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1 September, 2022

SDG-related FDI increased by 38.5% in 2021

The number of greenfield FDI projects in SDG-aligned sectors experienced a strong increase in 2021.

By Sofia Karadima

The number of greenfield foreign direct investment (FDI) projects in sectors that work towards the achievement of the UN’s Sustainable Development Goals (SDGs) experienced notable growth in 2021, according to the Global FDI Annual Report 2022

There were 4,874 projects in SDG-aligned areas in 2021, up from 3,519 in 2020, representing a 38.5% increase in sustainable investment during this period. 

FDI projects in SDG-aligned areas represented 30% of all projects tracked in 2021, up from 25% the year before, according to our FDI Projects Database.

Which sectors are driving this growth?

Communications and media was the sector that attracted the highest number of greenfield FDI projects in SDG-aligned areas across both 2020 and 2021, followed by renewable and alternative energy and food. 

More specifically, 20.4% of all projects in SDG-aligned areas were in communications and media in 2021, up from 10.4% the year before. 

Investments in renewable and alternative energy also experienced a solid increase in 2021, with several projects promoting the achievement of SDGs. For example, Spain-based utility company Endesa invested $709m (€707.96m) to expand its operations in Pego, Portugal, with a photovoltaic solar plant.

Other sectors that received a high number of greenfield FDI in SDG-aligned areas include software and IT, pharmaceuticals and medical devices. There were also some key projects in sectors related to healthcare, education and biotechnology

Where are the leading destinations for SDG-aligned projects? 

The US was the leading destination country for greenfield FDI in SDG-aligned areas in both 2020 and 2021, receiving similar numbers of projects for both years, in areas such as food, renewable energy, communications and media, healthcare, pharmaceuticals and biotechnology. 

Germany ranked second and the UK third when it came to receiving FDI in SDG-aligned areas over this two-year period. Other destinations that attracted a high number of SDG-friendly projects included Australia, Brazil, China, France, India and Spain. 

Where are the leading investors for SDG-aligned projects located? 

Investment Monitor’s analysis shows that the US remained the leading source market for outbound greenfield FDI in sectors related to SDGs in 2020 and 2021. The number of SDG-aligned outbound FDI projects increased by 38.1% in 2021 from 2020 levels. 

Germany was the second-largest outbound market over the two years, with the number of SDG-aligned projects created by companies from the country in 2021 reaching 405, up from 323 in 2020. The UK experienced a solid growth in outbound activity in 2021 with 409 projects, up from 284 the year before. 

Other key source markets in this two-year period were France, Japan, Sweden, Switzerland and China. 

What does the future hold for SDG-aligned FDI? 

FDI in SDG-aligned areas experienced solid growth in 2021. With foreign investors backing projects that promote the SDGs, the host countries benefit from industry-specific expertise, the transfer of technology, and job creation in sectors that deliver environmental and social impact. 

However, it remains to be seen if there will be more growth in SDG-aligned FDI projects in the years to come, or if geopolitical tensions, a global cost of living crisis and continued supply chain disruptions will cause investors to focus less on sustainability. 

Download the full Global FDI Annual Report 2022 here. 

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