Making It #16 - Partnerships and financing

8/11/2019 Making It #16 - Partnerships and financing

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Number16

MakingItIndustry forDevelopment

for inclusive and sustainablePartnerships and financing

industrial development


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A quarterly magazine.Stimulating, critical andconstructive. A forum fordiscussion and exchangeabout the intersection ofindustry and development.

www.makingitmagazine.net


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EditorialBusiness-as-usual is not an option. Climate change, extremeweather, growing resource scarcity and increasing inequality areformidable challenges. A growing world population means we need

to produce more goods and services, while using less resources,generating less waste and emitting less pollution.It is clear that the world must devise and adopt a sustainable

development model and quickly transition to a low-carboneconomy. But how are we going to implement a truly sustainabledevelopment approach on a global scale? And how are we going topay for this great transformation?

In this issue of Making It, our contributors consider thepartnerships and financing necessary to fight global warming,to promote cleaner and resource-efficient production, to addressthe worlds social and environmental challenges in a sustainable

and lasting manner. Common themes are the need to forgeeffective partnerships with the private sector and to harness thefull potential of industrys contribution to the achievement ofsustainable development.


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GLOBAL FORUM6 Letters8 The G-77 at 50: South-South

cooperation still necessary,still real Interview withAmbassador Aliyar LebbeAbdul Azeez10Hot topic: Green growthor post-growth? Assessingresponses to the challengesthat lie ahead, Andr Reichelbelieves it is time for a post-growth strategy

14 Business matters news and trends

FEATURES16New bottle, hows thewine? Sameer Dossaniconsiders how the newBRICS bank could be adifferent, and better, kind

of development bank

MakingItIndustryforDevelopment

The designations employed and thepresentation of the material in this magazinedo not imply the expression of any opinionwhatsoever on the part of the Secretariat ofthe United Nations Industrial DevelopmentOrganization (UNIDO) concerning the legalstatus of any country, territory, city or area orof its authorities, or concerning thedelimitation of its frontiers or boundaries, orits economic system or degree of

development. Designations such asdeveloped, industrialized anddeveloping are intended for statisticalconvenience and do not necessarily express a

judgment about the stage reached by aparticular country or area in the developmentprocess. Mention of firm names orcommercial products does not constitute anendorsement by UNIDO.The opinions, statistical data and estimatescontained in signed articles are theresponsibility of the author(s), includingthose who are UNIDO members of staff, andshould not be considered as reflecting the

views or bearing the endorsement of UNIDO.This document has been produced withoutformal United Nations editing.

Contents

Editor: Charles [email protected] committee:Thouraya Benmokrane, Jean Haas-Makumbi, Sarwar Hobohm (chair),Kazuki Kitaoka, Jo Roetzer-Sweetland,and Ravindra WickremasingheDesign: Smith+Bell, UK www.smithplusbell.comThanks for assistance toZHONG XingfeiPrinted by ImprimerieCentrale, Luxembourg,on PEFC-certified paper http://www.ic.luTo view this publicationonline and to participate indiscussions about industryfor development, please visitwww.makingitmagazine.netTo subscribe and receive future issuesof Making It, please send an emailwith your name and address [email protected] It: Industry for Developmentis published by the United NationsIndustrial Development Organization(UNIDO),Vienna International Centre,P.O. Box 300, 1400 Vienna, AustriaTelephone: (+43-1) 26026-0,

Fax: (+43-1) 26926-69E-mail:[email protected] 16, 3rd quarter 2014Copyright The United NationsIndustrial Development OrganizationNo part of this publication can beused or reproduced without priorpermission from the editorISSN 2076-8508

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20Wheres the money? AssaadW. Razzouk considers howwe are going to finance the

transition to a green economKEYNOTE FEATURE22 Engaging with the privatesector in the Post-2015Development Agenda Philippe Scholts and TimWall consider the new formsof partnership required toimplement innovativebusiness models that responto commercial imperatives,while also delivering on thedevelopment front


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34Who is going pay for Africaspost-2015 developmenttransformation? Charles

Abugre Akelyira outlinesa new form of globalpartnership38Country feature: Mongolia Looking to diversify,plusinterview with SanjaasurenOyun, Minister of Environmentand Green Development42Good business Profileof Sri Lankas Nimali Chipsand Fibre Mill

POLICY BRIEF44How developing nations canclose climate finance gaps46Endpiece Peter Richardson Caribbean plans to forgea united front on elusiveclimate finance

28From problem to solution:Working with industry for theglobal environment Naoko Ishiion how the Global EnvironmentFacility is working with the

private sector to generateresults on a global scale32 Industrial development in achanging world Amid renewedinterest in industrial policy,Erik Solheim considers the roleof development assistance

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LETTERS

MakingIt6

First, protect theenvironmentIn general, what I appreciatemost about Making Itis thediversity of extraordinaryinternational stories onindustry and economy. My

favourite is the story aboutwater-efficient toilets in issue#15, I suppose because I cantfind an analysis like thisanywhere else. For Europeans,most surprising seemscompany managing directorChen Chunhong's attitudetowards patent protection. Shesays if more companieswould employ this water-savingtechnology, it would actuallybring more benefits to the

global environment as a whole.In this sense, copying our ideais a good thing. Forget patentprotection in favour ofenvironmental protection!Marvellous! This is how wecould make the world a betterplace. If only the rest of theworld could share this attitudedespite losing an enormousamount of money.Susanne Berger-Achatz, NewsEditor, Hitradio 3, Vienna,

Austria

Technology andindustrialdevelopmentThe interview with LI Yong inissue #15 introduces anexcellent mission which is well

outlined by the UNIDODirector General. Technologieswith technical experts canjumpstart the industrializationof underdeveloped anddeveloping countries, withconsequential benefits ofeconomic growth, which helpsto reduce poverty (a crucial

mission of UNIDO) throughjob creation. And social upliftcan be a by-product thereof.

Technology can be a criticaltool to sustain industrializationwithout adversely impactingthe environment. For example,energy is a key input toindustrialization, and variousenvironmentally friendlyalternative fuels to coal areprogressively embraced, or atleast being tested, across the

globe. Alignment andwillingness to share knowledgewith less progressive societiescan help us evolve to a betterglobal society across culturesand political boundaries.

While not wanting to minimizethe segmented challenges,setting strategic developmentgoals and developing tactical

The interview with UNIDO DirectorGeneral LI Yong, in issue #15, above,introduces an excellent mission.

action plans, which should bealigned, owned by and committedto by both giving and receivingsocieties, may take time butshould be doable. The good thingis technologies and

industrialization can deliver lotsof stated goals/by-product

benefits economic and socialgrowths, job creation, povertyminimization, sustainability andenvironmental protection, etc.Debabrata Saha, Director,International CommercialTechnology and Marketing, AirProducts and Chemicals Inc.,Allentown, USA,LinkedIncomment

GDP and globalwealthA letter in Making Itissue #15questioned whether grossdomestic product (GDP) can beadequately used to measurewealth, quoting economists whoadmit GDP does not capture

the human condition. I agrBizarrely, when a consum

buys imported goods only asmall fraction of its final selprice will appear in the GDthe country where it wasproduced, while the greaterof it appears in the GDP of tcountry where it is consumFor example, in 2007 the nawith the highest per capita G

(in other words, whose citizare supposedly the mostproductive in the world) waBermuda. Yet its an island thaven, home to hedge fundand reinsurance companieand doesnt actually producany physical commodities.

A couple of thousandkilometres away is anotherisland the DominicanRepublic where hundredsthousands of employees wo

in fifty-seven export proceszones, producing shoes andclothing mainly for the USmarket. Yet, that year, its GDwas just three percent ofBermudas when measuredmarket exchange rates,therefore languishing ninetseven places below Bermudthat years global league tab

Which country made a grcontribution to global wealthat year?

Dizo Kora, by email

BRICS and MINTIn the short article in issue #(Can intra-BRICS cooperatiadvance amid economicgloom?) Oliver Stuenkel saythat things seem to havelargely gone downhill for th

The Global Forum section of Making Itis a space for interaction anddiscussion, and we welcome reactions and responses from readers aboutany of the issues raised in the magazine. Letters for publication in Making Itshould be marked For publication, and sent either by email to:[email protected] or by post to: The Editor,Making It,Room D2142, UNIDO, PO Box 300, 1400 Wien, Austria.(Letters/emails may be edited for reasons of space).

GLOBAL FORUM


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BRICS countries (Brazil, Russia,India, China and South Africa)and outlined the problemsfacing each of them. Oliver thenwent on to say that doubts aboutthe utility of the BRICS acronymare misguided. I disagree.

