Climate change, business and human rights

The Paris climate talks are underway. What does this mean for the 'business and human rights' field?

Does presenting climate issues as human rights issues necessarily increase the urgency, likelihood or comprehensiveness of corporate and financial activity and proactivity?

One assumption of advocacy in the BHR field is that framing the social responsibilities of business by reference to recognized, established human rights standards lends a certain urgency, persuasiveness, or imperative to businesses to act.

The assumption is that describing business conduct as having a human rights impact or potential human rights dimension brings some special galvanising force to the equation that other approaches do not.

(It is also thought that overlaying gives more virtuous businesses a stable framework of standards against which to plan their efforts to create social value and reduce negative enviro, social and governance impacts. Of course, business responsibilities are not just framed in rights terms for strategic reasons, but for reasons of principle: business activities can violate or at least impair, but also protect or enhance, various fundamental rights).

There are very sound reasons for believing that, in strategic terms, addressing the societal role and impact of business and financial activity in the lexicon and vocabulary of human rights may have some profound and positive effects.

But is it obvious and undeniable that this is so?

Are there some ways in which deploying human rights concepts and language might undermine the goal of more rights-aware, rights-based, rights-compliant business and finance?

For instance, could framing business-oriented campaigns in human rights terms sometimes lead to a defensive, litigatory mindset rather than a problem-solving, cooperative one? Could labeling something a 'Business and Human Rights' issue make some politicians and others less likely to champion it, for example in more conservative polities, than labeling something a 'responsible business issue' (the same norms still apply)?

I just do not think it is self-evident that invoking human rights on an issue necessarily makes everyone stop and say 'Oh OK, well in that case, lets all fix this!'

I do not think it is necessarily the case in relation to the nexus of business, human rights and climate change.

As the Paris talks proceed, this post simply refers to a guest blog I wrote this week where I developed these thoughts: here.

Jo

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.

Milton Friedman's ghost in Mombasa, 2015

The fashion at corporate responsibility summits is to mock Milton Friedman, the Chicago school economist.

I often wonder how many who do so have in fact read his late 1960s - early 70s doctrine before dismissing his famous line that '... the only social responsibility of business is to make profits...'

(Here it is in a nutshell, and by the way in its full explicit Cold War, capitalism-as-freedom context; a fair full quote would add what he did: '... so long as it stays within the rules of the game ...' engaging in free and fair competition without deceit, and compliance with the laws of the land.) 

Friedman's ghost has appeared a few times to me, in broad daylight too, here.

'Here' is downtown Mombasa, the heaving multi-ethnic port city that has long been the gateway to Kenya, and indeed to the entire east Africa region.

(Through its congested port comes everything from east Africa's oil supply to many of the small consumer goods sold by the region's ubiquitous street traders; too little that is Kenyan besides tea is exported in return -- and too much of its 'exports' consist of ivory poached for Asian markets, but that is perhaps another story ...)

In apparent contrast to Friedman's austere doctrine, we now tend to accept that 'the development challenge is no longer the preserve of government'. So reads an editorial by Kenya's deputy president in a local daily, following remarks he made at a conference in Nairobi earlier this week.

The remarks are an opportunity to reflect on what business the business community has in designing and delivering the development agenda -- globally, nationally and locally. 

There is no doubt, in my mind, that business (however we might define it) both has a significant role to play (within some important limits), and has clear interests in the development agenda succeeding.

The deputy president's remarks raise some consistent issues in topical debates on how the private sector can support development, and how supporting a vibrant private sector can have developmental dividends ... 

Some points he makes are hard to argue against. The private sector stands to benefit from developmental gains; its role goes beyond financing or co-financing projects that have development impact -- it is not just a source of resources; and so on.

And only purists will object to him using the term 'corporate social investment' (which can have a limited CSR-project meaning), where he really means a range of broader impacts that larger firms and funds can have beyond simply Friedman's approach of maximising profits while obeying the rules of the game, especially paying taxes and employee's salaries and complying with environmental and other laws.

Here in Mombasa there are initiatives, for instance, that reveal business groupings taking a more deliberate, engaged, do-not-wait-for-government approach to issues such as finding work for what Friedman called 'the hard-core unemployed'.

Yet call me a heretic, and accuse me of seeing ghosts: Friedman was not totally, as they say, 'on crack'.

In all my meetings with businesspeople here, including (in fact, especially) those with sincere longer-term developmental passion and vision, a message emerges that on its face is uncomfortable for all of us espousing a far greater explicit role for business in development.

