D+C Newsletter

Dear visitors,

do you know our newsletter? It’ll keep you briefed on what we publish. Please register, and you will get it every month.

Thanks and best wishes,
the editorial team

Register

Finance

The SDGs and the private sector

by Sabine Balk

In brief

The Dhaka based textile company Zaber & Zubair Fabrics has committed to achieving the SDGs and has set up a waste-water treatment plant of its own.

The Dhaka based textile company Zaber & Zubair Fabrics has committed to achieving the SDGs and has set up a waste-water treatment plant of its own.

The 2030 Agenda gives the private sector a significant role for achieving the Sustain­able Development Goals (SDGs). Many corporations have pledged their support. A recent study done on behalf of several leading German civil-society organisations (CSOs) analyses how businesses are contributing to SDG-related action. It assesses what can be done to better align business activities with the SDGs.

Private-sector engagement is growing in the SDG context. Many companies have a sustainability strategy or a Corporate Social Responsibility (CSR) branch. However, the impact is hard to measure, as the study with the title “Highjacking the SDGs?” points out. It was published by several CSOs, including the two faith-based agencies Misereor and Brot für die Welt as well as the German NGO Forum on Environment and Development, and it was co-founded by the Federal Ministry for Economic Cooperation and Development (BMZ).

The CSO activists worry about the power of financially potent players and what they ultimately want to achieve. Private businesses, by definition, maximise profits, and human rights violations and excessive exploitation of resources can increase profits. CSOs are also concerned about governments assigning core functions of state agencies to private companies, particularly in the social sector.
The study recommends policymakers should:

  • draw up binding national plans for the implementation of the 2030 Agenda,
  • guarantee accountability, transparency and effectiveness where private funding is involved,
  • not rely on voluntary sustainability strategies, but introduce regulations like due diligence along entire supply chains, and
  • enact legislation for fair and effective tax collection.

As for businesses, the study recommends that they should:

  • support the SDG agenda in ways that respect and uphold planetary boundaries as well as human rights,
  • thoroughly assess what the SDGs mean for their core business strategy, and
  • implement SDG action plans with clear timetables and indicators.

The role of CSOs, in the eyes of the authors, is to serve as watch dogs. They must push governments and UN institution towards SDG implementation.


Bonds as solution

One of the crucial questions discussed in the paper is how to finance the SDGs. It is estimated that implementing the agenda might cost $ 5 to 7 trillion in developing countries. One option the study discusses is to issue bonds in order to raise money on capital markets.

Various kinds of so called green bonds serve to finance climate protection and other environmental measures. In March 2017, the World Bank issued SDG bonds in order to raise money for SDG-related projects. So far, European investors have bought bonds worth € 163 million. Those who buy bonds are promised a rate of return, which is linked to the performance of specific private-sector companies. These 50 companies are listed in the Solactive SDGs World Index. The World Bank chose them because they either “dedicate at least one fifth of their activities to sustainable products” or because they are “recognised leaders in their industries” in regard to social and environmental sustainability.

The bond is used to fund projects in health care, education, drinking-water infrastructure, renewable energy and related matters. Harmful industries, moreover, are explicitly excluded. This applies to nuclear power, weapons, alcohol, gambling, adult entertainment and palm oil.

The CSO authors deplore that there is no way to evaluate the effectiveness and relevance of SDG bonds yet, and they doubt that bonds will play a very important role. The report spells out specific downsides. Bonds are a “special form of debt”, and these inherently risky financial instruments can be subject to speculation.

Another part of the study assesses the role of tobacco corporations. This industry adopted SDG rhetoric early on in spite of the health hazards its products cause. The report shows how such rhetoric serves the industry’s broad strategy to circumvent regulation. The CSOs argue that sugar and other harmful industries similarly prove that corporate engagement in SDG matters has serious limits. In their view, the agenda needs safeguards against corporate interference.


Link
Abshagen, M.-L., et al., 2018: Highjacking the SDGs? The private sector and the sustainable development goals.
https://www.globalpolicy.org/images/pdfs/GPFEurope/Hijacking_the_SDGs.pdf

Add comment

Log in or register to post comments