It was the economist JimONeill who came up with theacronym, claiming thesecountries could rival the

advanced economies. Butgrouping them together wasalways a superficial idea.

Now ONeill has come up witha new acronym the MINTs toform an even more tenuousgrouping of Mexico, Indonesia,Nigeria and Turkey. Most ofthese countries remain trappedin the North-South division oflabour of supplying raw

materials to the advancedeconomies. This makes themhighly vulnerable to the ups anddowns of the commoditiesmarkets. When the Chineseboom helped pull commodityprices up, the BRICS and MINTseconomies did well. But nowChina is slowing down andcommodity prices are in retreat.

These labels of BRICS and

MINTs help financial marketstarget countries where quickprofits can be made, rather thansustained industrialdevelopment. With the US andEurope in depression,speculative money has rushedinto countries such as Braziland Turkey. But the money isnow beginning to pull out,partly because the US economy

is looking a bit stronger and alsobecause of the problems all theemerging economiesthemselves are struggling with.

Olivers article has someinteresting insights into theBRICS countries economic andpolitical problems but they seemto be relevant for countries acrossthe South not just those selected.James Holmes, website

comment

South-SouthcooperationIn the main article in issue #12,I think Martin Khor raises animportant point when he saysthat much has been made ofincreased trade among thecountries of the South, but much

of it consists of intermediatecomponents to be used inassembling goods destined formarkets in the North.

The fact is that companies inthe North do not compete withcompanies in the South; theycompete with other Northerncompanies, especially to see whocan most rapidly and effectivelyoutsource production to lower-

wage countries in the South.Much of the import activity inglobal supply chains is in fullyfinished goods. There is fierceSouth-South competitionbetween producers for contractwith Northern-led companies,but hardly any North-Southcompetition as such.John Tresadern, websitecomment

For further discussion of theissues raised in Making It, pleasevisit the magazine website atwww.makingitmagazine.net andthe social networking Facebooksite. Readers are encouraged tosurf on over to these sites to joinin the online discussion anddebate about industry fordevelopment.

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GLOBAL FORUM

What do you see as the most important

international issues for the G-77 within

the United Nations system in 2014?

The G-77 is the largest intergovernmentalforum of developing countries, if not an

intergovernmental organization itself in astructural sense. It gives voice to thecollective concerns and aspirations ofdeveloping countries, which today stand ataround two-thirds of the total UNmembership. It negotiates on vital issueswith other groups, states and partners onbehalf of its members and peoples.It provides leadership on global issues ofconcern or interest to the Group as acollective.

All issues would seem to coalesce into abroader agenda of enormous importance

for both the G-77, as well as the otherpartners, whatever angle one mayapproach them from and, that is, thereview of Millennium Development Goals,and the elaboration of the post-2015Development Agenda and the SustainableDevelopment Goals. All areas that the G-77deals with would fall into this basket inone way or another whether it is povertyeradication, employment creation,

development cooperation, restructuringinternational financial architecture,market access, climate change, energy,food and water security, or other pressingconcerns relating to the environment and

sustainable development.The G-77 is celebrating its 50th

anniversary this year. Some see the world

as increasingly divided between rich and

poor within national boundaries, and thus

believe that the developed North and

developing South is an out-dated

concept. After 50 years, is South-South

development cooperation still relevant?

While the argument that there is Northwithin South, or South within North,appears attractive, it is important to discernthe background against which this

argument has forcefully been put forwardfor quite some time now. In my view, in away it serves a section of the North well,since the fall in development assistance tobelow the level agreed cannot be explainedin any other convincing way. It is in thiscontext, in part I think, that the concept ofSouth-South development cooperation hasdeveloped. By which I mean that we, thedeveloping countries, need to help each

other where our strengths lie. This isbecause poverty eradication anddevelopment continue to remain theutmost priorities of all developingcountries. This explains why South-Soutcooperation is not just necessary but, in tcircumstances, is a reality.

In terms of South-South development

cooperation, does the G-77 see industr

development as a priority? In the conte

of carbon emissions, industrial polluti

and climate change, and of growingconcerns about resource scarcity, do yo

think the countries of the Global South

can follow the same model of producti

and consumption as the countries of th

North?

Poverty eradication and developmentcannot be pursued effectively unless thare complemented by what many consiis the one of the key drivers ofdevelopment, and that is industrialdevelopment. It is logical that if South-South development cooperation is to b

more meaningful and effective, industrdevelopment needs to be at the top of olist of priorities. Extending this furtheryou would agree that industrialdevelopment is a priority, the path youtake to pursue it, and all that is associatwith it, become priorities as well.

Industrial development, like any otheprocess, has its own costs and benefits.We need to take it forward in a prudenteffective, and environmentally friendlymanner, if we are to avoid the downsidWe all know that, in as much as it has

yielded benefits, in situations where thwas no judicious regulation or sense ofcontentment, it has contributed tophenomena, including the ones that yohave mentioned. Although suchchallenges are prevalent in a morepronounced manner in countries of thNorth, we in the South cannot becomplacent either. It is in this context tI appreciate the concept of inclusive an

The G-77 at 50: South-

South cooperation stillnecessary, still real

Interview with Ambassador Aliyar Lebbe Abdul Azeez,Permanent Representative of Sri Lanka to the United NationsIndustrial Development Organization (UNIDO), and co-chairof the Group of 77 (G-77) Vienna Chapter in 2014.


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GLOBAL FORUM

sustainable industrial development asendorsed by the UNIDO GeneralConference in its Lima Declarationadopted in December 2013.How does the G-77 view UNIDOs vision

for inclusive and sustainable industrial

development (ISID)?I believe ISID is not just a fast-emergingtrend today. It is in fact necessary andinevitable. It is derived from the veryconcept of inclusive sustainabledevelopment, the intrinsic value of whichwas reaffirmed at the Rio+20 Conference.That it has been brought to bear onindustrial development is only natural.

How to give effect to ISID? And what

mechanism could help best advance itsimplementation? These are crucial issues,and while we cannot shy away fromdiscussing them, it is not practical toexpect all these to be addressed at once.This is where I believe that considerationsof equity and resilience in the overallmatrix of ISID are important. The idea isto have an inclusive platform, whichmeans flexibility and understandingamong all members.

On the other hand, UNIDO needs tocontinue the follow-up on the LimaDeclaration, and this would require ISID-mapping as an internal strategy in order tosee what is the maximum it should seek toachieve out of the process of elaboration ofthe Post-2015 Development Agenda, andwhat is the minimum it can be contentwith. As we in the G-77 have stressed, toimplement ISID, both the UNIDOSecretariat and member states will have towork together.What are some of the ways in which the

G-77 can advocate for the inclusion of aSustainable Development Goal (SDG) on

industrialization?

In advocating for ISID, the G-77 is animportant platform but, as I stated before,we need to adopt an inclusive approachwhich looks at a larger constituency, ofwhich the G-77 remains at the core.

First, it can be done by continuing to builda consensus on operationalizing ISID, with arealization of its obvious benefits. Second,there should be a multi-layered, multi-setting cooperation, involving the

headquarters of the UN and otherorganizations and agencies. Third, we needto address what I think is a misconception:that industrialization and industrialdevelopment mean the same thing. In myview, although these terms are usedinterchangeably, industrial development isthe more appropriate concept because Ithink it directly relates to, and is derivedfrom, the concept of development.

Photo:UNIDO

Ambassador ALIYARLEBBE ABDUL AZEEZwas the chair of theGroup of 77 (G-77)Vienna Chapter duringthe first half of 2014.The Group wasestablished on 15 June1964 by 77 developingcountries during thefirst session of theUnited NationsConference on Tradeand Development inGeneva. Although themembership hasincreased to 133

countries, the originalname has beenretained because of itshistoric significance.The main focus of theG-77 Vienna Chapter,which is supported bythe United NationsIndustrial DevelopmentOrganization, is thepromotion of technicalcooperation activitiesand internationalcooperation. The G-77Chapter serves all theVienna-based UNorganizations.


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HOT TOPIC

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GLOBAL FORUM

In discussions of the future of economicgrowth, business as usual is not anoption. The alternative, say many, is greengrowth: growth that is resource-efficient,low-carbon and socially inclusive. In thisline of thinking, green growth is the key tomanaging climate change, bringing eco-friendly development to emergingeconomies, renewing economic structures

in industrialized nations, and creatingmore jobs to employ a rising population.

Unfortunately, green growth is a myth,or at least an inadequate response to thechallenges that lie ahead, because itignores the social, political and personaldimensions of sustainability. It can nevercut deep enough into the structures of selfand society to secure a solution to thecrises that we face.

