blinken talked about. It’s a race to the bottom not just on low cost without thinking about life cycle costs, but also when it comes to ESG, worker safety, human rights, fair employment practices, et cetera.

So we really believe – and one of the reasons we’re so supportive of Blue Dot is that we think certification helps promote a more virtuous cycle by really elevating these values of transparency, of worker safety and the safety of the physical assets that you’re building for the public, of respecting human and labor rights, of taking responsible ESG actions, and, of course, building capacity in local industry and local government.

And as the Secretary said, these things sound expensive but they’re really not. If you think about it from a value for money over the 30, 40, hundred-year life cycle of a physical infrastructure asset, these things pay for themselves many times over. It’s a much better value proposition. And I’m so excited to hear people talking about life cycle costs the way that you are.

I think that some institutions like the World Bank and some of the other international finance institutions have started making some of the really important updates and modernizations to their procurement practices that Sharan talked about a little bit, and particularly focused on environmental and social sustainability – and rightly so – but in practice, what we see when we’re bidding on work around the world is that procurement processes generally have not yet caught up to that. And big infrastructure projects are still being awarded on lowest total installed cost without regard, in many cases, for the kinds of ESG concerns that we’re talking about, and that Blue Dot is all about elevating the standards for.

So low cost still seems to win, so we’re saying all the right things here now, but then we need to go put that into practice, and I really believe Blue Dot will help us do that. So we’ve got to keep shifting the thinking, and Blue Dot’s going to be a really important framework for how we do that.

MS LACQUA: Thank you so much. Secretary, how do you ensure that corruption, for example, doesn’t undermine the benefits of what we’ve – some of the things we’ve been talking about in infrastructure?

SECRETARY BLINKEN: So this is really a critical issue because we’ve seen that time and again, and of course, it’s broader even than infrastructure. If you look around the world over the last 10, 15 years, virtually every social movement you can think of has at its root, either as the cause or a cause, revulsion at corruption, and whether it’s the food vendor in Tunisia or the Maidan in Ukraine or half a dozen other movements I could point to, this is at the heart of it.

But when it comes to sapping the potential of infrastructure investment and creating as well a crisis in confidence, nothing is as corrosive as corruption. And so it’s vital that we also get ahead of it in these projects. And this is one of the things that I was talking about just a short while ago: We need more effective tools and mechanisms to help prevent and, if necessary, detect corruption in these projects from the get-go, and that’s exactly what we’ve now established – a toolkit working with the OECD that we will begin to put into practice, which I hope will make a difference.

But look, the very process that we’re talking about here, and the Blue Dot Network in and of itself, I hope will be a gauge of assurance and a gauge of quality, including when it comes to corruption and avoiding that in these large projects.

MS LACQUA: We’re almost out of time, so I’m going to ask you – thank you, Secretary – in 30 seconds each to name your priority, one or two priorities for the next two years.

Sharon.

MS BURROW: So the foundations have to be clear. Procurement is critical, but it has to have that ESG lens at the highest standards, and the due diligence has to come with grievance procedures and remedy that are internal, managed by government responsibility but also with workers and the contractors. And just transition, as we indeed prioritize investment for the green future we all need to invest in, because the climate emergency won’t wait. Then, in that context, the ILO guidelines on just transition must be part of that social dialogue.

MS LACQUA: Yves, in 20 seconds.

MR PERRIER: I think that, in fact, we need these standards. At the same time, they have to be simple. The principle is to be simple. We can find some universal standards, but after, we have to take into account the specificity of each country and so on, and especially on the social question where there can be differences of approaches. And ourselves, we have developed a rating of companies, of corporates, and a rating of projects which is an in-house ratings, and we’ll be happy, in fact, to share this with others. And – but to come to these, let’s say, common principles because the danger is to come from all of this in that, I would say, many – too many parameters, too much bureaucracy. And the principle is that substance must be over form, and not form over substance.

MS LACQUA: Great, thank you so much.

I keep on shaving seconds off. Brendan Bechtel, maybe in 15 seconds, just your number-one priority. (Laughter.)

MR BECHTEL: I think the most important thing is to have the Blue Dot framework available early in project planning. That’s the riskiest part of any project development. Having that certification process happen early in a project’s development and planning will allow us to mobilize more, I think, ESG capital to these kinds of projects, which, again, will help frame all these projects in a more positive way going forward.

MS LACQUA: Great.

Secretary, final word?

SECRETARY BLINKEN: Three words: Let’s get going. (Applause.)

MS LACQUA: Thank you so much, ladies and gentlemen. We’ve come to the end of the panel, so I’d like to convey our gratitude to many of you watching virtually or also in the audience, and most of all I’d like to thank all of our great panelists, in particular the Secretary of State Antony Blinken, for such a rich and engaging conversation. So please, join me in thanking them. (Applause.)

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