25 January 2019
Last week the OECD hosted the second annual Private Finance for Sustainable Development Week (PF4SD Week). The week brought together stakeholders from the public and private sector, trade unions and civil society to discuss new approaches in using private finance to reach the Sustainable Development Goals (SDGs). TUAC, alongside the ITUC Trade Union Development Cooperation Network (TUDCN), actively participated stressing the need for social dialogue and for keeping governments, not financial intermediaries and large MNEs, in control of the development agenda.
With official development assistance from developed countries currently far below the 0.7% global commitment, many, including the OECD, are looking to private finance as a way to reach the SDGs and achieve the 2030 Agenda. As such, mobilization of private finance is often revered as key in reaching the SDGs and governments are increasingly directing official development assistance to support private investments in development projects.
At the PF4SD Week, the OECD presented its new report, Social Impact Investment 2019, which calls for international standards to be applied on collecting data and measuring impact. This implies better measuring and monitoring of the end-results and thus impact of the various forms of private finance in development including Blended Finance, Green Finance, and Social Impact Investment, as well as the overall effectiveness of private sector engagement through development co-operation.
Contributing to the OECD discussions, the TUAC and the TUDCN agreed that private finance can play an important role in development and welcomes the increased focus on the effectiveness. In the opening session, TUAC Secretary General Pierre Habbard cautioned that private finance comes with a price of its own, and that development projects are too important to be left to private investors alone. The public option for involving private sector in development (namely traditional public procurement) should remain the preferred option because it is the one that keeps governments in the “driver’s seat”, not the lawyers, not the financial investors. Development is about public goods and about social purpose – not an “asset class” for investors.
The TUAC & TUDCN participants highlighted the need for criteria on private sector investment in development cooperation to be coherent and fully aligned with the international development effectiveness principles. The recently adopted, and G7-endorsed, OECD Blended Finance Principles offers a comprehensive framework. However, as far as the OECD itself is concerned, they can be better supported and framed by other key OECD instruments such as the revised OECD Guidelines for Multinational Enterprises and the Guidance on the Due Diligence, Principles for Public Governance of Public-Private Partnerships and the 2017 “Framework” for better governance of infrastructure to name a few.