This document discusses partnerships between aid and the private sector for sustainable development. It begins by outlining the interest donors have in engaging with the private sector and criticisms of public-private partnerships. It then examines case studies of partnerships that achieved both developmental and commercial success. Key partnership principles that led to sustainable development outcomes are identified from the cases. The document proposes piloting partnerships and establishing a platform at the OECD to provide policy guidance, encourage pilots, and build evidence and transparency around partnerships between aid and the private sector.

1. Aid and Business for Sustainable Development 1
Steve Bass
17th February 2015Author name
Date
Steve Bass
17th Feb 2015
Steve Bass, IIED
OECD ENVIRONET 17th session
17th February 2015
Aid + private
sector =
sustainable
development?

2. Aid and Business for Sustainable Development 2
Steve Bass
17th February 2015
Aim of this presentation
Open today’s discussion on aid engaging the PS
for climate change, green growth and SD:
By reflecting on:
• WRI/IIED dialogue with Aid+PS on SD (2013)
• IIED case studies aimed at identifying
partnerships for inclusive SD (2014-present)
Suggest ideas – 1. Principles, 2. Pilots, 3. Platform

3. Aid and Business for Sustainable Development 3
Steve Bass
17th February 2015
Interest in Aid/PS engagement
Donors are engaging with the PS, for political & ‘efficiency’ reasons
Big businesses are the focus – many seek to understand, measure,
communicate and improve their SD and poverty impacts
SMMEs have neglected potential for inclusive SD in poor people’s markets
PPPs are the main partnership type, but…
Criticism of PPPs for env degradation and social marginalisation
From 2015, SDGs will increase pressure on aid to support inclusive SD.
New measure being developed – Total Official Support to SD
Incentives for PS engagement and for SD are not yet aligned in aid system
Poor mutual understanding between donors, big and small PS
Time for review of aid-PS engagement…

4. Aid and Business for Sustainable Development 4
Steve Bass
17th February 2015
SD partnerships – joint devt
and commercial success
Developmental
success
Partnehips
Sustainable
Development
Commercial
successs
Market
Develop
ment
Risk
Reduction
Policy
Influence
Business
Case
Poverty
Reduction
Env/
Climate
Protection
Equity /
Inclusion
Economic
Develop
ment

5. Aid and Business for Sustainable Development 5
Steve Bass
17th February 2015Partnership types
Aid+PS partnerships:
• PPPs
• Voluntary agreements B2B, public2B, gov2gov
• Community enterprises
• Community development contracts
• PPPeoplePs
• Multi-stakeholder dialogue/policy process…
Supporting finance mechanisms:
• Challenge funds
• Innovation funds
• Revolving-door funds
• Grants
• Preferential loans
• Targeted subsidies
• Capacity/training funds…

6. Aid and Business for Sustainable Development 6
Steve Bass
17th February 2015
Observations on partnerships
WRI/IIED Aid+PS4SD Round Table concluded:
• Donors focus on finance – but enabling
environment is also important for inclusive SD
• Partnerships for SD may involve govt as
regulator/enabler, NGOs as broker/watchdog
• Need evidence, pilots, dialogue on best practice
• Modest next step – IIED case studies of inclusive
partnerships…

7. Aid and Business for Sustainable Development 7
Steve Bass
17th February 2015
Case Study Selection
Case Study range
Economic sectors: water,
waste, energy, forestry,
fishery, agriculture, housing,
construction, metals,
materials, textile, chemicals
Partnership Types: PPP,
voluntary, community
enterprise, community
contracts
Criteria for Selection
Involvement of SME/informal
sector
Defined SD aims and
objectives, or showcased
outputs/outcomes, that include
both env and social issues
(IRF SDGs model)
40 cases selected –
18 studied in detail

8. Aid and Business for Sustainable Development 8
Steve Bass
17th February 2015
Case study analytical framing
Sustainable development
outcomes +
Partnership characteristics
that achieve them
Adapted from IRF, 2013, Post-
2015: framing a new approach to
sustainable development.

9. Aid and Business for Sustainable Development 9
Steve Bass
17th February 2015
Coverage of available cases
Partnership type Case study example Aid finance mechanisms
Public-private
partnership (PPP)
 Manila Water
 E+Co
 Re-Tie Bangladesh
 Water-Futures
Partnership
Local govt / donor financing
Preferential loans
Capacity / training funds
Commercial financing
Voluntary
agreement
(B2B, public2B, gov2gov)
 VA3
 Switch-Asia
 ANSAB Nepal
Capacity / training funds
Capacity / training funds
Capacity / marketing funds
Community
enterprise
 Nicaragua Enterprise and
Employment Prog
 Techfortrade
Preferential loans (guaranteed
by donors)
Private funds / pump-priming
Community
contracts
 El Mezquital
 AECF
 Cadbury Cocoa
Partnership
Revolving door funds
Challenge funds
Grants

10. Aid and Business for Sustainable Development 10
Steve Bass
17th February 2015
Aid roles
Role of aid Example
De-risking El Mezquital – revolving fund is reducing lending risk and
bringing more local products into commercial markets
Convening E+Co – field offices are effectively combining finance
sources with on-the-ground expertise
Capacity
for SD
VA3 – supporting platforms for the partners cuts cost of
essential networking and shared learning on SD
Inclusive
SD policy
El Mezquital – aid ensures decision-making responsibility
is shared with affected communities
Transparency Cadbury Cocoa Partnership – joint oversight boards
(including NGOs and UN agencies) assure SD

