Steve Bass: Business for Sustainable Development – early results from an IIED/WRI project
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Steve Bass: Business for Sustainable Development – early results from an IIED/WRI project
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Steve Bass: Business for Sustainable Development – early results from an IIED/WRI project
- 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
Editor's Notes
- One of the main outcomes of the Rio+20 Conference was the agreement by member States to launch a process to develop a set of Sustainable Development Goals (SDGs), which will build upon the Millennium Development Goals and converge with the post 2015 development agenda - The private sector plays a crucial role in the development process by creating jobs, innovating and providing products that can transform the lives of poor people. European Commission coms (13/05/2014) calls for a stronger role of the private sector in achieving inclusive and sustainable growth in developing countries Excerpt” The private sector provides some 90 per cent of jobs in developing countries, and is thus an essential partner in the fight against poverty. It is also needed as an investor in sustainable agricultural production if the world is to meet the challenge of feeding 9 billion people by 2050. And through innovation and investment in low-carbon and resource-efficient solutions, it will have a major role to play in the transformation towards an inclusive green economy. Given the private sector’s potential for generating inclusive and sustainable growth in developing countries, private stakeholders including businesses, financial intermediaries, associations and workers and employers organisations are emerging as ever more active in the development field, both as a source of finance and as partners for governments, non-governmental organisations (NGOs) and donors.”
- Not just PPPs, even within PPPs there is variety that still involve local SMEs, this can range from int companies. Private to private have a role for public and aid, and they involve different scales of companies. Ex Cadburys the big UK company. Explain in more what types of partnerships are.
- 5 Partnership Principles (Key): IBM – Foster Inclusive Business Models IMD - Early Institutional and Management system Development CTD - Early Capacity and learning/Training systems Development WP - Active consideration of the Wider Policy/enabling environment relevant to service CA - Establish clear Communication and Accountability
- Emerging principles: emerging from the results of the IRF. We are finding these informed by case studies. 1. People arrive in partnership with diff goals and expectations (ex get money out the donor etc). Setting up an agreement with compatible purposes. For example setting up roles.
- Private investment and capacity building getting the governance technical assistance provision in improving governance that is outside the scope of the loan. The aid component was multilateral in the form of technical assistance that was publicly paid for. Which principles did they meet and why. Focus on governance system.
- (China-EU on textile and dying SMEs) – Partnership type: European Commission, Chin Government, Dutch Government, SME Association. Project team leaders: trusted broker role. (why is this important) because of dutch experience of SMEs and good connections with European Commission. This is a really interesting partnership, complicated because it goeas across different scales. It goes well because it ticks them. Mention it is in the process of replication from regional to national. Success is that it had all those principles done upfront and early. Complies with majority of principles, has provided substantial data to feed into principles, and relies on a proactive partnership leadership. Coordinates on policy, business, government and SME Association level. In process of scaling from regional to national level. Provides solid information on partnership mechanism but there it is still in progress and outcomes have not been measured yet. Preliminary results show that the scaling up in Changchun has increased VA3 annual energy saving potential in period 2012-2015 from 29 to 198 PJ and annual water saving potential from 60 to 188 million m3. This 2015 energy saving is equivalent to an emission reduction of 20 Mton CO2. Therefore the ambitious target of the VA3 climate change mitigation action of 10 Mton CO2emission reduction in 2015 has already been doubled halfway through this project. Netherlands Enterprise Agency(policy implementation agency of Dutch Ministry of Economic Affairs), Rijksdienst voor Ondernemend Nederland (RVO.nl), Erik ter Avest