By Barbara Adams,
Gretchen Luchsinger
16 April 2015 - Getting
the right balance between public and private sector roles and
responsibilities in the Financing for Development and Post-2015 process
will be fundamental to prospects for sustainable, inclusive development.
Yet early evidence suggests this balance is already awry, skewed far in
favour of private interests. Are we seeing a process of outsourcing the
international agenda?
There’s no question that businesses around the world are sources of
growth and employment. But they are also the source of the most serious
threats to sustainable development—from pollution to illicit financial
flows that undermine prospects for public resources.
Can we have a transformative development agenda without the
transformation of business? Is it time for a new model of business fully
grounded in sustainability and inclusion as inherent, not optional,
operating principles?
Just more business
as usual?
At the FfD3 hearings
with businesses last week, the theme, albeit unstated, seemed to be
business as usual—let’s just do more of it. Sessions covered how to
increase public-private partnerships and how to cultivate more small and
medium enterprises, seemingly on the assumption that more is better. Is
it? All of this could happen under the current growth model and be
completely unsustainable and deepen already serious marginalization, yet
that did not appear to be a prominent concern.
What was discussed instead? One speaker stressed that risks are not as
great in many developing countries as many investors think, and that in
fact more money can be made there than in rich countries. A
representative from the fertilizer industry made multiple interventions,
without anyone pointing out the huge environmental and social costs from
these products—”or that even mainstream commercial farmers have started
to see the merits of fertilizer-free approaches to managing the soil.
What’s the zero
draft of FfD3 got to say about it?
With the zero draft of
the FfD3 outcome finally on the table, a speaker at the business hearings
described it as having a lot of language that is positive for business,
and called for it to encourage businesses and financial industry to get
involved and feel they are part of the solution, not the problem. The
draft itself refers to businesses playing a “critical role,” and calling
on them to engage as “partners in the development process.”
But what track record do businesses really have in being part of the
solution where that is not a mandated and enforced requirement?
Especially on the systemic, broad scale required for sustainable
development? What’s the incentive for the world’s 200 largest
corporations, whose combined sales now exceed the size of the economies
of 182 countries, to exert their enormous power and influence in any way
beyond maintaining the status quo, which has delivered so many benefits
to them?
The zero draft avoids any strong references to one area where the private
sector could be encouraged in many developing countries. That involves
the kind of industrialization that provides decent, well-paying jobs,
while respecting human rights and environmental limits. This process
restructures and diversifies economies, so countries rise above
dependence on relatively low-return, volatile activities such as
agricultural commodities. Many of today’s rich countries pursued
industrial policies that allowed them to take this path. But these are
nearly impossible under the current trade and investment regimes, which
are dominated by already wealthy countries and corporations. Poorer
countries in particular have little chance of entering the global economy
in a way that propels domestic industries—”and decent jobs.
Medicines for
whom?
The zero draft includes the same reference to “essential” medicines that
appears in the post-2015 talks. Global Policy Watch has already
reported on the pressure there to downgrade agreed international language
around access to medicines, with some countries lobbying hard for the
more restrictive definition of only “essential” medicines. Who benefits
from this? The gargantuan pharmaceutical industry, intent on protecting
profits? Governments that now are increasingly elected on the back of
private election finance? Probably not all people—much less the planet,
given the copious amounts of medicine ending up in the water supply.
Whose incentives?
At the FfD3 hearings with businesses, there was a lot of talk about how
public sector actors need to be better prepared to work with the private
sector. Governments need to increase their project preparation skills,
for instance, and understand how to develop proposals attractive to
private partners. As one speaker pointed out, “Capital likes predictable,
risk-adjusted returns.” As do probably most people—but without the power
to insist that their needs be taken care of above all else.
Does all this imply that the incentive structure only operates in one
direction? Is there an assumption that we should have less confidence in
the aptitude of the public sector, so therefore it must do more to
operate on business terms? Even when those might be the same terms that
have led to the current highly inequitable, unsustainable patterns of
development?
Why is it appropriate to insist on targets for public financing in the
form of Southern development assistance, as has happened during the first
round of formal FfD3 negotiations this week, but claim that using targets
to control remittance costs for people mostly at the low end of the
employment chain will unnecessarily interfere with market mechanisms?
We can talk, as speakers at the business hearings did, about “piercing”
the sovereign credit rating (set by private agencies) with
well-structured projects (by public institutions making themselves
attractive to private investors) and that will attract investments (back
to the private sector). Since public and private incentives are currently
so poorly aligned, it is hard to imagine how public entities operating
more and more along private lines will keep up with their primary public
responsibilities, including as the main duty bearers for protecting
sustainability, inclusiveness and human rights. But at what point should
projects vital to human and environmental well-being happen regardless of
a business take on the issue?
Who’s social
contract?
It is true that huge sums now lie in private hands. Yet instead of
focusing mainly on siphoning off some for sustainable development, deeper
questions need to be asked about business models that are mostly not
sustainable or inclusive. These must be transformed—or the high ambition
of sustainable development called into question.
Sustainable development is a concept that recognizes relationships,
between people and planet; among economic, social and environment; across
different countries with their full spectrum of different capacities and
responsibilities. It is, in a sense, a kind of social contract, grounded
in indivisible human rights, that delivers for everyone alive today, with
full consideration for generations to come.
Yet many businesses, encouraged by years of deregulation, think of
themselves as existing outside this social contract. Or as able to select
the parts useful to them—such as through deliberate strategies to reduce
tax bills even as they are underpaying workers who then have to rely on
social protection schemes paid for by taxation.
As a privileged group, they are able to set their own norms, mostly
related to their own survival and profitability, and expect the public
sector not to stand in the way. Large transnationals have pushed this
approach so far that some governments at the United Nations have called
for a legally binding framework to regulate them and provide appropriate
protection, justice and remedy to victims of human rights abuses.
A social contract with gaping exemptions or
exclusions is bound to collapse. Many businesses might agree that a
contract is binding, not optional. It must be upheld and enforced, and
there can be no picking and choosing-no exceptions.
What’s Happening
Next
Post–2015 negotiations
- 20–24
April: Means of implementation and global partnership for
sustainable development
- 18–22
May: Follow–up and review
- 22–25
June: Intergovernmental negotiations on the outcome document
- 20–24
July, 27–31 July: Intergovernmental negotiations on the outcome
document
- 25–27
September: UN Summit: Delivering on and Implementing a
Transformative Post–2015 Development Agenda
FfD3 negotiations
- 15–19
June: Intergovernmental negotiations on the outcome document
- 13–16
July: 3rd Conference on Financing for Development
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