The Role of the Private Sector: Partnerships for Sustainable Development

Delivered at the Global Compact Network Pakistan, 46th Business Talk in Karachi, Pakistan.

Mr. Ahsanullah Khan, President,
Global Compact Network Pakistan

Mr. Fasiul Karim Siddiqi, Secretary,
Global Compacts Network Pakistan

Distinguished panellists and delegates,

It’s a pleasure to join you at the Pakistan: Global Compact Network. Your consultations on the post-2015 development agenda and associated activities augur well for Pakistan business and for the country. In my remarks I will:

  • First, briefly touch on core elements of post-2015 development agenda;
  • