KAMPALA PRINCIPLE 2:DPs_SUBP 2.B

Sub-principle 2.B

Ensure sustainable development results by aligning core business and development interests

 

Why is it important? 

 

Partnerships with the private sector are more likely to succeed and deliver long-term development results for those furthest behind when they are clearly linked to core business operations; evidence shows that projects succeed when development and core business strategies are well aligned. Philanthropic initiatives that are closely linked to such core business strategies, as well as corporate philanthropy, which may go beyond a company’s business focus, both provide important contributions to sustainable development, but they can also be short term in nature. As such, responsible business conduct, understood as projects and partnerships in which sustainability considerations are integrated into businesses’ core operations, are often considered more targeted towards sustainability outcomes in the long run. To bridge this gap and build a congruence between development and business practices, development partners’ role as mediators and bridge builders across the private sector’s and partner countries’ interest is of key relevance. 

Self-reflection questions
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Policy Level Project Level
  • Does your government’s or organisation’s private sector engagement (PSE) strategy recognise the importance of aligning core business and development interests for interventions to be sustainable over time?
  • Does your PSE strategy prioritise projects and partnerships that support sustainable core business practices rather than corporate social responsibility (CSR) or corporate philanthropic initiatives? 
  • Does your government or organisation support companies in exploring how to align CSR or corporate philanthropic activities with core business operations and offer incentives to align their practices with the Sustainable Development Goals and the partner country’s national development goals?
  • Does your PSE strategy provide clear and robust safeguards to ensure that the pursuit of commercial interests will not undermine efforts towards development goals?
  • Do you provide practical guidance and examples on how to achieve and communicate the focus on aligning business and development results to partner country governments?
  • How can you ensure that a partner country’s development goals are respected when confronted with diverging business commercial interests, for example if the business belongs to your domestic industry?
  • Have you established a theory of change or catalogue of factors that describes how business and development interests will be served by your projects to deliver on the SDGs and other international commitments like the Paris Agreement? 
  • Have you allocated roles to project participants as to who is responsible for ensuring which aspect of the project?
  • Are you and project participants aware that the sustainability of interventions with the private sector depends on the commercial viability of projects?
  • Have you considered how a project will continue to provide sustainable development results and outcomes beyond the project horizon? Will there still be an incentive for the private sector to continue serving the target sector and/or population?
  • Do you have a clear sense of how to exit once the project ends and markets are established?
  • Does your project include feedback and grievance mechanisms from the local community on development results?
  • Do your projects target sectors where greater alignment between business and development results can be foreseen in the long run, like in renewable energies?

Actions to consider
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Policy Level Project Level
  • Support partner country governments in establishing assessments for examining business partners’ practices and alignment with national development priorities.
  • Identify sectors where you anticipate potential for congruence between business and development interests in line with the overall objective of delivering for those the most in need. 
  • Harmonise performance indicators to facilitate private sector participation and procedures in the reporting of the SDGs.
  • Support innovative business models that focus on delivering both business and development outcomes and create incentives to develop and scale them up. 
  • Support efforts to align businesses’, partner country governments’ and other stakeholders’ priorities in sectors and regions you are active in.
  • Enable CSO watchdogs to inform decisions on the results focus at the strategic level to ensure overall development outcomes are prioritised and followed through.
  • Use the triple bottom line to measure success related to the economic, social and environmental dimensions of PSE activities.
  • Discuss and balance project partners’ expectations regarding development outcomes and the need for financial returns.
  • Consider co-creating PSE projects with the private sector to determine shared purpose and interests.
  • Ensure your private sector partner has expressed a specific business case or value proposition before initiating your PSE project.
  • Start small. Pilot to test the market and development returns before upscaling. 
  • Encourage projects with social and environmental entrepreneurs as they often organically combine development and commercial interests in their business models and encourage them to grow.
  • For each project, agree among all partners on how you will jointly define and measure development and business outcomes.
  • Monitor the attainment of business and development outcomes flexibly, offering lessons learnt and opportunities for scaling up successful interventions in priority sectors.
  • Use due diligence processes within your administration early and smartly, for instance related to legal compliance and good general and sector-specific business practices in line with the organisation’s rules and regulations. Examine whether and how a proposed private sector partner’s core business aligns with and contributes to social and environmental development objectives.

Pitfalls to avoid
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Policy Level Project Level

       DON’T…

  • Prioritise short-term projects with CSR and corporate philanthropy initiatives over long-term projects based on the core operations of partner companies.
  • Use inappropriate or excessive incentives to attract business in detriment of development outcomes. 
  • Create incentives and obstacles that divert resources away from smaller companies. As responsible business conduct; environmental, social and corporate governance and other requirements are becoming more stringent, some companies may struggle to meet requirements that demand robust administrative and technical capacity.
  • Demand alignment from businesses towards development results without considering your own and partner countries’ need to align with businesses’ needs for profitability and commercial viability.

      DON’T…

  • Assume that companies involved in development co-operation projects should not profit from projects. 
  • Rush into a partnership with a private sector actor without taking the time to determine if it is a correct fit.
  • Neglect the perspective of local actors such as local civil society organisation watchdogs in assessing project progress on business and development targets.
  • Set up objectives that may negatively affect the commercial viability of the project.
  • Infer a business case that a business itself has not articulated.

COUNTRY-LEVEL EXAMPLES

The Sustainable Trade Initiative – supported by the Dutch, Swiss and Danish governments – brings together a range of impact-oriented state and non-state organisations (companies, civil society organisations, governments and multilateral initiatives) to accelerate sustainable production and consumption. The Sustainable Trade Initiative works to harness the core business of MSMEs and transnational corporations to realise real and sustained development results across value chains, ensuring that companies see a business case for investing in sustainable commodity production. Through this, populations furthest behind directly benefit from fairer wages, more affordable commodities and healthy food, thereby reducing poverty and inequalities and providing greater food security.

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