In some shape or form, green growth isalready happening. In Germany, forexample, both energy intensity and energy

consumption have declined slightly over

the past 20 years, while GDP has steadilyincreased. But Germany has achieved thislargely by doing away with lots of its ownenergy-intensive industries, andoutsourcing this part of the supply chainto other parts of the planet most notablyto China. The same is true for the UKeconomy. And thats the key issue: whathappens to green growth when theres

nowhere left to outsource the mostimportant causes of your problems?

The central concept of green growth isdecoupling: in other words, how toincrease the efficiency of the economy bydetaching production from its currentheavy use of finite resources. The idea isthat the greener you shop, the more theearth is saved. So, for example, newtechnologies mean that the air coming outof a car at its rear end can be cleaner thanat the front, while fuel is actually saved inthe process of driving.

Examples of relative decouplingabound, as in the German and UKeconomies above. However, theres noevidence that green growth leads to anyabsolute decoupling or permanentreduction in ecological impact, whetherthrough lower carbon dioxide emissions,reduced extraction of raw materials, or lessbiodiversity loss. Fuel consumption permiles travelled may be declining in these

Green growth orpost-growth?

economies, but total consumption isgrowing; refrigerators may use less

electricity, but there are far more of thein use and their combined ecologicalfootprint is increasing. Growth is stillgrowth, even if it is more energy-efficieIn this sense, decoupling is also a myth

The social and human consequencesabsolute decoupling are profound, andthat provides a clue to the continuedpopularity of green growth, even thougcant deliver on its promises. After all, it

Assessing responses to the challenges that lie ahead, AndrReichelbelieves it is time for plan P a post-growth strategy.

ANDR REICHEL is aresearch fellow at theEuropean Centre forSustainability Researchat Zeppelin Universityin Germany. Moreinformation about hiswork can be found atwww.andrereichel.de


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GLOBAL FORUM

growth, and growth exercises a powerfulhold on the imaginations of policymakers

across the world. The appeal of greengrowth is clear: no fundamental change isneeded. Policies can be that little bitgreener. Business models can incorporatemore corporate social responsibility. Butthe underlying structures of unsustainableeconomies and lifestyles remain the same.

The problem identified by proponentsof an End to Growth (Richard Heinberg)or a Great Disruption (Paul Gilding) is

that ecologically, any kind of growthpushes against the limits of a finite planet:

the rising economic costs of climatechange and resource extraction (especiallyunconventional gas and oil via hydraulicfracturing and tar sands). Economically,there are clear, diminishing returns togrowth in most industrialized economies.In this sense, post-growth or de-growthbecome the new normal of economicactivities like it or not.

The same is true for productivity gains:

the more efficient a process becomes, themore difficult it is to squeeze out that extra

one percent of increased productivity.Mats Larsson even argues thatinnovativity the ability to innovate newproducts and production processes hasinbuilt limits. If a product can beproduced at zero cost and in zero time, nomore innovation is possible. Withadvances in information technology, thatpossibility is rapidly becoming visible.

In post-growth or de-growth, the goal

The appeal of green growth is

clear: no fundamental changeis needed. Policies can be thatlittle bit greener. Businessmodels can incorporate morecorporate social responsibility.But the underlying structuresof unsustainable economiesand lifestyles remain the same.


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HOT TOPIC

GLOBAL FORUM

is not just to decouple economic activityfrom its ecological impact, but to destroythe connection completely. For example,renewable energy production can supplyenergy at zero variable cost. If theinfrastructure required is also producedwith renewable energy and recycledmaterials, then the ecological impact could

be zero.The de-growth movement calls for a

voluntary contraction of Northerneconomies via shorter working hours, theredistribution of wealth and income,increased subsistence production andcollaborative consumption, and thepromotion of non-monetary, commons-based economic interaction. Some roomfor economic growth will still be left forSouthern economies to develop until thebulk of the global population moves out ofpoverty.

In this vision, the goal is a steady stateeconomy, which is both ecologicallysustainable and socially equitable: wherethe physical size of the economy stayswithin the carrying capacity of planetaryboundaries, while at the same timeensuring a fairer distribution of, andaccess to, all natural and social resources.Post-growth is not just an economicgoal its the key to the realization of ajust society.

The narrative of post-growth does haveits problems. An economy that doesnt

grow might look rather dull. Steady stateappears to imply a static economy, perhapseven a static society. However, even if theGerman economy, for example, does notgrow, it would still need to produce andsell products and services worth US$3.5trnin purchasing power parity each year inorder to maintain its GDP.

So post-growth doesnt spell the end ofthe entrepreneurial spirit or of human

creativity or personal development quitethe opposite. As John Stuart Mill oncenoted:

[it] is scarcely necessary to remark that astationary condition of capital andpopulation implies no stationary state ofhuman improvement. There would be asmuch scope as ever for all kinds of mentalculture, and moral and social progress; asmuch room for improving the Art ofLiving, and much more likelihood of its

being improved, when minds ceased to beengrossed by the art of getting on.

Are green growth and post-growthincommensurably at odds? Some say yes.Ralf Fcks, president of the green politicalthink-tank, Heinrich-Bll-Stiftung, inGermany, argues for renewed optimismabout the possibilities of green growth vianew technologies, new forms of socialinnovation, new taxes on resource use, andgreen ordo-liberalism: the Germanapproach to economic questions that sitssomewhere between social liberalism and

neoliberalism by emphasizing the role ofgovernment in ensuring that marketactors are able to produce socially andecologically desirable results.

From a post-growth perspective, all ofthese levers are useful, but they leave outcrucial regulatory changes in the financialsector, measures to promote large-scalewealth redistribution, reduced workinghours, and encouragement for commons-based forms of economic activity. Post-growth advocates like Peter A. Victor andTim Jackson focus more on these areas

because they actively reduce growth ormake economic and social systems lessgrowth-dependent.

In the green growth paradigm, ideasabout sharing and the entire notion of thecollaborative economy are missing. But ifthese social, political and personalinnovations became part of the paradigm,as well as technology, then green growthmight actually be able to deliver on its

promises, so long as it relinquishes thebelief that growth is an end in itself.

However, doing this represents a hugchallenge to the ways in which societieare currently organized, politics arestructured, and patterns of consumptioand cooperation are internalized inpersonal values and behaviour. The socpersonal and political implications of dgrowth are enormous, which is one of treasons why green growth exercises suhold on the conversation.

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GLOBAL FORUM

For example, reduced working hourswould help to create more time for

community and cooperative activities, aswould a guaranteed basic income for all.With that foundation in place, peoplewould be released from the treadmill ofhaving to earn more money to financetheir habits of over-consumption, andsocial security, pensions, and universalhealthcare could be ensured. This wouldalso make social security systems lessdependent on continued economic

growth. These collaborative forms ofeconomic activity rest on the

development of new forms ofentrepreneurialism and alternativemonetary systems, like local or virtualcurrencies, which establish a secondmonetary system alongside fractional-reserve banking.

We might call this new post-growtheconomy a civil economy, a productiveeconomic system beyond the growthimperative that promotes every kind of

wealth in cities and communities cultural and human as well as social and

economic. Taken together, these stepswould change the physical, economic,social and mental infrastructure thatsurrounds us in fundamental ways. Theywill create a new normality in which weuse resources collaboratively, create andlive out values beyond the monetary, fostercloser social ties and community cohesion,and abandon the relentless call ofperpetual economic growth.

Post-growth doesnt spell theend of the entrepreneurialspirit or of human creativity orpersonal development quitethe opposite.


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The State of Green Business 2014,an annual assessment of corporatesustainability trends and metrics,paints a mixed picture.

The good news is that the art ofcorporate sustainability continuesto evolve. Whats business as usualtoday was, not that long ago,innovative, even breakthrough:bio-based products, accountingsystems that place a realistic valueon water and carbon, smart supplychains that optimizetransportation, and renewableenergy that isnt just for show. Thebad news is that for all of theadvancements and achievements,

the public that sustainabilityisnt just about preservingicebergs, rainforests andcharismatic fauna its also abpublic health, community we

being, food security, affordablhousing and alleviating pover

Renewable energy jobs grew14% to 6.5 million employees

worldwide last year, led by thesolar panel industry, accordina new report from theInternational Renewable EneAgency. Employing a total of2.6 million workers in renewaenergy jobs, China led in hirin2013, followed by Brazil and thUnited States. The solar indusspurred by increasingphotovoltaic panel installatioAsia and falling prices empl2.27 million workers at the en

trends

BUSINESS MATTERS

when you actually measure year-on-year progress companies aremaking, its a disappointing stateof affairs.