This is the inconvenient truth that the greatest developmental impact business could have in places like this is for government to focus on allowing them to succeed as businesses. Not specifically as socially responsible or development-oriented businesses (although there's no trade-off necessary), but to succeed as law-abiding firms creating value, jobs, tax revenues, demand for better governance, and so on.

The developmental impact that a flourishing, open business sector could have in such places (within the natural resource and environmental envelope) perhaps compels one to turn from exploring alignments and partnerships (the current trend) to old-fashioned 'let tax-paying business succeed'.

The public policy issue then is far more about fostering enabling environments for core business activities, than persuading business to seek alignment with particular aspects of the development agenda. 

If so, it follows that contrary to the deputy president's (otherwise welcome) message, the role of government is not to help business identify where it can have maximum developmental impact.

Instead the role of government is to identify where it (government) can create maximum developmental impact by identifying where to help business do what business does best, while upholding the (evolving, more demanding) rules of the game ... cue Milton Friedman's famous quote.

Jo

PS -- this approach may of course assume that government has the regulatory, planning and other capacity in particular to tax business appropriately and to make use of those revenues.

Business, peace and regulatory approaches

This post comes from Oslo, ahead of tomorrow's 'Business for Peace' award and summit.

The award was initiated by the B4P Foundation to recognise firms and business leaders that have made a special contribution to promoting the prospects for peace, either locally or (I suppose) on a net global basis.

The summit itself seems largely devoted to much broader 'sustainable business' themes. Adopting a nerdy hat, i'd have to say that more research is needed to support the (intuitive) proposition that sustainability approaches are also peace-enhancing ones.

The idea of recognition and other positive incentives reflects a sound regulatory approach that does not simply conceive of business as a source of possible conflict risk.

Much of the literature on business + peace / conflict is on the negative impacts that investment or business activity can have on peacebuilding, for example directed to conflict links in global supply chains, for example in the mining sector.

This is only part of the story. Awards like the Oslo one do not necessarily have significant impact, but the idea of recognition goes to the heart of a regulatory approach that seeks to harness the incentives, resources, etc of business in support of public policy objectives.

This approach informs my book Regulating Business for Peace (see link below) -- captured in this quote at the front of the book (Bardach and Kagan, 1982):

"[T]he social responsibility of regulators, in the end, must be not simply to impose controls, but to activate and draw upon the conscience and the talents of those they seek to regulate..."

The idea of measuring a business's net contribution to peace even in local settings, by the way, is a very complex one. This June sees the publication of our report from Chatham House exploring (in some factual scenarios) the merit of propositions that natural resource development in fragile states can have a 'peace-positive' effect.

This involves some tricky concepts, and for the most part business does not see a role in overt or explicit contributions to consolidating peace. It sees the scope of its proper role as efforts to 'do no harm', in terms of adopting conflict-sensitive approaches.

Public policy should be comfortable with that, while regulatory approaches should look to catalyse continuous improvement in business conduct -- social contributions well beyond mere compliance with minimum standards.

For some previous posts on this topic, and book link, see here. 

Jo

Cross-sector partnerships: fashion, fuzz and focus

This post marks six months to the summit to agree the next global development agenda, to replace the 2000-2015 MDGs (Millennium Development Goals).

Discussion of the Sustainable Development Goals is filled with the significance of cross-sector partnering as the key to unlocking development potential.

By 'cross-sector' is often (if not exclusively) meant 'public-private' and so the partnering agenda is, in large part, about more proactively engaging the worlds of business and finance in the world's development.

If 2015 is the 'year of partnerships', what is at stake?

Any good contribution on this topic needs to address, at a minimum (a) what sorts of activities might be meant by the broad term 'partnership' or 'partnering'; and (b) the many assumptions that attend the rhetoric on this issue: assumptions about trust (between business and government), and about aligned incentives and adequate capacities for long-term sustained partnering.

This is vital since (as often when UN summits loom) there is a tendency towards self-reinforcing rhetoric, persistent refrains that reinforce fashions while often losing sight of opportunity costs and risks.

The fashion for cross-sector partnering risks erecting this very difficult, emerging set of practices as the development panacea without adequately theorising, testing, illustrating. 

It also risks distancing states from their development obligations by suggesting that the main vector for development requires the cooperation of business and others. Yes, collaborative development holds great promise, but development failures cannot simply be put (in future) to the failure of partnerships. These fail all the time, in many areas of life.

A blogger on this -- or any -- issue should offer variety along with some attempt at insight, opinion, information.

