Stepping back: the private sector and the SDGs

How effective will global development targets be in securing the sustained engagement of the private sector? Are expectations of the private sector's developmental role running too high?

It is October and we are somewhat past now the UN fanfare around the long-negotiated 2030 Sustainable Development Goals (SDGs) to replace to 2000-2015 MDGs.

Much has been written around the SDGs, including in relation to what is portrayed as a revolutionary recognition of the private sector's role.

In view of this mountain of opinion this post has the limited ambition of querying whether this is so (game-changing scope for private sector engagement), and a related general observation querying the utility of the SDGs as ordering principles to guide development generally.

One thing to note is that the private sector is mentioned only once in the SDGs, in Target 17.17 of Goal 17, and then only in terms of formal partnerships (which are not the only way for business to up its developmental impact, or for policymakers to harness that).

The enthusiasm around the Private Sector Forum accompanying the SDGs process and summit, and the fact that there is these days a forum for business at all, can be misleading in this sense. Unreasonable expectations around the private sector's development role feature in a number of past posts on this blog (here).

Business is not about to simply 'step up' and finance pro-poor development, and to observe this is neither to criticize business nor turn away from the scope for harnessing commercial resources in support of development targets.

We do need to do more work on what incentives might exist for firms to become more explicit in partnering for development and otherwise becoming more explicit in their developmental contributions. See this recent Gaurdian event (a summary of which is out soon).

Yet those that call for business to 'step up' on the SDGs (see here, for example) must also acknowledge the huge complexity involved in all but the most well-resourced firms in trying to track SDG-related impacts. The answer is not to say 'various tools now exist to help in this'.

This relates to a second, too-late-but-anyway reflection on the SDGs.

It comes from re-reading, if you would, the sentence above 'Target 17.17 of Goal 17'. Many have commented how a key to the MDGs' relative success was their brevity and (for a very complex subject-matter) their simplicity.

The same cannot be said of the SDGs. Quite apart from poorly-resourced states, how are major firms really going to find the development agenda a compelling phenomenon with which to engage, if it has proliferated into such detail? Yes, goals need measurable targets alongside, but I wonder whether the SDGs will sustain corporate interest in sustainable development in the way they might have had their drafters' had the grace to keep things a little simpler.

I have written / ranted before on how to sustain sustainability and problems of compliance fatigue (here).

Related to regulatory and policy proliferation is the risk that SDG-related activities (by states, by firms, by civil society) become a process of tracking and compliance-style activities, rather than strategic thinking about how to promote more peaceful and prosperous societies overall.

In 2012 I wrote this post about the ordering, motivating power of simple ideas in thoroughly transforming society (here).

I am still reading all the fallout from the SDGs summit, but my own first impression is that their ambition to be comprehensive has meant a missed opportunity to present a compelling, clear, relatively simple set of ideas for a better world.

This will surely hamper the narrower objective of engaging business in meeting these goals.

Jo 

Corporates and human rights: 'knowing and showing'

The corporate responsibility movement (within and beyond firms and funds) has in recent years reflected at some length on the utility of public reporting on human rights impacts.

In an ideal and informed market, a firm's commercial value should partly depend on its social values.

How does externally-oriented reporting loop back to internal changes in strategy? How does one move socio-enviro impact issues from the periphery to the boardroom? How do those charged with improving social impact get themselves seen, on the inside, as important value-enhancers -- rather than being 'relegated' to the public relations / communications department?

Where it is not required by regulation, what is the commercial ('business case') for reporting to the public on existing or emerging human rights and social impact problems?

For many firms, there is something of a 'damned if you do / damned if you don't' dilemma here.

The obvious recent example is the reaction to Unilever's proactive approach to the human rights impacts relating to its operations and supply chains.

Unilever's CEO is a world leader in this respect. Yet not all market analysts approve of him airing, as it were, the 'dirty laundry' of adverse human rights impacts that the firm's internal processes find existing in the supply chain.

Whatever the legal-litigation and other considerations, from a corporate strategy (both brand protection / promotion, and general risk management) perspective, there is a strong argument to be made that those firms which make proactive efforts to 'know and show' the shifting map of their social (and enviro) impact are more likely to identify and pre-empt commercial and 'non-financial' risks, reinforce brand integrity, and so on.

What will it take for this strong argument to become (as Australians say) a 'no-brainer' -- beyond argument?

Achieving supply-chain integrity in social impact terms is very hard, especially for global multi-goods firms.

Firms that are honest about the complexity of these issues and display good faith efforts to address them may find customers, consumers, suppliers, investors, insurers and others far more forgiving than those which adopt, in effect, an 'ignorance is bliss' approach.

Ignorance is risk. Transparency is in -- this vague but undeniable norm of some sort, from Beijing to Brussels. Shielding is ever-harder, and a bad look.

One question is what it will take for these issues to level out such that other firms do not look at the reaction to Unilever's reporting and decide to keep their heads down. What incentive structures can shift the game so that there is only a 'damned if you don't' position?