The report, produced byGreenBiz.com and Trucost, lookedat the 500 US companies thatmake up Standard & Poors Index,and the MSCI World Index,covering more than 1,600companies in 24 developedmarkets. In most cases, progressover the last five years isincremental. In some cases, itsflat, or even declining.

For example, total greenhousegas emissions among both US and

global market indices remain flat.Intensity, which are emissionsnormalized to economic activity, isalso largely unchanged. For all the

efforts companies are making, itsnot leading to progress. Its not

just carbon. The progress on wateruse, air emissions and solid wasteis minimal, or worse.

But there remain reasons foroptimism, powered by significantshifts in attitudes amongcompanies and their investors andcustomers; the growth oftechnology poised to leapfrogprogress and accelerate change;and a growing recognition among

Speaking at the UNIDOGeneral Conference in Lima inDecember 2013, United NationsSecretary-General, Ban Ki-moon, backed industry to helpthe world address formidable

challenges. Ban said that thepost-2015 development agendawould not be achieved withouta close partnership with theindustries that promote growthand jobs.

Ban commended themember states of UNIDO foradopting a new LimaDeclaration, which stresses therelevance of inclusive andsustainable industrialdevelopment as the basis for

sustained economic growth.The Lima Declaration, Ban said,creates the foundation for thecoming decades of UNIDOsimportant work as the centralagency in the United Nationsfor all matters related toindustrialization.

The Secretary-Generalhighlighted three ways in which

Ban backs industry to deliverUNIDO is especially well-placed to contribute tosteering the human family ona safer, more prosperous andsustainable path. Firstly, hesaid, the agency can help build

on progress made in reducingpoverty and shape the futureglobal development agenda.

We will not eradicatepoverty without the industriesthat promote innovation andtechnology transfer. Industrialdevelopment can also be apowerful enabler, powerfulengine, of social developmentby creating opportunities forwomen and young people.

Second, said Ban, UNIDO

and industry can createmomentum for environmentalsustainability.

Industry needs to take ongreater responsibility forcleaner production andimproved resource efficiency.Industry must protect theplanets resources andemphasize sustainable

consumption and production.The third area where UNIDO

can contribute, Ban said, is inhelping to meet the challenge ofclimate change.

Climate change is a serious

threat to the development anprosperity of all the nationsGreenhouse gas emissionscontinue to rise. We need toprogress further and safer anfaster.


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2013, largely concentrated inChina, the report said. The biofuelindustry, with 1.45 millionemployees, and wind energy, with830,000, were the second and thirdlargest employers.

In a forthcoming report, theInter-American Development Bank(IADB) is calling for industrial

policies in Latin America. This is awelcome development, writesAndrs Velasco, a formerpresidential candidate and financeminister of Chile, in an article forProject Syndicate.

Velascos preview of RethinkingProductive Development: Sound

Policies and Institutions for Economic

Transformationpoints out that theIADB does not speak of industrialpolicies, and instead uses thepolitically correct phrase

productive developmentpolicies. But, he writes, themessage is clear: in Latin America,the state and public policy shouldhave a role in deciding what getsproduced. A generation ago, thismessage would have beenheretical. Today, it is a matter ofcommon sense.

The IADB report states, There

is now a growing consensusamong policymakers and analystsalike that by putting all industrialpolicy out of bounds, the regionmay have thrown out the babywith the bathwater. More andmore, the question is not put interms of whetherto do activeproductive development policies

but rather how to do them.

Migrant entrepreneurs havecreated one in every seven British

companies, according to the firstcomprehensive analysis of officialdata about founder origins.

Almost half a million peoplefrom 155 countries have launchedUnited Kingdom-based businessesthat are currently trading with atleast 1m (US$1.68m) in revenue,according to research by DueDil, aresearch company, and Centre for

Entrepreneurs (CFE), a think-tank.Together they are responsible forcreating 14% of British jobs.

Damian Kimmelman, chiefexecutive of DueDil, said theresearch proves that migrantentrepreneurs are hyper-productive, net contributors to theUK economy.

History tells us that the mostproductive states alwaysencourage intellectual andtechnological ferment; thats

what were seeing in Britairight now, and we mustcelebrate it, addedKimmelman.

The research found thatentrepreneurial activity amthe migrant community wnearly double that of UK-bindividuals: 17.2% hadlaunched their own busine

compared with 10.4% of thborn in the UK.

The largest group of forborn founders in the UK aIrish, followed by Indians.Germans are in third placeresearch found, ahead of UAmerican and Chineseentrepreneurs, in fourth afifth. Poland is the sixth-bsupplier of migrant businfounders, ahead of France,and Pakistan.

Photo:UNPhoto/EskinderDebebe

A transatlantic coalition ofcentre-right figures frompolitics, academia and businesshas come together to

reinvigorate environmentaldebate on the right of politics.In February 2014, the London-based ConservativeEnvironment Networkpublished Responsibility andResilience: What the Environment

means to Conservatives, withcontributions from ArnoldSchwarzenegger, former NewYork mayor Michael Bloomberg,Paul Polman of Unilever, IanCheshire of Kingfisher, and

James Wolfensohn, ex-presidentof the World Bank, amongstothers. The core themes thatemerged from the report areeconomic resilience andcompetitiveness, the facilitationof competition via openenvironmental markets, andreconnecting with historicdefinitions of Conservatism.

Speaking at the report lat the UK Houses of ParliaBen Goldsmith, Chair of tSteering Committee of th

Conservative EnvironmenNetwork, said, This is thewide-ranging and ambitiodoctrine on the environmever to come from businethe conservative movemenThe bigger message is thathe conservative tools ofcompetition and the free mare powerful enough to dethe environmental securiteconomic resilience we nea stable society.

Goldsmith continued, effect is to completely expthe myths that the environbelongs on the left of polithat business is not leadinthis issue. Centre-right paaround the world must nomake the running with smgrowth-orientatedenvironmental policies.

Centre-right tries toreclaim the green agenda

Ban Ki-moonaddressing theUNIDO GeneralConference inLima, Peru,December 2013.


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Sameer Dossaniconsiders how aBRICS bank couldbe a different, andbetter, kind ofdevelopmentbank

Newbottle.How

s

thewine?

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At the 2012 Delhi summit of Brazil, Russia, India, Chinaand South Africa (BRICS), the leaders of the five nationsagreed to launch a BRICS development bank. Thefollowing year in Durban, the initiative was given a name:the New Development Bank (NDB). While perhaps notthe most original of monikers, the name does begquestions how new is the New Development Bank?Whose development are we talking about here? And doesthe world need another multilateral bank?

[Editor's note: With the establishment of the New

Development Bank during the BRICS summit inFortaleza, Brazil, in July 2014, we should get someanswers to these questions soon.]

Do we need a new development bank?The World Bank and its sister institution, theInternational Monetary Fund, established 70 years ago,have lent billions to developing countries. Yet, in theirheyday in the 1980s and 1990s these institutions didnot produce results in terms of poverty reduction or evenin terms of increasing economic growth. In almost allregions, inequality skyrocketed during this period. Evennow, with the exception of Latin America, the gap

between rich and poor continues to grow.

While the World Bank would be quick to point that it cannot be blamed for these failures, it is telliinstitutions supposedly meant to foster developmhave, to this day, very few examples of countries thhave actually helped to develop.

Part of the failure can be attributed to the triumideology over evidence. Washington consensus p fiscal and trade liberalization, privatization and bausterity were required of every developing counsought international assistance. The results have n

been pretty. As has been extensively documented, tperiod from 1980-2010 was in part defined by extrslow growth globally. Where growth did occur in thNorth, it often turned out to be the result of speculbubbles. In the South, the only countries to grow wthose that ignored Washington consensus policiesChina, Malaysia, Singapore and a few others and state-backed borrowing and investment to drive anindustrial policy.

In the last decade or so, middle-income countriincluding the BRICS, have been investing in andsometimes giving what we would usually call aid tdeveloped countries in Asia, Africa and Latin Amer

China is by far the biggest player here, but Brazil, Iand others are also extending their reach.

What does the increasing role of Southern counas agents of development in other Southern counmean for the worlds poorest and most marginalizthis yet another layer of exploitation, or do these epossibly offer a way out of poverty to communitieshave been denied their rights for centuries? Will thhelp countries improve policies and practices or wa mechanism whereby rich countries, like China, gaccess to more resources and markets using the figmultilateralism?

There are no straightforward answers. But befo

explore deeper, we should be clear about what is nothe table.

Whose development model?Progressives have long critiqued the developmentof the North being exported to the South asenvironmentally and socially exploitative. The focGDP growth to the exclusion of other aims (externin economic jargon) is highly problematic, especiacountries that do not yet have strong social andenvironmental regulations. In countries like Indiamovements have strongly opposed a developmentfocussed on urbanization, infrastructure developm

and on expanding market reach, which almostnecessarily entails the destruction of traditional anindigenous communities and lifestyles.