11. Aid and Business for Sustainable Development 11
Steve Bass
17th February 2015
Beginning the analysis…
Case study Partnership
type
Role of aid SD outcome Partnership
characters *
VA3 Voluntary
agreement
Capacity econ, soc, env IBM, PMD,
CTD, WP, CA
Manila Water PPP Convening econ, soc, env IBM, PMD,
CTD, WP, CA
El Mezquital Community
contract
Financial,
policy
econ, soc, env IBM, CA
Cadbury
Cocoa Pship
Community
contract
Transparency econ, soc, env IBM
Switch-Asia Voluntary
agreement
Capacity econ, env IBM, CTD, WP
E+Co PPP Convening econ, env IBM
* Characteristics of case studies with clear SD outcomes can help to
inform Aid+PS4SD principles…

12. Aid and Business for Sustainable Development 12
Steve Bass
17th February 2015
1. Ten partnership principles?
Successful partnerships include [high confidence from case studies]
1. Inclusive Business Model – inclusive process for SD plan, delivery, report (IBM)
2. Partnership and Management Development – clear roles, aligned incentives (PMD)
3. Capacity, learning/Training Development for SD tailored for context (CTD)
4. Wider Policy/enabling environment for SD actively considered and engaged so
prerequisites in place – tackling regulation, bureaucracy, tariffs, fees, subsidies, etc (WP)
5. Communication and Accountability channels on SD established and clear (CA)
Successful aid roles in partnerships appear to include [lower confidence]
6. Additionality – to what PS would do anyway; seeking leverage not just pass-through
7. Neutrality – not creating unfair advantage in the market
8. Sustainability – shaping long-term commercial and developmental viability
9. Transparency – requiring SD reporting from PS
10. Risk – underwriting the risks of innovation

13. Aid and Business for Sustainable Development 13
Steve Bass
17th February 2015
2. Pilot partnerships?
For SDGs, need evidence and confidence:
• In-country shared experimentation/risk-taking
• Across diverse sectors, businesses, aid modalities
Example idea: De-risking private investment in HEP:
• MFI participation in HEP now only 5-10%; reduced SD scrutiny
• PS doesn’t invest in SD as ‘it’s risk capital that can be lost’
• SD provisions cost only 2-3% of total project – good donor role
 3-part Financing Facility to lever PS investment in ‘SD dams’, so…
 Public good costs throughout HEP project life (3 stages)
 1 ESIA grant; 2 risk-share if proposal fails; 3 SD implem support
 Also support improved regulatory capacity
 Full IIED study at DFID request. UK and other interest

14. Aid and Business for Sustainable Development 14
Steve Bass
17th February 2015
3. Platform on Aid+PS4SD?
Use the OECD DAC mandate:
 To develop DAC policy on PS roles in SDGs
 To encourage and learn from Aid+PS pilots
 To call for and assess evidence
 To build trust and transparency, shared
values beyond compliance

15. Aid and Business for Sustainable Development 15
Steve Bass
17th February 2015

16. Aid and Business for Sustainable Development 16
Steve Bass
17th February 2015
Case study method

17. Aid and Business for Sustainable Development 17
Steve Bass
17th February 2015
Case Study:
Manila Water
Partnership Principles
1. Fostering an Inclusive Business Model
2. Early Institutional management system
development
3. Early capacity and learning/training systems
development
4. Active consideration of the wider policy/enabling
environment relevant to service
Results show that:
• Reduced water loss from 63% to 12.2%.
• Water access to the base of the pyramid
and more efficient use of water
compared to its predecessor.
• Replicated in Vietnam.
Manila Water is a PPP in Philippines
that took over responsibility for
providing clean and reliable water
supplies to the city’s east zone in 1997.

18. Aid and Business for Sustainable Development 18
Steve Bass
17th February 2015
Case Study: VA3
VA3 – Chinese laundry and textile
companies accelerate environmental
performance. Led by Dutch donors. The
project demonstrates most principles.
Partnership Principle
1. Fostering an Inclusive Business Model
2. Early Institutional management system
development
3. Early capacity and learning/training systems
development
4. Active consideration of the wider
policy/enabling environment relevant to service
5. Establishing clear communication and
accountability channels
Preliminary results show that:
• Increase of annual energy saving and
annual water saving potential
• climate change mitigation target of 10 M ton
CO2 emission reduction in 2015 has been
reached twice (half-way through project)
• Scaled up from local to national level.

19. Aid and Business for Sustainable Development 19
Steve Bass
17th February 2015
De-risking: Financing Facility
 3-part financing facility for flexibility, uptake and effectiveness
 Some projects may need Part A only. Others A+B or A+C
 It is not a subsidy. Aid leverages sustainability in the public
interest, while private finance seeks profitable projects
Part A
Grant Provision
To undertake SD
assessments
Part B
Risk-Share Provision
For enhanced project
preparation studies
Part C
Implem Support
Provision for special cases
• To Fund Hydropower Sustainability Assessment Protocol (HSAP)
• Mainly early stage and project preparation assessments
• To reinforce weak regulation / M&E and help build capacity
• When recommended by a Part A HSAP
• For project preparation to enhance ESIA, elaborate
additional measures, factor into project & financing plans
• Only invoked if project fails to achieve financial closure
• When recommended by a HSAP (Part A)
• Targeting small or special projects
• Enhancing E&S risk management in construction or operations