Has the time come for a legally binding framework to ensure that private sector’s activities contribute to (and not undermine) sustainable development?

As the negotiations on the zero draft of the Third Financing for Development Conference (FFD3) progress civil society organizations, Governments and the UN met at the occasion of the roundtable entitled Towards a Private Sector Accountability Protocol for Sustainable Development to discuss the proposal of a Private Sector Accountability Protocol for Sustainable Development. Such a framework would entail, among others, mandatory social and environmental reporting and financial transparency rules to align the private sector’s activities with SDG’s and human rights obligations.

Most agree that the private sector plays an important role in development as it creates jobs, transfers technology, spurs innovation and allows for economic growth. However, as the private sector entities’ main goal is to make a profit, in some cases obtained at the expense of the environment and of human rights, there continue to be widespread concerns over their involvement in development.

Within this context, it is not surprising to see that the FFD3 draft’s repeated support to the private sector -through public-private-partnerships (PPP’s), blending finance mechanisms and infrastructure investment - has generated widespread criticism. To mention a few:

Roberto Bissio (Social Watch) stated at the FFD3 Hearings: “the OECD defines the PPPs as a form of government procurement. But it is a form that is usually shrouded in secrecy, not open to public bidding and, by proposing a “buy now pay later” solution to budget constraints it usually promotes irresponsible spending and, ultimately, hidden indebtedness”.

Stefano Prato (SID) echoed similar concerns: “We wonder where is the evidence for the multiple references to PPPs in the FfD3 draft. The use of PPPs should be interrogated, as increasing evidence shows that they change the nature of public services, worsen the fiscal problems against which they are offered as solutions, and provide less efficient and more costly operations”.

The Brazilian Ambassador also made public his disagreement: “the FFD3 draft is excessively pro-business… public policies and pro-people outcomes cannot be outsourced to the private sector”.

These concerns are shared by a growing coalition of civil society organizations, which is calling –in the framework of the FFD3 Conference- for a Private Sector Accountability Protocol for Sustainable Development. Such a framework would entail legally binding obligations such as financial disclosure (including on taxes paid to national Governments) and sustainable development impact assessments covering environmental, social and governance areas.  

The current negotiations on the zero draft of the FFD3 should seriously consider this proposal as well as the setting of clear and transparent benchmarks and criteria for the private sector’s involvement –especially when ODA and public resources are used.

Time has definitely come to move from voluntary Code of Conducts to legally binding accountability mechanisms built on the UN Guiding Principles on Business and Human Rights.

Will Governments live up to the expectations in Addis Ababa?

Read more:

A Private Affair: Shining a light on the shadowy institutions giving public support to private companies and taking over the development agenda

ACT Alliance position on sustainable development finance towards a post-2015 agenda

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By Marina Ponti, Social Watch
@pontimari