Even in a best-case scenario, initiatives like the are unlikely to challenge any of this quite the oppthey are likely to take a GDP-centred, Northern-development-model approach. That is the model tthese countries are following, with megaprojects liThree Gorges dam in China, the Jirau dam in Brazthe Kudankulam nuclear power plant in India bei


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showcased by their respectivegovernments as developmentsuccesses. But the NDBs failure tochallenge the lack of environmentaland social protection in thedevelopment model does not meanthat all hope is lost.

While the neoliberalism of the1980s and 90s promoted a worldviewin which growth and a certain model of

development are ends in themselves, it did noteven deliver the growth and development thatit promised. Amidst recent triumphalism aboutthe achievement of the UNs MillenniumDevelopment Goals sits a sad truth: progressagainst poverty has been made in only a handfulof countries. Take out China, Brazil and a fewothers, and poverty reduction has a poor trackrecord in the last 30 years. Even GDP growth hasbeen disappointing at the global level (with ahandful of exceptions), and a lot of the growththat has happened has been deeply inequitable consider Mexico and India for some of the

less equitable growth stories.The failure is not surprising. Neoliberals argue that

countries should find their comparative advantage tocreate a trade-based strategy to growth countries shouldexport what they have. However, neoliberalism has neverexplained why the economies of the US and Japan are notdependent on the export of fur and fish, commoditiesthat they were exporting when they began theirdevelopment process.

True proponents of development understand thatindustrial transformation, not comparative advantage, isthe key to the story. Countries like the US and Japan werenot developed as long as their economies were primarily

exporting raw materials only when the economiesbegan to produce and export manufactured goods couldthey be called developed (or even developing). Theprocess of industrial transformation is something thatthe World Bank and IMF have not supported in fact theinstitutions have opposed and blocked these policies.

What the BRICS bank could doMight a BRICS bank be different? It is certainlypossible. Many of the BRICS countries (China

being the most obvious example) are goingthrough the process of industrialtransformation themselves, with state supportfor domestic companies a key component ofeconomic policy. And the BRICS countries(unlike the G7 countries who still dominate theWorld Bank and IMF) have no history of tryingto force economic policy down others throats.

To be clear, that does not mean that we can

expect better results in terms of human rights orenvironmental protection. Early development in the UK,for example, was characterized by high levels of pollutionand worker exploitation at every level. But it was adevelopment process (albeit an awful one) that centredaround the transformation from an agrarian economy toan economy that manufactured goods. The NDB, ifconsistent with BRICS rhetoric so far, should not hinder(and might even support) this process of industrialtransformation.

Many non-governmental organizations (NGOs)critical of proposals for a BRICS bank have pointed to thedecades of struggles to force the World Bank and other

international financial institutions to adopt and enforcepolicies to protect vulnerable communities and theenvironment. They point to controversial projects likethe Brazilian-Japanese-Mozambican ProSavana project,which involves the state-owned Brazilian AgriculturalResearch Corporation adapting Brazilian export cropsfor Brazilian agribusinesses to start large-scaleagriculture projects in northern Mozambique, withexport infrastructure paid for by the Japanese aid agency.The critics say it puts Mozambiques small farmers atrisk, while benefiting Brazilian and Japanesemultinational companies in their production andprocessing of soy, maize, sugar cane and other cash crops.

These criticisms are certainly valid; problems relatedto bilateral financing of projects are likely to reappear inthese multilateral efforts. But it is unlikely that adevelopment bank can be founded in 2015 and not havesome kind of social and environmental protections inplace. What those protections will look like and how theywill be enforced are questions with which NGOs andother stakeholders should be engaged.

Unfortunately, it is not clear how NGOs or other civilsociety actors are meant to engage with this process.

SAMEER DOSSANI, ActionAidInternationals advocacy coordinator,has been working on issues of debt,

development, human rights andinternational economic justice for

over a decade, including as directorof the NGO Forum on the Asian

Development Bank, and of 50 YearsIs Enough: US Network for Global

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Unlike other developing country formations (notablyIBSA the grouping that includes BRICS countriesIndia, Brazil and South Africa), there is no formalmechanism for civil society consultation orengagement. Even if this does not change for theBRICS, civil society organizations (CSOs) should bepushing hard to include CSO consultations in thepolicies and programmes of the NDB.

Despite its many potential flaws, the proposal toestablish the NDB should be viewed with cautious

optimism. The key countries driving the process Brazil,India and China are not motivated only by a desire toexpand their political and economic influence. They arealready doing that without an international developmentbank. They are also motivated by a desire for legitimacy,coupled with a desire to compete with (perhaps evenshow up) the G8 countries that did not live up topromises made in 2008-09 to give developing countriesmore say over the IMF, World Bank and otherinternational finance institutions (IFIs). At that time, theBRICS countries and others were promised more sayover the IFIs in exchange for putting in billions whichthe IMF ultimately directed to Europe. The rich

countries have yet to live up to their end of the bargain.The BRICS desire to be seen as the promoters of

genuine development gives campaigners an inroad tohelp the BRICS countries define what genuinedevelopment is. If the development discourse were tofocus less on mosquito nets and vitamins (important asthose may be) and more on sustainable economictransformation, industrialization and job creation, wemight all be better off. Both the BRICS and CSOs can bepart of the process.

A bank that is willing to fund policies aimed ateconomic transformation would be a step in the rightdirection. But would it really contribute to development

and poverty reduction? There are a few things tolook out for on the off-chance that it can meetthis lofty goal.

First, the NDB should lend not just to BRICScountries (which have many other potentialsources of income), but also the worlds poorestcountries.

Secondly, the NDB should not focus on a specifisector, but rather it should fund those projects that

countries identify as key to their industrialization adevelopment policies. If that is not feasible we arealready hearing that there will be sectoral focus oninfrastructure it should only operate in countriesinvestment in the niche sector is already part of thenational development strategy.

Thirdly, in addition to financing projects, the Nshould be building up technical expertise, researchdocumenting various development experiences. Dthe noble efforts of some, there still is not enoughdocumentation on why and how countries developis even less documentation putting that theory intopractice in the context of a particular developing co

and, where that documentation exists, it is usuallycoloured by the political agendas of the World Banthe IMF. The NDB should build up a counterweighthose narratives and work with underdeveloped cowhich may request help to develop their own strateeconomic transformation.

A new global architectureIf the NDB is really trying to push in a different dirit should be cautious about working with the existiIFIs, especially the World Bank and the IMF. Whileinstitutions are already preparing to greet the NDBpotential partner, partnership would come with a l

baggage for an institution promoting itselalternative. In order to create such a genualternative, it should look elsewhere, perhmore participatory institutions like the G

Fund for AIDS, Tuberculosis and MalariaIn addition to a more democratic gove

structure, the NDB should ensure thatrepresentatives from recipient countries part of the process. There are many ways iwhich it could do so the best might be tcreate a governance mechanism that inclrepresentatives from other structures, suthe African Union or the Least Developed

Countries block, as well as members ofSouthern civil society.

If the NDB can establish governstructures more equitable, moretransparent, and more tilted towensuring that the needs of poorcountries are at the fore, it may the already building pressure fomeaningful reform of the BrettWoods institutions.


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Assaad W. Razzouk considershow we are going to finance thetransition to a green economy.

Wheresthe money?

ASSAAD W. RAZZOUK is aLebanese-British clean energy

entrepreneur, investor andcommentator. He is GroupChief Executive and co-founderof Sindicatum SustainableResources, a global cleanenergy companyheadquartered in Singapore;a board member of theAssociation for Sustainable andResponsible Investment in Asia;and a board member of theClimate Markets andInvestment Association.

Pic

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According to the United NationsIntergovernmental Panel on Climate Change,the Earth is set to warm by 4 to 5 degreescompared with pre-industrial levels, warmingthat will wreak devastating effects on theplanet and lead to massive destruction, loss oflife and loss of subsistence for millions. Inorder to avoid this outcome, the InternationalEnergy Agency says we need US$1trn a yearuntil 2050 to finance a transition to greengrowth and green lifestyles.

Where is this US$1trn going to come from?First, based on research by the Climate Policy

Initiative, three-quarters of all climate

financing already comes from the country it

is spent in. We will need (and will have to get)

funding from most countries, even very poor

ones, though thats not the same thing as

saying we need it from their public purse:

climate change is a global commons and

requires every individual, company, and

country to participate in its solution.

