As the international community gears up for Rio+ 20, and also begins to focus on what is needed to replace the Millennium Development Goals when they expire in 2015, many are starting to ask whether and how the private sector should be involved in a new framework for international development. ODI has developed some initial ideas on what business engagement might look like and is convening business and other stakeholders to take forward this discussion.
Both donors and developing countries are arguing for a greater focus on economic growth and private sector investment in a post-2015 agreement. The newly set up High-level Panel to advice on the design of a new development framework after 2015, which David Cameron co-chairs, highlighted the critical role that economic growth and trade play in reducing poverty. And Andrew Mitchell commenting on the Prime Minister’s role on this panel, referred to ‘harnessing private sector investment as vital for poverty reduction and human development’. The case for leveraging private sector resources to accelerate progress towards development goals is often made, but so far there haven’t been specific proposals or discussions on how (if at all) the private sector could engage more effectively in a new development framework.
It is useful to review previous experience. When the MDGs were agreed, MDG8 on partnerships mentioned the need to deliver some goals together with the private sector (e.g. access to ITC and pharmaceuticals) but businesses were not involved in the goal-setting process. Some initiatives, such as the Business Call to Action, launched after the goals were agreed, sought to engage businesses ex post, inviting companies to make commitments to help deliver some of the goals.
The development landscape has changed significantly since early 2000. A number of businesses have become much more involved in poverty and development debates. As expectations on the role of business in development are on the rise, some of these businesses may, arguably, want to be more involved in the discussions about a new development framework this time round. This also makes sense from the point of view of development communities: leveraging on business resources and expertise where appropriate can help maximise development impact.
So, is there a role for private sector in the process of agreeing a new framework for development after 2015, and, eventually, in the agreement itself? And if so, what could this be? We have developed a set of 3 initial proposals / scenarios, involving varying degrees of business engagement, as set out below:
Scenario 1 Business feeds into the development of the framework to ensure it maximises the contribution they can make to growth and development: under this scenario, firms are consulted in the process of agreeing a new development framework, with a focus on what they would like to see included in the goals, that would best help them contribute towards delivering them. A coalition of business associations articulates the views of interested businesses and feeds into the UN-led process set to agree a new development framework after 2015.
Scenario 2 Business makes pledges and commitments attached to specific goals and donors strengthen partnerships with business to deliver goals: in addition to feeding their views to the UN-led process, firms are invited to make (opt-in) pledges and commitments related to specific goals agreed by governments in the UN-led process. Goals are used as an opportunity to pool efforts and contributions from different relevant actors (including existing pledges) providing some coherence to different isolated initiatives. Although the initiative risks turning into a PR exercise, if focused and with buy-in from relevant actors, it could become an effective mechanism to drive theme/goal- based partnerships. These would take a more long-term and holistic approach to finding joint solutions that maximise the impact of donor spend and the scale and success of business investment.
Scenario 3 Improved reporting on the contribution of business to development goals – a separate framework for business: business and development practitioners see an opportunity in debates about a new development agreement to discuss what makes an inclusive/responsible business and standardise measurement on business contribution to development goals. Currently reporting is varied making meaningful comparisons, even within the same industry, a difficult task. Working groups including industry experts are set up to work out a few topline common indicators across industries, and more detailed industry-specific breakdowns. With calls for integrated reporting, some forward-looking companies include this information in their main financial reports. Some governments adopt this framework as part of their regulation (e.g. requirements for those businesses registered or listed in their countries), or provide positive incentives to companies that report or comply.
Achieving inclusive and sustainable development is undoubtedly a complex challenge, but one that is more likely to be achieved if resources and expertise from different actors are combined and used strategically. Forthcoming discussions about the future of development taking place in Rio+20 and ongoing debates on a new development framework after 2015, once the MDGs expire, provide good opportunities to do so.
Download a copy of ODI’s new paper ‘Beyond 2015: What role for business?‘. For more information on this project or to be part of the consultation and discussions please contact firstname.lastname@example.org.
Written by Paula Lucci and Karen Ellis, Overseas Development Institute.