Last week the Brookings Institution hosted a very informative panel discussion (you can view it here) on increasing the role of the private sector in the global development agenda. The panel discussion, entitled Partnerships, Corporate Social Responsibility and the New Development Agenda, centred around how to ensure that sustainability and accountability are at the heart of corporate strategy. It also looked at how to engage business on sustainable development and how to mobilize companies to more effectively advance global priorities.
The panel consisted of Anne Finucane (Bank of America), Jane Nelson (Harvard University), Daniella Ballou-Aares (U.S. State Department), Mindy Lubber (Ceres), and Vera Songwe (World Bank). I shall begin by providing a short recap of the discussion and the main themes that emerged, and then conclude with some of the my thoughts on the event.
Partnerships and the New Development Agenda
In response to growing recognition that the private sector has an important role to play in combating poverty, promoting shared prosperity and enhancing environmental sustainability, policy-makers are working to define a clear role for the private sector in the Post-2015 Development Agenda. While this is a great start, realizing such an ambitious agenda will require that the private sector become a global development leader in its own right. There has never been a greater need for financial innovation and for banks, financial institutions and investors to develop new products, services, technologies, and even new business models so that they can be a part of the solution in driving more inclusive and sustainable growth. Some examples of private sector-led initiatives that contribute to development include new business models that reach lower-income customers, giving them access to basic products and services, and bond issues for public health programs that accelerate research funding and the distribution of vaccines.
Rebuilding Public Trust
In the aftermath of the global financial crisis the private sector is facing a pretty serious public trust deficit. If the private sector is going to play a leadership role in development, they must work to rebuild this trust. Corporations need to demonstrate how they are improving their risk management systems, government processes, accountability and transparency. While it is essential that these corporations address their governance and risk management issues, it is equally important that they look to the future are not paralyzed by the past. Some necessary steps to rebuild trust include engaging in public dialogue with legislators, regulators and consumers, sharing knowledge and best practices, and developing new products and services.
Opportunities for Financial Innovation and New Models of Partnership
Many of the panellists echoed the sentiment that without significant engagement from the private sector we will not achieve a new set of development goals. The private sector has the resources, finance and expertise to face some of the most costly development challenges including climate change and expanding energy access. Without strong functional collaboration between governments, NGOs, stakeholders and the private sector, we cannot hope to mobilize even a fraction of the funds required to address these problems. In addition, the demand for business to provide financial resources and innovative solutions has become even more pronounced due to declining faith in the aid/NGO community to solve these problems. With government resources becoming progressively constrained and the growing demand to demonstrate value for money spent, the need for new models of partnership in development is becoming increasingly clear. The ‘new models of partnership’ discussed by the panellists mostly involved banks, companies and financial institutions coming up with innovative products and services and NGOs helping to develop standards and evaluation tools. One of the panellists stated that over time having sound development expertise will become a fundamental pillar of risk management strategy. In order to protect their investment, companies who operate in developing countries will make more of an effort to understand what and who they are investing in.
What Gets Measured, Gets Managed
In order to encourage greater participation from the private sector, there needs to be a push for more tangible commitments where results can be seen. Having clearly laid out goals and targets is important because what gets measured, gets managed. Currently, one of the only things we have good measurements for are public aid flows and related activities. Panellist Daniella Ballou-Aares stressed that moving forward it will be critical to find ways to measure the value and impact of the private sector activities.
While I agreed with many of the points that the panellists made, I found the discussion a little too hypothetical for my taste. Although the panellists expressed a sense of urgency to enhance the role of the private sector in development, there wasn’t much of a discussion surrounding the logistics of how a partnership between development actors and the private sector could be achieved. The discussion also focused more on how a partnership with the private sector could help the international community to achieve their development and sustainability goals, without really a exploring how private sector-led development initiatives could help to improve (or harm) the lives of individuals and communities in developing countries. The discussion left me with more questions than answers: What kind of incentives will it take to encourage the private sector to step up to a leadership role in development? Is it even reasonable to expect that they will take on a leadership role? What steps can the international development community to take to foster a partnership with the private sector? In which sectors can business make the greatest difference to development outcomes? What are some of the ethical implications of business-led approaches to development?
In my opinion, the highlight of the event was the panellists themselves. I was so pleased to see five dynamic female leaders on the panel and I really enjoyed how they emphasized the importance of women’s economic and social empowerment. The panellists did an excellent job of affirming the necessity of engaging the private sector as a partner in development, and what can be achieved if we are successful in doing so. I believe that the private sector offers many lessons and best practices that could help to improve development impact, and that the development community would have much to gain by working more closely with them. I hope that the international community will move towards formulating a tangible, realistic action plan to realize such a partnership.