Countries with little capacity to reduce

emissions and adapt to climate impacts will

nonetheless have a deep-pocketed privatesector which can contribute.

What matters is how the private sector

can be made a full partner in the fight against

climate change. The private sector already

accounts for more than 60% of global

climate finance and if we are to get to

US$1trn in annual climate finance flows,

it will have to account for the majority

of funding.

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Second, we also know that out of this

US$1trn, US$100bn or 10% is intended to

come via the Green Climate Fund, a UN

institution which joins an alphabet soup

of international climate support vehicles,

including the GEF or Global Environment

Facility, the CIFs or Climate Investment

Funds, the UN climate talks Adaptation

Fund and another thirty-five

organizations listed as UN partners on

climate change. The Green Climate Fund

is supposed to facilitate the mobilization of

the US$1trn annual flow of capital neededfor climate action.

So how do we make the private sector a fullpartner, while getting the Green ClimateFund off the ground?Private sector mobilization is

straightforward: we must continue our

efforts to introduce a carbon price across, at a

minimum, all G20 economies. Carbon

markets represent up to 50% of the solution

in the fight against global warming and a

carbon price is critical to mobilize the private

sector (which accounts for 70% of globalGDP and 70% of employment). Domestic

carbon markets are spreading and linking up

around the world, and by 2015 are likely to

cover some four billion people. Yet fossil fuel

industry lobbying continues to deliver

watered-down versions of this effective

instrument. Green bonds, for example,

wont get off the ground at the scale we need

without a carbon price (and a rising curve

for carbon prices) to help price future cash

flows correctly.

Getting the Green Climate Fund off the

ground with US$100bn in annual spendingpower is just as challenging. For now, the

US$100bn is nowhere to be seen, a symptom

of a larger malaise. There are several factors

behind a social movements likelihood to

succeed, and, to date, the climate movement

has spectacularly bungled all of these factors,

but none more so than the need to give rise

to stabilizing institutions to give it

permanence and efficacy. The track record of

climate funding from UN-related

institutions leads one to despair: between

them, these vehicles disbursed a total of

US$15bn over the past 20 years, an average of

US$750m per year, a far, far cry from

US$100bn.

Contrast the current state of international

climate funding, in particular the Green

Climate Fund, with the Global Fund to Fight

AIDS, Tuberculosis and Malaria. The Global

Fund is an international financing

institution set up in a partnership between

governments, civil society, the private sectorand affected communities, by combining

resources towards fighting HIV and AIDS,

tuberculosis and malaria through grant

programmes. Founded in January 2002 in

Geneva, just three months later it approved

its first round of grants for 36 countries.

Twelve years later, the Global Fund has

disbursed more than US$23bn, saving

8.7 million lives: emphatic proof that global

co-operation can work and that when it does,

it solves global problems.

Why has the climate movement beenunable to give rise to effective institutionsof a size commensurate with the problemwe are trying to tackle?The Green Climate Fund has been a very

long five years in the making and is acting as

if it were deserted of common sense: while it

has received a paltry US$40m in pledges so

far, it spent all of it on its administration and

on board meetings around the world,

without a thought to approving even

symbolic grants to needy communitie

deserving projects. In typical fashion,

2014, it declared that it finally agreed o

of design rules, paving the way for its i

capital to be raised, and accompanied

success by announcing a French

contribution of US$1m (thats 10% of

1% of US$100bn) to fund its own expe

There are a couple of conclusions w

already draw from the history of climafunding mechanisms.

First, we need to stop reinventing t

wheel with new aid mechanisms. Grea

fragmentation is undermining the few

public dollars that are put toward miti

and adaptation annually. As the Globa

has shown, it is easy to raise massive

amounts of funding once the political

there. In the case of the climate fundi

mechanisms, whether its the Adaptati

Fund, the GEF, the CIFs or the Green

Climate Fund, we know that that finan

transaction taxes for example (well-testiny taxes on certain financial transact

also known as Robin Hood taxes) coul

raise US$300bn a year globally. Its tim

the G20 or the G7 to implement these

Robin Hood taxes and, following the l

the Global Fund, voluntary taxes on av

as well.

Second, it's time for the UNFCCC t

vastly scaled down to an institution

providing technical input on monitor

reporting and verification, and accoun

greenhouse gas emissions. After 20 ye

arguing that a tonne of COis a tonneCO, its now clear thats not the case.

The tonne is a tonne mantra is a key

behind the failure of international

negotiations, because the effort to redu

emissions in one country is not the sam

that required in another. As we are

witnessing, governments are quite hap

developing emission-reduction polici

measures on their own terms. Recogn

this fact leads to the conclusion that th

UNFCCCs function should now be gr

reduced, with much less effort devoted

trying to get countries to agree oncomparable targets and much more ef

devoted to ensuring the integrity of

underlying climate actions. With soun

monitoring, reporting and verification

principles accepted among all governm

there is much greater scope for marke

work to create long-term, rising forwa

price curves against which the private

can invest.


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Philippe Scholts and Tim Wall

consider the new forms ofpartnership required to implementinnovative business models thatrespond to commercial imperatives,while also delivering on thedevelopment front.

PHILIPPE SCHOLTSis Managing Directorof the ProgrammeDevelopment and

TechnicalCooperation Divisionat the UnitedNations IndustrialDevelopmentOrganization.

TIM WALL is SeniorPolicy Adviser at theUnited NationsGlobal Compact.

KEYNOTE

ENGAGINGWITHTHE PRIVATESECTOR INTHE POST-2015DEVELOPMENTAGENDA


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Photo:istock.com In the last two decades, increasing economic

growth rates in many developing countries havereshaped the global economy and opened upnew opportunities for learning and enteringinto new activities and sectors. Developingcountries are not only accumulating valuablesources of capital and labour but they are alsoimproving their skills and capacities to innovate.

Such continuous changes in the globaleconomic landscape have been characterized bya shift of wealth towards the East and South,shaping new forms of promoting, as well asfinancing, development. However, leadingtechnology and knowledge towards sustainablegrowth and moving up the value chain is still achallenge for most of the developing world.

Productive business activities are central todevelopment. A strong private sector is a keydriver of local economic growth, knowledge and

technology generation, job creation and theprovision of fundamental goods and services.Therefore, both developed and developingeconomies are increasingly realizing thenecessity of engaging the private sector as anintegral and dynamic agent of development, inorder to sustainably address the most pressingglobal and national challenges. This is central tocontinuing negotiations for the developmentagenda that is to replace the MillenniumDevelopment Goals (MDGs) beyond 2015.

The problems facing our world today are too

massive and too interconnected for unilateralapproaches. Complex development prioritiesrequire systematic and vibrant globalpartnerships that succeed in connectingfunding and expertise with local resources,implementation capacities and ownership all essential for advancing towards ourshared goals.

The development landscape contains manyaspirational partnerships which fall short ofimplementing their bold objectives of bringingtogether public sector, private sector, and civilsociety entities to improve the lives of peopleliving in poverty. Common pitfalls includemisalignments between the global strategy andthe local execution; a lack of commonmeasurement systems for monitoring andassessing progress; inadequate structures tomanage complexity; inability to create shared

value; and insufficient resources to guaranteesustainability.

Despite the collective development discouabout the essential role of partnerships with private sector in advancing development atmultiple levels, good practices remain elusivmany are ad hoc or rather limited, and often on corporate social responsibility andphilanthropy, rather than core business activBusinesses also usually face obstacles tocontributing to the longer-term sustainabiliany development effort, mainly due to the lacan enabling regulatory environment or thenecessary infrastructure that allows them to

Undoubtedly, achieving key outcomes ineconomic development, environmentalsustainability and inclusive growth entailsworking together across sectors and indusin new and more effective ways. Isolated andisaggregated efforts frequently fail to genthe desired results due to partnership

approaches which are incompatible with thcomplexity of the challenges.

As we reflect upon how to better engage private sector as a key partner for sustainabglobal development beyond 2015, one cannover-emphasize the need for multi-stakehodialogue mobilizing the full resources of thinternational community, if we are to delivmeasurable results on the ground.

How does an ambitious post-2015development agenda create a businesspartnership strategy and structure that wo

at the global, regional, and local levels?Meeting this challenge effectively will golong way towards ensuring progress in thecurrent post-2015 negotiations. This entailidentifying new forms of partnership that forward innovative business models thatrespond to commercial imperatives, while delivering on the development front.

Whereas private revenue streams fordevelopment are highly sought-after bydonors, non-governmental organizations(NGOs) and national governments as a meaof mobilizing alternative sources of fundin

budget concerns alone are not the mainimperative. When partnerships build on thresources, capabilities and influence of a raof stakeholders to tackle complex challengthey become powerful mechanisms toaccelerate development.

