PHM-Exch> Big Business Capturing UN SDG Agenda? b7

[Claudio Schuftan]

From: Jomo <jomoks at yahoo.com>

*Big Business Capturing UN SDG Agenda?*

*Jomo Kwame Sundaram, Anis Chowdhury*

KUALA LUMPUR & SYDNEY, Dec 11 (IPS)  - Over the last two decades since the
Global Compact, the United Nations has increasingly embraced the corporate
sector, most recently to raise finance needed to achieve the Sustainable
Development Goals (SDGs), i.e., for Agenda 2030. But growing big business
influence has also compromised analyses, recommendations, policies and
programme implementation, undermining the SDGs.

Changing financing arrangements
Inadequate funding of the UN and its mandates by member States has required
this search for additional finance, initially with philanthropy and
‘corporate social responsibility' efforts by private business, but
increasingly, by viewing profit-seeking investments as somehow contributing
to achieve the SDGs.

While the global economy grew 47 fold from $1.35 trillion in 1960 to $63
trillion in 2010, the UN organization's regular core budget fell to 0.0037
per cent of global income. Meanwhile, ‘core' un-earmarked resources fell
from nearly half of all UN financial resources in 1997 to less than a
quarter today. A recent UN Secretary-General's report estimated that over
90 per cent of all UN development system activities in 2015 were funded
with non-core, earmarked project resources.

An earlier report found total non-core resources for UN-related activities
increased 182 per cent in real terms between 1999 and 2014, mostly going
through a growing number of UN ‘vertical' trust funds, beyond Member
States' control, while core resources increased only 14 per cent.

Such ‘siloed' trust funds – with funding rising three-fold over the last
decade – enable both donor governments and corporate interests to determine
UN funding, bypassing established decision-making processes. Thus, UN
development financing increasingly serves donor priorities.

New development finance discourse
Influential quarters claim that in order to achieve Agenda 2030, financing
needs have to rise "from billions to trillions" of US dollars, and that
this can only be done by engaging the corporate sector.

According to a 2015 World Bank report, while the Millennium Development
Goals (MDGs) needed billions in official development assistance, the SDGs
require trillions in investments.

Although most development spending involves national public resources, most
Organization for Economic Cooperation and Development (OECD) governments
opposed international tax cooperation at the 2015 Addis Ababa third UN
Financing for Development conference.

Thus, instead of helping boost national revenue enhancing capacities and
capabilities, the Addis Ababa Action Agenda (AAAA) claimed that private
capital had "the potential for scaling up to achieve the demands of the
Sustainable Development Goals".

Corporate funding for sustainable development?
The three major multilateral agreements of 2015 – the AAAA, the Agenda 2030
for SDGs and the Paris climate agreement – were all premised on private
financing while the Agenda 2030 Reflection Group stressed the need to
mobilize funding from private business, finance and investment.

Multi-stakeholder partnerships have long been advocated by many OECD
governments, UN agencies and former UN Secretary-General Ban Ki-moon. This
envisaged big business working with governments in public-private
partnerships (PPPs), blended finance and various other novel financing
arrangements.

A 2015 UN Environment Programme (UNEP) report emphasized the need to
"access private capital at scale, with banking alone managing financial
assets of almost US$140 trillion and institutional investors, notably
pension funds, managing over US$100 trillion, and capital markets,
including bond and equities, exceeding US$100 trillion and US$73 trillion
respectively."

Public-private partnerships
The AAAA promoted PPPs and blended finance arrangements, while the Global
Infrastructure Forum was set up at Addis to close the ‘infrastructure gap'
in developing countries, estimated by the outcome document at between "$1
trillion to $1.5 trillion" annually.

    Thus far, PPPs have been more significant in developed and upper
middle-income countries, as low-income countries are rarely able to attract
large private investors. Warnings that PPPs and other such modalities,
already problematic in OECD member countries, are even less likely to
succeed in developing countries, where cost recovery is more difficult,
have been largely ignored.

Instead, PPPs have often worsened national budgetary positions in the
long-run due to the contingent liabilities governments are required to take
on. Consequently, in most cases, governments bear the most risk, subsidize
ventures and guarantee revenues to the private partner.

While PPPs have clearly contributed to national financial difficulties,
such problems were largely ignored until recently. With changing
international relations, they are now being highlighted as leading to
national ‘debt bondage' to China and other non-traditional sources of
finance.

Meanwhile, the US and other developed countries have announced major new
infrastructure financing initiatives of their own, to draw developing
countries from financial reliance on China. This unexpected political
rivalry will have mixed consequences for borrowing developing countries.

PPPs involve many unpredictable risks, primarily borne by governments, as
well as side and spill-over effects, with the private partners typically
setting most terms. Moreover, PPPs in social sectors, such as health and
water, are less inclusive, disadvantaging the poor and the less accessible.

Meanwhile concerns have been raised, even by The Economist, about
enthusiasm for blended finance as ‘aid', which typically favours private
partners from the donor country. Such aid diversion  -- from budgetary
support, social programmes and essential services -- prioritizes private
profits, rather than the public interest.

Checks and balances?
The UN Global Compact's 10 principles from the turn of the century remain
the main intergovernmental framework governing non-state partnerships, but
remains ill-equipped for meaningful accountability, especially as it
pre-dates the SDGs, and hence, are inadequate now.

Promoted and often required by OECD governments, PPPs and blended finance
have not received enough critical scrutiny in terms of compatibility with
UN mandates, while their extra-budgetary funding status has exempted them
from rigorous audit, review and impact assessment.

With financing gap concerns accepted as the rationale for multi-stakeholder
partnerships, the private sector is increasingly calling the shots, with
occasional lip service to civil society engagement merely providing
legitimacy, rather than adequate checks and balances.

***
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