Aligning profit with public good, and vice versa
Last week I represented Ericsson at the UN’s Financing for Development (FfD) conference in Addis Ababa. Among other things, I was able to participate in the African Development Bank’s Financial Inclusion event, be one of six business representatives at one of the official UN Round Tables, and be a panelist at the Business Forum session on market innovation.
Overall, the week ended as a significant step forward for the Sustainable Development Goals (SDGs), seeking to avoid the myriad financing problems that affected the MDGs (Millennium Development Goals) when many member states didn’t live up to their financial commitments. The result, mainly hailed as a success, was the Addis Ababa Action Agenda, a financing framework that has been agreed by the 193 UN member states attending the conference. Countries recommitted to achieving the target of 0.7 percent of gross national income going to official development assistance, and 0.15-0.20 percent for the least developed countries.
So while much of the discussion was driven by the member states, what was interesting this time around was the slow-to-emerge consensus that the private sector might in fact have a very important role to play. The business sector is still far from being leveraged, but when you have major company turn out such as Ericsson, MasterCard, Phillips, Volvo, Unilever, and financial institutions such as the ADB, IFC and IDB to name just a few, heads are slowly starting to turn. Many companies are putting sustainability at the heart of their agenda, with many initiatives to show for it. But how should development be financed, when by definition a company should make money?
What if we could rethink how to finance development by using government funds to leverage the innovation and resources of the private sector? The private sector is already creating new jobs and making investments in infrastructure. For example, could ODA (official development assistance) help to stimulate investment by eliminating investment risk? Other ideas ranged from better leveraging public-private partnerships to expanding the recognition of companies as being capable of contributing to development with more than just philanthropy – in areas such as innovation, skills building, capacity-building, efficiency and governance.
Government finance should come in where the innovation potential exists but struggles to achieve scale. With innovative finance frameworks, governments could make positive impacts on their development agendas. And the International Federation of Red Cross-Red Crescent Societies even sees a need to link humanitarian finance with development finance.
But even more progressive companies were in evidence at the Market Innovation panel let by Allan Pamba of GSK. (He claimed it was his first time ever moderating an event, though none of us on the panel really believed him.)
Each of us shared a view on using our company’s core business to support development: Walter van Kuijen from Royal Philips talked about health care, Walt Macnee from MasterCard about financial inclusion, and I talked about the role technology can play in achieving the SDGs, and our experience with public-private partnerships. We were joined by a very progressive Canadian Minister of International Development and Minister for La Francophonie, Christian Paradis, who told the panel about how the government partnered with Sarona Asset Management, and the launch of GFX (Global Finance Exchange), an online investor marketplace and resource platform that will help private and public investors more easily find and connect with each other to complete deals in emerging markets. Sumitomo gave a compelling case on scaling up bed nets to fight malaria. The CEO of a prominent Kenyan bank explained one of their key business insights – the poor don’t have long-term plans, they plan for transactions – and how the bank adopted its business model to that reality.
A few examples where Ericsson has experience are both in cross-sector partnerships. For example, with Philips we work on smart lighting – co-locating mobile broadband infrastructure with street lights in order to create intelligent cities and roads of the future; with Coca-Cola on how to enable access to clean water and the internet; and in Myanmar we are working with the UK DFID development agency to scale up access to quality education.
Other sessions in the Business Forum included Responsible Business Practices, Support to SMEs, and Financing Energy and Sustainable Infrastructure, to name a few. The jury is still out as to how much influence the Business Forum will have on the overall negotiations. I had a quick chat with the Head of the ICC, and lamented that there were only six of us businesspeople let into the UN General Assembly “round table” of several hundred member states and UN organizations. She told me: “This is a great thing – this year we actually got in!”
So while the role of the private sector is still far from leveraged, there is growing recognition that official aid will not be enough to reach the SDGs. It’s an exciting time because the conversation with the private sector has started – now we need to find a way to translate aid language into the business world and vice versa. It is truly a time to work in multi-sector, public/private partnerships to scale up for sustainable development.