Today, transformative development solutthrough business exist with the capabilities


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have profound impacts on areas including:gender equality, human rights, climate change,agriculture and food, water and corruption. Theprivate sector has been traditionally the driver oftechnology development and innovation,representing a hub for technical progress. It has,moreover, proven to have considerable ability tocombine inventive capacity with access to finance.

But businesses are already engaging indevelopment in a variety of ways frominitiatives seeking to identify new models ofincorporating responsible behaviour in coreactivities, to more traditional initiatives strivingto leverage business supply chains and theproduction process. One particular area wherethe private sector has played a critical role is increating innovative solutions to climate changeand energy security, which often demand finecoupling between capital and ground-breaking

capability. Creating and engaging in platformsfor dialogue and knowledge sharing with theprivate sector can unlock the potential ofrelevant actors, directly impacting theeffectiveness of partnerships.

The Green Industry Platforms work to ensuremore sustainable business practices inmanufacturing refers to these initiatives, drivenlargely by large and small companies adjustingtheir business model to deal with todayscomplex and resource-constrained world. Thisglobal multi-stakeholder partnership, launched

by the United Nations Industrial DevelopmentOrganization (UNIDO) and the United NationsEnvironment Programme (UNEP), creates aplatform for businesses, governments,international and civil society organizations towork together, with a view to globallyminimizing the negative environmental impactsof todays businesses, through scaling up andmainstreaming greening practices throughoutthe global manufacturing and industry process.

In fact, businesses that integrate sustainabilityinto their business models are increasinglyreaping greater opportunities for new markets,innovation, resource efficiency and riskmanagement, while also adding long-term valuein economic, social and environmental terms. Asthey are constantly encountering furtheropportunities associated with development,businesses are progressively more aware of theneed to adapt to the changing global developmentagenda, and thus recognize the value of

partnerships and self-engagement in this context.Moreover, a number of partnerships focus on

helping to shape public policy as well as publicattitudes for improved corporate performance.Respective policy advocacy in climate and energy,as put into practice by the Caring for Climate(C4C) initiative, is another example of leveragingthe private sectors capacity for innovation totarget pressing global challenges. Launched bythe UN Secretary-General Ban Ki-moon in 2007and jointly convened by the United NationsGlobal Compact, the secretariat of the UnitedNations Framework Convention on ClimateChange and UNEP, C4C offers engagementopportunities to help prevent a climate changecrisis by mobilizing a critical mass of businessleaders to recommend and implement climatechange solutions and policies. The initiative helpscompanies to advance practical solutions, share

experiences, inform public policy, shape publicattitudes and engage in public-private

partnerships. More than 350 companies from50 countries, which support the worlds largest

business initiative on climate change, areprepared to set goals and publicly discloseemissions as part of their existing disclosurecommitment within the UN Global Compactframework.

Multiple factors explain the accumulatedinterest in supporting convergence between

business incentives with public policy objectives,and more specifically, in its explicit integrationwith achieving future sustainable developmentgoals. Despite the fact that we all talk about aglobalized world, the private sector is actually a

valuable point of contact for reaching localpeople and meeting local needs. On the onehand, business-reorienting practices aroundsystemic development issues can create positiveeconomic, environmental and social spillovers

by promoting local development, inter alia,

Transformative development solutionsthrough business exist with the capabilities tohave profound impacts on areas including:gender equality, human rights, climate change,agriculture and food, water and corruption.

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creating local infrastructure, generating newsources of income, and empowering differentgroups particularly the poorest, advancingopen markets and enlarging the possibility forlocal commodities to be exported. On the otherhand, their commercial interests in safeguardingsupply chains, embracing new investmentopportunities, developing new markets targetingthe poor and protecting themselves from futureshocks, are also preserved. These kinds of win-win solutions are what we need to be looking for.As such, this is a pressing opportunity to ensurea deep and central focus on businessengagement within any post-2015 discussions.

National governments are also exploring newways to enter new sectors and develop newactivities in order to accelerate economic growthand strengthen their production apparatus, so asto maintain high and inclusive growth.

Transforming their production structures is

critical to that effect, and in return will empowerthem to overcome context-specific needs.Investing in transforming and upgrading

domestic production structures is as importantfor developing countries today as the design andimplementation of industrial policies. In orderto better adapt to the worlds changing landscapeand to drive economic and industrial growth as ameans to address poverty and sustainabledevelopment priorities, developing economiesare dedicating considerable efforts to identifyingnew forms of partnerships with domestic andforeign companies to enhance technology

transfer and linkages. They are alsosimultaneously investing in supportinginnovation and the development of small andmedium-sized enterprises (SMEs), with a viewto building up domestic production capabilitiesand foster diversification. Building inclusiveand sustainable value chains by upgrading andstrengthening the competitiveness of local

producers for their successful inclusion in regional and global value chains has provensignificantly benefit from the participationthese producers in embedded business netand partnerships.

Non-traditional forms of partnerships arnotably populating the internationalcooperation landscape, particularly as thesealternative approaches (e.g. South-South antriangular cooperation) create new channelmaking available further development reso

both in terms of expertise, knowledge andfunding. Private investment flows from theGlobal South continue to hold the potentiasignificantly leverage the development impof partnerships.

The success of reaching inclusive andsustainable industrial development calls fodialogue with the private sector to build

collaborative partnerships, create synergiesinvestments, identify mechanisms to channand mobilize resources, and improve domeinstitutional capacities, at the national, regiand global levels.

Depending on the sector, businesses candeliver both commercial and development gthrough their supply chains, their distributinetworks and the benefits they grant to theiemployees. UNIDO and the UN GlobalCompacts expertise in industry-relatedknowledge and their track record in fosterin

business partnerships offer valuable resourfacilitating and/or brokering synergies betwthe public and private sector, thereby enabliinvestment opportunities that are inclusivesustainable and supporting skills developmstimulate innovation and productivity.

That said, we must continue to encouragpartnerships that seek to scale up interventinvolving the private sector core activities odealing with under-investment in developmchallenges. Getting the public and private sto work together is in itself a challenge, andneed for coordination at multiple levels furcontributes to its complexity. However, thediscussions shaping the post-2015 developagenda are reaching a crucial stage, and thucase has never been more compelling formutually-reinforcing partnerships, enablincontributions from a variety of stakeholdereffect the transformation needed for a morprosperous and sustainable future.

Developing economies are dedicatingconsiderable efforts to identifying new

forms of partnerships with domesticand foreign companies to enhancetechnology transfer and linkages.

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Naoko Ishii on how the GlobalEnvironment Facility is working

with the private sector to generateresults on a global scale.

From problemto solution:Working withindustry forthe globalenvironment


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If we break down environmental degrinto causes, consequences, and solutiosee industry represented in each categNon-renewable energy production, thdangerous persistent organic pollutancontamination of water resources,overfishing, and clear-cutting of foresall examples of industrial contributionglobal environmental degradation. Whlook at how rising sea levels driven by change could inundate business-intencoastal areas, or how energy price shocfrom declining non-renewable resourdisrupt business output, we see thevulnerability of industry to the conseq

of environmental degradation. And whconsider the ways in which private entcan contribute to innovative andtransformational approaches to solvinenvironmental problems, we see induintegrally involved in the solution to thenvironmental threats.

The next decade will likely see worlpopulation grow by 700 million. Anestimated 50% growth in economic ouwill expand the ranks of middle-classconsumers by as much as one billion pFeeding this expanding population wi

require new techniques in industrial-sagriculture, while meeting the consumdemands of a growing middle class wiboth a challenge and an opportunity foindustry. To meet these demands sustwe have to place a more accurate valuenatural assets such as fresh water, cleanforests, and fisheries.

It is with these challenges in mind I have developed a four-year plan for thGlobal Environment Facility that emp

NAOKO ISHII (CEO andChairperson of the GlobalEnvironment Facility)pictured with a GEF bannerat the 2013 Chemicals andWastes Conference ofParties to the BaselConvention. The banner isfilled with signatures ofbeneficiaries of of the GEFschemicals projects in China,Kenya, Mexico, thePhilippines, and Tanzania.


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a partnership approach to tacklingenvironmental problems, and it is criticalthat the private sector, including industry, bean integral player in that partnership, alongwith international organizations, nations,and civil society. Comprehensiveengagement with industry is a vital part ofthe GEFs long-term strategic effort,GEF2020, and the next four-year fundingcycle, GEF-6, which got under way in July2014. Only with the participation of theprivate sector can we place an accurate valueon natural capital, and fully incorporate thatvalue into the way decisions are made andprogress is measured. We intend to use the

convening power of the GEF, in concert withour partners, to ensure that all key actors from local communities to nationalgovernments, the private sector, civil societyorganizations, and indigenous peoples recognize the part they must play in findingand implementing solutions.