This is true even for an occasional (roughly fortnightly) blog like this one.

Yet when a topic is complex, surrounded by mediocre inputs, and very important, I think a blogger adds value simply by passing on something worth reading.

Of all the pieces I've read in 2015, this World Vision report perhaps best sets out the issues and meets its title's promise of 'advancing debate' -- if only by promising to help clarify what the debate is, and so separate fashion and fuzz from topics that need focus. (It follows some earlier excellent briefings from that organisation on this topic).

For the most recent thoughts on this issue on this blog, see here.

Jo

Business and human rights: framing issues

If the 'business and human rights' agenda becomes about everything, it will end up standing for (and achieving) nothing.

I noted this in a recent Chatham House paper referred to in the previous post.

This week, The Economist released a report showing how unsure business people are about what is required of them in relation to a responsibility to respect human rights.

I suppose my perspective is shaped by a legal background, such that to describe something in human rights terms is to suggest that one is dealing with activity that impairs recognised rights, activity with legal consequences, invoking all the regulatory power of profound universal norms.

This is not how the current 'business and human rights' (BHR) debate proceeds, as my paper noted. 

Instead, as a roundtable in London yesterday reinforced, many proponents see the BHR debate as very broad, relating to issues from 'tax justice' to 'casualisation of labour'. In none of these areas can it credibly be said that a business violates someone's human rights in ways that international (or even national) law, as it exists today, would recognise.

The BHR agenda is, I think, at something of a cross-roads.

The breadth of the BHR agenda and the resonance of framing things as 'human rights' is part of its power, power that might contribute to shifting the very nature of capitalism and the corporation's role in society.

Framed positively, the conversation can be one about how to solve social problems and create shared value, not about narrow issues of compliance, liability, remedy.

Yet the very power that the BHR project has is derived from the fact that 'human rights' are norms recognised, over time and by the consensus of states, as deserving special protection as a function of their universality. Seen this way, it may be tempting to recruit 'human rights' for every campaign about changing how business operates, but this risks diluting the force of the principles and claims that give BHR resonance in the first place.

Jo

These issues are the subject of a forthcoming research paper at Chatham House.  

Business and human rights: reporting and measuring

Better corporate measurement and reporting on social impact will probably promote better performance -- but not necessarily.

Many in business are overwhelmed by the proliferating plethora (had to try that...) of guidelines and reporting frameworks, standards and metrics for sustainable and responsible business.

In a previous post (here) I've noted the compliance fatigue and other problems that result from this phenomena.

In theory, firms that measure and report on their human rights or other social, environmental and governance impacts thereby also become more attuned to these in strategic and operational terms, 'mainstreaming' them into their business practices and decisions. 

(In parallel, many of these issues around social and environmental impact -- triple bottom line, non-financial due diligence, or whatever one wishes to call it -- are coming in from the periphery to the core of commercial considerations.)

However, it is not necessarily the case that more reporting, more measuring, etc., equips corporate decision-makers to be better at seeking out more socially beneficial or enviro-friendly ways of operating. Nor do they necessarily improve transparency and accountability (even if they force firms, or parts of firms, to engage with the ways in which they affect people and the planet, and give watchdogs something to audit). 

The effect of widespread uptake and implementation of reporting frameworks might be profound in shifting business cultures. But the effect is not automatic. It depends. In particular, not all firms have good feedback loops: externally-facing reporting will not necessarily change management mindsets.

Creating these frameworks, indices, matrices should not be an end in itself, therefore.

There is scope for more research on links between corporate responsibility reporting and business practices, and related frameworks for the finance sector -- whose practices hold so much influence over corporate practices in turn.

The prompt for this post is my briefing paper, published last week for Chatham House, on trends in the field of 'business and human rights'. See here.

Also published last week was the very promising first detailed guidance for corporates on reporting on efforts to implement the 2011 UN Guiding Principles on Business and Human Rights. See here.

Finally, last week but one saw the publication of this brief guidance to corporates on due diligence in relation to human rights issues. See here.

All this is good, provided the business and human rights 'community' does not deceive itself that more publications, more guidelines, more frameworks will necessarily, of themselves, make the difference.

Jo

Building peace: what role for business?

What is proper and possible in engaging and influencing business in processes of building peace?

This week's post simply links to one written for the Cambridge University Press blog, relating to my book Regulating Business for Peace, just published.

The post is here.

Jo

For previous posts on this theme, see here.

Public-Private Partnerships: Hype or Hope?

Partnering with business for development is overwhelmingly a good thing.

