The document discusses challenges around financing the sustainable development goals (SDGs) through private sector engagement. It raises questions around whether the private sector can reliably partner to achieve the SDGs. While private activity, finance, and investment are increasing, challenges remain around ensuring additionality, impact, and inclusiveness of private sector activities. Effective monitoring and accountability mechanisms are also needed. Politics and incentives shaping firm behaviors are key factors that must be understood to build on domestic policies and strategies and determine if the SDG agenda can truly alter approaches to development financing.

1. Session 2: “Is the Agenda Viable?
Financing the Agenda – what’s new?”
Bruce Byiers
CIDOB, Barcelona, 15 April 2016

2. • Are the necessary means in place?
• Is the private sector up to the job?
• How to ensure effective monitoring and
accountability?
Can the private sector become the reliable
partner that is required to achieve the SDGs?
Questions…
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3. • From billions to trillions etc
• Devarajan’s (2015) MDG Mea Culpa:
Wrong question – the countries that made the
most progress weren’t necessarily those
receiving most aid…
Wrong answer – how do you estimate the cost
of achieving interrelated goals anyway?
Wrong approach to development – “Poor people
are poor because they are stuck in a low-level
political equilibrium” – finance a distraction or
an excuse?
• Viability: Do such frameworks affect
behaviour? (e.g. See ERD 2014)
‘Financing’ the SDGs?
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4. MoI - Rise of the private sector?
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0
10
20
30
40
50
60
70
80
Millenium
Declaration
Paris Accra Busan Agenda2030
Private Sector Poverty Partnership Aid Monitoring

5. Source: DIE, ECDPM, ODI – European Report on Development
The ‘means’?
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6. Private sector “up to the job”?
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7. 1. More private sector activity:
- Private sector development (PSD) – finance,
business environment, industrial policy,
matching, Aid for Trade…
- Private sector finance for development (PSF)–
new sources, risk mitigation
- Private investment for development (PSE) –
guarantees, risk mitigation, partnerships etc
1. Better private sector behaviour:
- Responsible, ethical, sustainable value chains
- Voluntary/mandatory reporting etc
Related but distinct agendas
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8. • Industrial policy
• Business environment reform
• Access to finance
• Public-private dialogue
• Value-chain integration
• Business development/skills
• Making markets work for the poor
• Innovation policy
• Management skills – vocational training etc
Challenges for SDG agenda…
• Anything new?
• Complexity
• The PE of economic reforms
Private sector development
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9. • Leverage foundations, pension funds, SWFs,
equity funds, local currency bonds etc
• DFI leveraging through blending grants,
loans & private finance
• Various SDG purposes – not just PSD
Challenges
• Need to be profitable - targeting
• Risk management and balancing
• Enough bankable projects?
• Legal environment
• Primarily a lack of finance?
Private sector finance
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10. Commercial & development alignment?
• Donors - Private sector engagement for
development
• CSOs – Sustainable, people-centred
businesses
• Businesses – Africa rising, philanthropy, CSR
• LIC Gov.s - Economic transformation, more
& better jobs
Private sector engagement
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11. Commercial & development alignment?
• Donors - Private sector engagement for
development (own commercial interest?)
• CSOs – Sustainable, people-centred
businesses (declining core funding?)
• Businesses – Africa rising, philanthropy
(‘Licence to operate’, sustainable ss chains?)
• LIC Gov.s - Economic transformation, more
& better jobs (political survival?)
Private sector engagement
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12. • Perceived > real risk
• From CSR to "core business model”
• Partnerships - public-private cooperation
models and CSO-business
• Beyond aid – DFIs, outwrad investment
Challenges
• Inclusivity? Impact? (not just a PS issue!)
• Additionality?
• Criteria for engagement….?
Private sector engagement
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13. …but are they CRITERIA? or goals or
objectives:
1. measurable development impact;
2. additionality;
3. market neutrality;
4. shared interest & co-financing;
5. demonstration effect;
6. social, environmental and fiscal
standards.
6 EC Criteria for PSE
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14. CSO criteria
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15. SAGCOT
Private led agriculture PPP
Principles there
how do you enforce
inclusivity questioned - large firms too powerful?
Lesotho Queen Mamohato Hospital
Public led health PPP
Difficulty in negotiating along the line
Political interest?
Misadvised?
Better Factories Cambodia - Garments
branded firms EXPECTED to pay
enforcement cost pushed onto suppliers
limited transparency
Beyond aspirations…?
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16. • “The” private sector?
• 70 Percent of global trade in intermediate
goods and services
• Economic transformation: need for LICs to
integrate with and climb value chains
• Rising consumer demand for economically,
socially, environmentally sustainable value
chains
• Firm-level licence to operate/philanthropy
etc
• ‘Universality’ in value-chains!
An accountable PS?
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17. Internal
• CSR – defensive, charitable, promotional,
strategic, transformational (Visser, 2011)
• Do good and/or motivate staff?
…depends on sector, size, inwards/outwards
orientation, new/incumbent etc
External
• Supply chain security (cocoa, extractives)
• Consumer demand e.g. FairTrade
• New (risky) markets
• Finance & gov. backing – e.g. IDH
• Regulations & transparency requirements…
Key factors shaping firm
behaviour
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18. • EU GSP+ => LICs adhere to 27
international conventions.
• Trade and sustainable development chapters
of EU FTAs also commonly refer to such
international standards.
• EU bilateral agreements e.g. illegal logging,
FLEGT voluntary partnership agreements
concluded on a bilateral basis
• Binding vs best endeavour (usually the
latter)
• Target – countries (trade) vs firms (EU
Conflict Minerals initiative of the EU, FLEGT,
EU Timber Regulation, or the Accounting
and Transparency Directives
Sustainable trade frameworks
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19. • Global
UN Guiding Principles on Business and Human
Rights;
ILO Tripartite Declaration of Principles Concerning
Multinational Enterprises & Social Policy;
OECD Guidelines for Multinational Enterprises;
UN Global Compact;
CFS Principles on Responsible Investment in
Agriculture and Food Systems.
• Private:
Global Reporting Initiative,
ISO 26000 on Social Responsibility,
Equator Principles (financial institutions)
Conflict-free Gold Standard
• Capacity & costs..
Sustainable business
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20. • Fast-changing definitions and requirements
• Burgeoning reporting requirements –
voluntary and mandatory
• Four key trade-offs in defining how policy
makers can encourage or require corporate
social responsibility (CSR):
Appropriate scope
Associated costs
The necessary regulatory mix
The related incentives and enforcement
mechanisms for compliance
• Weak enforcement – low access to redress
Reporting
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21. One overriding issue
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22. Politics
One overriding issue
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23. ECDPM Page 24

24. • Markets clearly key for development/SDGs
• Roles for ODA and non-ODA in working with
the private sector
• Trasparency & info. to limit harm &
maximise benefits
• Will the SDG agenda actually alter things?
• How to build on domestic
policies/strategies?
• Need to understand incentives and politics!!!
Where does that leave us?
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25. Thank you
www.ecdpm.org
Bruce Byiers bby@ecdpm.org
Twitter: @brucebyiers
www.slideshare.net/ecdpm
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