Much of what we do in support ofbettering the global environment involvesinteraction with industry, whether the tunafishery or chemical production plants orappliance manufacturers, or miningconcerns, or agribusinesses. The GEFs

primary responsibility is to support effortsunder treaties to address climate change,biodiversity, forests, land degradation,desertification, chemical pollutants, andinternational waters. We are also financingprojects under the new Minamata Treaty onMercury, opened for signature in Japan inthe fall of 2013. Our climate changeprogrammes include engagement withproducers of renewable energy systems andenergy-efficient lights and appliances.

Our biodiversity and international watersefforts have engaged the fishing and forestryindustries in collaborative efforts. We haveseen dramatic progress through the work wedo with partner institutions with privateindustry in reducing the use of persistentorganic pollutants. And a key focus of ourland degradation work is to ensure that theagriculture industry, particularly in climate-vulnerable regions, can provide secure foodsupplies for growing populations.

During GEF-6, which has just beenstrongly endorsed with US$4.43bn inpledges from 30 donor countries, we will beimplementing new Integrated Approaches

to addressing environmental challenges,including a project aimed at addressing theenvironmental pressures created by theglobal trend toward urbanization. TheSustainable Cities Integrated Approach willinvolve GEF engagement with localgovernments, civil society, and privateindustry to identify ways to manage theurbanization trend in a sustainable way.China will be the focus one of the firstSustainable Cities projects. A new WorldBank Group study on China urbanizationemphasizes the importance of addressing

the environmental consequences ofurbanization through the use of market-based tools such as taxes and tradingsystems for carbon, air and water pollution,and energy. GEF will be integrally involvedin developing and supporting thesestrategies.

Local, national, regional, andinternational institutions should work tostrengthen engagement with the privatesector because the private sector has the

capital, institutional knowledge, technicalexpertise, and implementation experience tomake sustainable development a reality.Through a cohesive institutional strategy onprivate sector engagement the world canmagnify its impact by redirecting andincreasing the volume of private investmentflowing toward sustainable activities.

The GEF has developed a number ofongoing initiatives in the industrial sectorgeared toward achieving environmentalbenefits and sustainability.

In China, the GEF has provided funds toreduce the risk involved in large volumeInternational Finance Corporation (IFC) loan

guarantees to help unlock lending for energyefficiency projects from commercial banks inChina. GEF involvement has served as acatalyst resulting in replication of an effectiveenergy efficiency lending model across thecountry. Through the en.lighten program, thGEF is effectively working with private sectorpartners across 55 developing countries toimprove the energy efficiency of public,residential, commercial, and industriallighting. The Global Efficient LightingPartnership Programme, or en.lighten, isenabling participating countries to save a

combined US$7.5bn and reduce carbondioxide emissions by 35 metric tons per year.Through the Global Cleantech

programme for small and medium-sizedenterprises (SMEs), GEF is helpingentrepreneurs who nurse and hatchinnovative ideas on clean technologies suchas renewable energy, energy efficiency, andwater and waste management, inparticipating countries, namely Armenia,India, Malaysia, Pakistan, South Africa and


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Turkey. The uniqueness of the programmelies in its competition-based approach toidentifying the most promisingentrepreneurs across a country, serving as adriving force to inspire the instincts ofentrepreneurs and resulting in the efficientuse of limited financial resources.Entrepreneurs participating in thecompetition are eligible to receive support,including extensive training and mentoringon business plan development, productdevelopment, and funding strategies.

Targeting industrial parks and economicdevelopment zones enables GEF to supportthe optimal combination of industrial

activities to achieve greater impact in a moreintegrated manner. An eco industrial parks/zone programme in Viet Nam has improvedthe environmental performance of targetedzones by reducing emissions of harmfulchemicals, improving energy efficiency, andreducing greenhouse gas emissions throughinvestments in clean, low-carbon technologyin the parks, and improving water usage andreducing pollutants into surrounding waterbodies. Private companies in the zones will bemobilized to actively participate in theproject activities.

GEF plans to replicate a successful projectthat addressed conflicting demands for freshwater in the Hai River Basin of China,which includes the capital, Beijing, andthe countrys fastest-growing city, Tianjin.The GEF and World Bank have supportedkey investments in satellite technologies toreduce the use of water for irrigation and inpractical sewage treatment options forsmaller cities. The result has been sharplyreduced nitrogen pollution and sharply

increased increase in income for farmersusing new techniques that have increasedyields while reducing water consumption.

A GEF-supported UNIDO TESTapproach engaged a number of countriesaround the Mediterranean and aimed to

build national capacities by conducting pilotprojects within priority industrial areasaffecting the Mediterranean basin. Theproject, funded by the GEF, Italy, and theprivate sector, demonstrates resourceefficiency and enhanced environmental andeconomic performance. The approachtargeted 43 industries in seven industrialsectors, resulting in a range ofimprovements including: Increased resource efficiency and cleanerproduction.Eco-design of products.The introduction of improvedmanagement systems, includingenvironmental management accounting and

the adoption of the CSR approach.And increased recycling rates and reuse ofwastewater.

The project delivered approximately 1,000man-days of training, yielding savings ofUS$17m, 9.7 million cubic metres of water,and 263 gigawatt-hours per year. The projectultimately leveraged US$20m in privatesector investment for cleaner technology forparticipating companies. This approach hasbeen replicated in a number of freshwater

basins and large marine ecosystems arthe globe.

Reducing the discharge of toxic subis an essential element of river basinmanagement. In Slovenia, GEF helpedan innovative environmental credit facreduce the discharges of nutrients andsubstances into the Danube River Basihelping Slovenia meet European Uniostandards. The initiative supports inducompanies, livestock farms, and smallmunicipalities that are planning to uninvestments to reduce water pollutantSlovenia, the GEF worked with the EurBank for Reconstruction and Develop

test the use of financial intermediarieslending to small and medium enterprThe US$57.8m framework credit facilichannelled through local banks to proloans to private sector companies and municipalities for investment projectreduce water pollution.

If we are successful in our engagemwith the private sector, we will bring abimportant transition in the green movfrom one in which private industry waas a major cause of environmentaldegradation to one in which the privat

is a critical contributor to protecting thenvironment and achieving sustainabgrowth. As CEO of one of the most iminternational investors in efforts to beglobal environment, I am convinced thGEF is on the right track in seekingpartnership with the private sector in endeavours. Only this way can we levescarce public resources with privateinvestment and entrepreneurial knowgenerate results on a global scale.

A man looks overthe worlds biggestroof-based solar

system in thesouthern German

town of Buerstadt.The 40,000 squaremetre installation

produces 4,500,000kilowatts per year.


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Amid renewed interest in industrial policy, Erik Solheim

considers the role of development assistance.

Industrial developmentin a changing world

Picture:GavinH

outheusen/DFID

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ERIK SOLHEIM is Chair of the OrganizationEconomic Cooperation and Development (ODevelopment Assistance Committee. Previofrom 2007 to 2012, he held the combined poof Norways Minister of the Environment anInternational Development.

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The world has seen tremendousimprovements over the past decades andindustrial development has been a strongforce for global development. Billions ofpeople and entire countries have been

brought out of poverty.Chinese manufacturing increased from

3.5% of world total in 1990 to 20% today. It is

not a coincidence that China has become theworlds biggest producer and brought 600million people out of poverty in the sameperiod.

Fifty years ago, the Republic of Korea wasone of the poorest countries on the planet.Through industrialization, aided by goodgovernment policies, it became one of themost technologically advanced societies onEarth. Think of Samsung, the global marketleader in phones, or Hyundai, one of theworlds most valuable brands. They have even

brought us the all-time YouTube hit,

Gangnam Style.From the African continent, Ethiopia has

set itself an ambitious target of becoming amiddle-income country without increasingits carbon emissions. The plan is to increaseagricultural productivity, strengthen theindustrial base and produce green energy.Ethiopia recently opened Ashegoda WindFarm, the largest in Africa. Economic growthhas been above 10% over the past decade.

If governments frame the markets in theright way, industrialization can help groweconomies, fight poverty and combat climate

change. Successful industrial developmentrequires good leadership, the right policiesand sufficient investments.

Countries have to be in charge of theirown development and industrialization.Governments should set the directions andprovide the right incentives for the privatesector. As Norways Minister for Environmentand International Development, I rememberreceiving Ethiopian Prime Minister, MelesZenawi. I invited him to speak to ourind

Making It #16 - Partnerships and financing

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