Home   »  Blog

Big business and the 2030 Sustainable Development Agenda

This post is based on a presentation given by Kate Donald, CESR’s Director of Human Rights in Development, at the UN Business and Human Rights Forum in November 2015.

A tax justice activist in Senegal calls on multinationals to
pay their share. Photo: Global Alliance for Tax Justice
The build-up to the agreement of the Sustainable Development Goals (SDGs) was characterized by enthusiastic engagement with the private sector by member states and to some extent, the UN. In many of the discussions and negotiations, the private sector was recast as an agent of development and a white knight financier.

This uncritical stance generated much concern from many of the civil society organizations involved, including the Human Rights Caucus.  This concern arose from experiences of seeing first-hand the negative, sometimes devastating, impacts that some private sector projects can have on human rights and the environment.

Overall, it is fair to say that from a human rights perspective the SDGs are a big step forward from the MDGs. As we’ve written before, however, there are two big elephants in the room: financing and accountability. And both of these have major implications for the role of the private sector.

Regarding the former, there is general agreement that the SDGs cannot be financed through a business-as-usual approach. Current financing flows, economic policies/systems and business behaviors simply will not suffice. We are seeing a prevailing shift in focus away from aid, towards the idea of funding development through ‘domestic resource mobilization’. This is probably a good thing, particularly when one considers a country’s sovereignty over their own development choices, self-determination, and sustainability. However, it is crucial to recognize that poor countries are not trying to mobilize resources in a vacuum or on their own terms. Instead, they are operating in a global economic system in which their ability to raise resources domestically is constrained by the global economic environment, systems and rules. 

What does this mean for business, especially big corporations and multinationals (which are those primarily being envisaged as sustainable development partners)? There is a lot of talk about how business can best contribute to the new goals and sustainable development generally. While tools like sustainability strategies, impact assessments and environmental reporting can certainly be useful, by far the most powerful tool businesses have at their disposal is a relatively simple one – to pay their taxes! Corporate tax avoidance costs developing countries many billions per year, more than they receive in aid. Meanwhile, tax revenues are crucial to realize a range of rights and finance sustainable development. So, if multinational corporations really want to contribute responsibly to SDG achievement, the best approach would be for them to curtail practices like shifting profits to tax havens and lobbying for tax incentives, particularly in low-income countries that badly need revenue. This should be understood as a core part of a company’s responsibility to respect human rights, as set out in the Guiding Principles on Business and Human Rights.

The second elephant in the room is accountability. Despite the fact that lack of accountability was acknowledged as a major reason for the shortfalls of the MDGs, this is a glaring weak spot in the SDGs also. The monitoring and review framework currently envisaged is vague and voluntary – and this shortfall extends also to the role of corporations. There is no real provision for monitoring, review or accountability of corporate sector activity, despite the fact that they are foreseen as playing a major role in delivery.

Civil society groups consistently argued that (as per the obligations of the state to protect from and provide remedy for human rights violations related to corporate activity) safeguards and accountability for private sector involvement in the SDGs must be built in. This is particularly important in the context of growing enthusiasm for public-private partnerships (PPPs) and privatization (despite the often concerning human rights and economic evidence against both). The Human Rights Caucus and other civil society groups argued for measures such as careful regulation and safeguards on corporate activity; ex-ante assessments of the suitability of private sector actors as partners in sustainable development initiatives, based on their compliance with human rights and environmental standards; and due diligence and impact assessments. Crucially, these must extend extra-territorially, in accordance with states’ obligations to protect human rights abroad from negative impacts of corporations headquartered in their territory.

However, in the final agreement (and in the Addis Ababa Action Agenda) there is a minor reference to the Guiding Principles on Business and Human Rights, but nothing else to address these concerns. So what hope is there now? At this point, it is really up to states to integrate such safeguards and corporate accountability mechanisms within their national plans and processes. Pressure from civil society (and hopefully, encouragement from the UN) will of course be a necessary precondition. Much of the most important monitoring and review work will take place at the national level, so for example, the domestic processes and mechanisms set up to review national SDG progress should also include assessments of the impact and effectiveness of PPPs. Countries should also integrate their National Action Plans on business and human rights with the SDG process.

Another potentially important way to integrate corporate accountability into the SDGs is to ensure critical measures of corporate activity/contribution are included in the indicators which will measure progress towards the targets. However, the current draft global indicator framework is almost entirely lacking in any indicators of the private sector’s impact. Indeed, under target 17.17 (‘Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships’) the only indicator currently agreed is on the amount of US$ committed to public-private partnerships, seemingly based on the uncritical assumption that PPPs are an unalloyed good and can stand in as a proxy for all other types of partnerships.

In conclusion, it is crucial that all types of institutions – NGOs, governments, the UN - stop working in silos when it comes to the SDGs. This applies to companies also. For those corporations looking to play a positive role in sustainable development, it’s not enough just to say they are providing jobs, and therefore contributing to development. Firstly, it is necessary to ask whether these jobs represent decent work and whether they pay at least a living wage. Companies also need to look at their impact across their operations and departments. For example, what about their tax liabilities and contributions? What about their family leave policies? Goal 5 on gender includes a target on addressing women’s unequal share of unpaid care work; here employers can clearly play a very important role in progress, in providing their employees with adequate, paid maternity and family leave (for both parents).

At the same time, states need to seriously and critically examine when and where (and what kind of) private sector involvement can be truly beneficial to sustainable development and human rights enjoyment.

Posted by Kate Donald on December 8th, 2015
Posted in Blog