A Low Bar for Business
Just out from the Business Sector Steering Committee is the “Financing for Development Business Compendium.” It highlights 33 efforts aimed at mobilizing the private sector capital, claiming these provide “a strong indication of the broad scope of ongoing initiatives and the potential for scaling up to achieve the demands of the Sustainable Development Goals.”
The initiatives will be listed on the UN Financing for Development website as examples of the commitments different stakeholders are making under the Third International Conference on Financing for Development (FfD3). Their stated aim is to mobilise private sector capital, expertise and facilitation around the SDGs but they lack explicit commitment to UN standards.
Loading up on private sector debt
A quick look at three of the initiatives, under the section called “Principles and Performance Tracking,” raises concerns, as this subject is key to follow-up on FfD3 and the post-2015 agenda.
Initiative number one involves the Development Finance Institution League Tables, led by the Global Clearinghouse for Development Finance. The stated objective is that “one of the principal measures of the effectiveness of a Development Finance Institution (DFI) is its ability to attract significant amounts of private sector debt.” What are the implications for public sector responsibility for private sector debt? The tables, by tracking “progress” in this area, are meant to spur DFIs to mobilize private sector finance for infrastructure. But at what cost? True, trillions are needed for infrastructure. True, infrastructure can be essential for sustainable development. But what gets lost when we talk solely about the quantity of finance, and particularly in a context of extremely mixed results from private sector financing of public projects? Quite possibly, in what might be yet another race to the bottom, human rights and sustainable development standards.
What are the indicators for the impacts of this initiative? Not “how many more people have access to quality health care, education, jobs, etc.,” but the number of projects in which a DFI has participated and the amount of financing for which it is responsible. These indicators measure not impact but inputs. Ironically, the UN itself has been pressured away from input measures towards importing so-called “results-based management” from the private sector.
Continuous improvement—in theory
Initiative number two is a business charter from the International Chamber of Commerce. It has the high ambition of helping businesses “of all sectors and geographies” shape their own business sustainability strategies. Business sustainability is a vaguely defined term with a lack of clarity about what it means or how it links to sustainable development.
The ICC Charter is another call for businesses to voluntarily pursue “continuous improvement towards sustainable development,” with an emphasis on raising awareness, providing a pathway to business sustainability and highlighting where business can do more. There are expectations for business benefits ranging from cost reductions to increased employee loyalty. It is lacking in how it explicitly relates to sustainable development. Might effective regulation aligned with international standards help this process along, possibly at a faster and more meaningful pace?
Public good or public relations?
Last on the list: the SDG Compass from the UN Global Compact, the Global Reporting Initiative and the World Business Council for Sustainable Development. They are joining forces to produce a guide helping businesses align their business sustainability strategies with the SDGs, ‘if they choose to’. With the pick and choose approach, what is the likelihood of achieving sustainable development?
There is also a reference to how “furthering the SDGs can bring about prosperity and opportunity for the private sector.” So a win for some businesses, but does it really make sense to appeal to the same profit motives that have already led so many enterprises down the path of unsustainable development? What is the likelihood that the SDG Compass, will become yet another opportunity for businesses to claim they are practicing “corporate social responsibility,” with no mechanisms or other forms of accountability to ensure that they do anything more than generate publicity?
Private sector activity is vital to all economies. But many of the forces that drive corporations have been shown to be profoundly strong—like greed and short-term profit motivations—and contradict sustainable development principles. A compelling amount of evidence suggests that these forces won’t be curbed by “voluntary” initiatives grounded in similar incentives.
If large businesses, in particular, given their huge resources and impacts, want to claim they are serious about sustainable development, they should be calling for strong, enforceable, consistent legislation that allows all private sector activities to happen on a level playing field, fully respecting all international norms that protect people and the planet. That might contribute to a UN fit for purpose.