Last week I heard John Morrison talk of the incentives (regulatory, market, consumer, corporate governance and other) required for moving these issues into the 'pre-competitive' space. That is, taking them out of play in terms of what firms see as the competitiveness downsides of greater proactivity and transparency on human rights impacts.

This blog is going through some transition as I settle into a new academic role.

A previous post reflects on these issues: here.

In the meantime, I can do no better on this topic than to promote Rachel Wilshaw's recent piece for a well-known Oxfam-related blog, on the Unilever report : see here.

Jo

Business and Human Rights: trends towards 2025

It is a decade since the UN mandate to develop what became the 2011 Guiding Principles on Business and Human Rights.

At the inter-governmental (Geneva) level, the consensus that existed in adopting the GPs in 2011 has not held. There is some sense of a return to the polarised, partly ideological debates of the pre-2000s on how best to regulate the impact that businesses may have on human rights.

Yet what happens in Geneva is only one part of what should be a range of regulatory, educative, advocacy, capacity-building, and other measures within countries, industry sectors and supply chains. Many of these will be driven by business leaders themselves and not necessarily premised on the idea that the only 'regulation' that counts is top-down legislative action.

These issues are summarised in a March report referenced in previous blogs on this issue.

This short post (from the Australian National University, where I work now) is simply to foreshadow a coming report in September, written as part of the Chatham House programme in international law. 

This report (see launch event spiel here) will look at the next decade of the broad 'business and human rights' field, based on analysis of current trends and their likely trajectory.

Jo

Extractive Industries and Conflict Risk

In what circumstances can the discovery and/or development of large-scale mineral resources bring countries or communities together, consolidating peace rather than driving conflict?

This question is the subject of the recently published Chatham House report 'Investing in Stability' (here).

As co-authors we found this a tricky subject area, filled with counter-factuals, definitional minefields, and serious methodological problems: how do we measure in what ways major resource projects increase or mitigate conflict risk? How do we attribute 'peace-positive' events or processes to the conduct of firms or others? How do we define 'peace' (net peace? local or national? etc) and who gets to do so? And so on.

The report proceeds on the basis that while energy and mining firms have increasingly clear responsibilities in ensuring conflict-sensitive operations and practices, the principal responsibilities are those of governmental authorities.

The tricky fact is that in fragile and contested states and situations -- the topic of this report -- governmental capacity is by definition very low or compromised. This increases the onus on responsible firms (and their financiers and insurers) to decide how, when and indeed whether to pursue large-scale projects in areas where the historical and political context makes it very difficult to see resource extraction and related revenues as capable of contributing to peaceful outcomes and processes. 

Jo

Rana Plaza: business, human rights and regulation

Where are energies best placed in closing the 'governance gap' on preventing and remedying human rights violations related to business activity?

This week came news from Bangladesh of murder charges brought against the owner of Rana Plaza (and some government officials) relating to the 2013 garment factory disaster, which claimed over 1,100 workers' lives.

Since such smaller, local businesses often supply global brands, the disaster gave some momentum to debates on the responsibilities of big brands for ensuring compliance with basic human rights, health and safety standards in their supply chains.

Such debates often ask 'who has responsibility' as if there must be one single actor accountable -- factory owners, local regulators in the production state, regulators in the retail state, brands and buyers (and their financiers), or consumers in more developed countries.

The boring answer is that a just and comprehensive and effective global system on business and human rights must inevitably involve a patchwork of differentiated but related roles and responsibilities.

(The standards against which these responsibilities can be gauged are fairly clear now, certainly in the global garment industry.)

The reasons for poor compliance vary; so must the strategies for promoting systemic practices of continuous improvement.

Unsatisfying as it sounds, a 'smart mix' of regulatory mechanisms and techniques will be required.

These must be grounded in public law, but also engage business actors in positive ways that go with the grain of commercial realities and seek to leverage a range of incentives beyond simple top-down legal commands.

In this context, events such as the Rana charges this week reveal, to my mind, at least three points:

1. Human rights need strong national laws: relying on industry self-regulation of labour standards in global supply-chains is not enough.

2. Global legal schemes for 'business and human rights' will only be as strong as the capacity and will of local authorities to uphold standards.

3. Consumers can be 'regulators' of business human rights compliance, and meeting minimum standards does not necessarily inflate costs.

The third point is a reminder that there is no necessary trade-off between being a responsible business and being a competitive one.

In an ideal world, and perhaps in the world to come (in some sectors, in some places), being a responsible business will be integral to being a competitive one.

If that is to transpire, for all the regulatory power in the world and for all the importance of having mandatory standards, there is no power quite like the power of the market to change business behaviour in society.

This puts the 'regulatory' onus on consumers, ultimately, in relation to human rights issues in retail supply chains.

That is not the same as saying 'let the market decide' without regulatory interventions. It is to recognise that the most powerful incentive for smaller business owners such as Mr Rana and family is a commercial one: comply or fail.

Jo

For previous posts on Business and Human Rights, see here.