Disciples of partnering are making fascinating progress, as The Partnering Initiative here in Oxford shows; pilgrims of partnering are forging interesting, promising relationships -- not waiting for policy orthodoxy to lead.

However, this post questions the new-found faith in public-private partnerships (PPPs).

It makes two points about the need for caution over the current enthusiasm for PPPs as the panacea for Africa's development.

1. The first is that the developmental impact of the private sector is not limited to what businesses can do in partnership with governments, civil society, and community groups.

Strategies that put 'business' and 'pro-poor development' in the same sentence should be about far more than PPPs. There are significant ways in which the developmental impact of business activity can not only be harnessed, but unleashed, without involving any partnering of the 'PPPs for development' sort.

For instance, last week's post noted the scope for responsible private enterprise to deliver poverty-reduction without partnerships as such, but with development policies geared to foster investment and broad-based, inclusive growth in societies that currently struggle to attract or achieve that.

The problem is that the current fashion for partnering, while welcome, could obscure the 'quick wins' available from, for example, helping countries reform their business regulatory environment in ways that reduce unemployment. This stuff is hard -- but not necessarily harder than PPP-ing, and potentially far more impactful in a diffuse sense across society at large.

Of course, short of partnering it makes sense to consult business (in an appropriate and principled way) in the design of policies intended to foster inclusive, sustainable growth through unleashing the private sector.

1A. This point -- PPPs are not the sole vector of increasing the private sector's development relevance -- relates to another. An emphasis on 'partnership' can be too narrow a framing for what is really about public-private cooperation more broadly: (a) 'partnering' is not limited to formal, regulated PPPs such as infrastructure ones, but encapsulates a range of relationships aimed at development impact; (b) cross-sector cooperation and dialogue, especially where systematic, can be hugely significant without involving partnering as such.

I promised a second point of caution over current prevailing PPP-related enthusiasm!

(A precursor to that is to note that the enthusiasm for PPPs and wider partnering is in fact hardly universal across either the business or development communities).

2. The PPP hype belies the experience that partnerships are hard to generate and maintain, often controversial, not necessarily efficient or effective, and not necessarily grounded in evidence of their superior developmental impact.

I say this as an overt proponent of exploring ways to engage business in the development agenda.

For the last year, I've advised on an emerging cross-sector partnership intended to promote the partnering agenda. The difficulty in getting business, government and academic actors to work together on this discussion-about-partnering is itself instructive of the challenges of partnering-in-fact. More work needs to be done on measuring the effectiveness and opportunity-cost of PPPs (widely defined), and on conceptualising their political and policy risks and implications 

In this respect, I recommend a read of this Devex Impact blog post on partnerships, especially its first few paragraphs.

Previous posts on this site have sought to reflect on these issues, for example the hype about PPPs in Africa (here).

Jo

Business, poverty and signs of confusion

Some skepticism of policy trends promoting the private sector's role in meeting development goals is healthy.

But there is a 'but' here.

The 'but' is that skeptics risk confusing means with ends, in ways that sound stridently pro-poor but which might occlude opportunities to harness (or unleash) private enterprise, in ways that might hold far more development and empowerment potential than the aid schemes of conventional development practitioners ... 

Take the latest Gaurdian Development Digest network's email this week.

There is a post (here) that laments the shift in development aid policy towards helping promote trade, investment and the liberalisation of markets. Whatever its merits, this makes the bizarre suggestion that "globalisation has made a tiny proportion of people better off." OK, the environment has suffered and China's sprawling migrant mega-cities may be awful -- but the author is determined to ignore the evidence that China's development has lifted hundreds of millions of people out of poverty. 'Liberalisation of markets' was integral to that process.

The confusion and contradiction among these skeptics is illustrated in the same Guardian issue, which carries a post on the challenges to attracting private investment in Africa's energy sector. Without this investment, Africa cannot create jobs, electrify hospitals, light classrooms, etc.

Attracting investment of this sort has huge pro-poor developmental implications.

Aid that helps countries erect regulatory frameworks to enable this, for example, surely cannot be dismissed as 'neoliberal' as if that easy, glib label explains everything we need to know. That is lazy, self-satisfying criticism.

It follows that (for instance) shifting UK aid policy to help improve the investment climate in poorer countries is not simply a self-serving process of diverting aid towards corporate interests.

The contradiction on that one page of the Gaurdian hub suggests that some observers want development, but only by certain means. These means, for them, must not involve any possible benefit to the private sector, local or foreign. Poor people good, companies bad.

This is so short-sighted, condescending and statist that it is hard to know where to begin attacking it.

Development targets are so hard to obtain and the ends of these development goals matter. If the means to achieving them involve opening up markets in ways that foster productivity and growth and opportunity and financing, it should at least be considered. Many development types seem instinctively, almost ideologically, to reject it.

Now, development is of course a process, not just a set of outcomes.

That is, the manner of the process matters. How things are done (participation, inclusion, etc) are as important as the achievements. Otherwise, if only outcomes and targets mattered, we would all be praising Rwanda's development achievements. The reason many right-thinking people do not is because they recognise that these goals are achieved in a political context where people are not free to mobilise to express their disagreement with government policies designed to benefit them ...  

Nevertheless, the ends matter too, at least to those directly affected by stubborn poverty traps.

It follows that if altering the thrust of development practices towards facilitating the prospects for business growth, investment and job-creation holds promise for bringing whole populations out of poverty, the fact that this might create investment opportunities for private business owners is not, on its own, a reason to oppose them.

This must be so unless growth is a zero-sum gain, whereby any gain must necessarily be at someone else's expense. I'm no development economist, but intuitively that seems wrong.

Development policy cannot be reduced to market-creation, and aid spending cannot simply be about opening doors for one's home corporations to find new markets -- but the desire to avoid benefiting private sector firms cannot itself justify opposition to schemes to increase and liberalise trade and investment that might have direct and indirect pro-poor benefits.

In contemporary Africa, policies calculated to improve the business environment are not simply the manifestation of global capitalism vanquishing the interests of the poor. Nor is the UK's shift in aid policy (and others like it) simply designed to promote British industry at the expense of local people in developing countries.

The fact that these new pro-growth aid policies and related economic opportunities will be distorted by powerful, self-interested elites is a manageable risk. Otherwise we accept that 'aid' only comprises hand-outs of the old-fashioned kind, which are also manipulated politically and yet hold no promise of economic self-empowerment.

There are much wider structural issues of trade and investment that affect the prospects of emerging out of poverty: aid to help build local business and attract investment should be balanced with aid to help build the capacity of countries to engage in trade and investment negotiations on better terms.

Jo

See here for previous posts expressing caution with the tilt towards business's role in development.

What role for business in tackling inequality?

'Africa Rising' advocates boast that the sub-Saharan Africa region hosts six of the world's fastest-growing economies. Yet it also holds six of the world's most unequal societies in income terms, according to the African Development Bank.

This week Oxfam released a report on the growing wealth and/or income gap around the world.

This is ahead of the annual Davos gathering.

If the inequality gap raises serious social policy (and even security) issues for governments to respond to, what is a responsible role for the private sector on this issue?

That is, what role should organised businesses play in addressing structural income inequality in African economies, beyond their duties as taxpayer and employer? Would shifting the focus onto business (and re-framing inequality as a corporate responsibility issue) wrongly detract from the proper locus of responsibility?

That lies in the complex social contract between citizen and state. Corporates should be neither excluded nor exempt in such a debate.

I wrote on this (... here ...) almost exactly a year ago -- also ahead of Davos, also about inequality, and also unsure where exactly 'responsible business' meets 'redistributive fiscal policy'.

There have since the last Davos been many reports on how Africa's fast (average) GDP growth rates have not reduced income inequality and may have only exacerbated it (see, for example, this report and this IMF Policy Paper, both from a year ago).

However, among all the policy prescriptions and advocacy points, few offer insights into what it is business could be doing more of, or less of, other than the obvious issues (where foreign firms are concerned) around tax evasion or avoidance.

Income inequality raises serious longer-term business growth and investment strategy issues in Africa, since it affects the pace, quality and sustainability of growth (for example, of new urban middle classes)*.

This 'bottom line' element suggests that business leaders will continue to give the issue attention. In weaker governed states in Africa, that could in theory (if somewhat counter-intuitively) extend to corporate taxpayers helping to increase the capacity of their host governments to levy and distribute fair and viable corporate taxes more efficiently.

For many African economies, it is arguable that growth rather than income inequality is the priority: without the tax income from sustainable, broad-based growth these economies will struggle with distributive policies. The current focus on 'inclusive growth' need not be a simplistic 'growth and redistribution' model, which posits citizens as passive recipients; if its ideals are realised, inclusive growth is economic empowerment not wholly based on state provision of income. Firms can contribute to this through their hiring and procurement policies. 

Jo

* Oxford Analytica, 7 November 2014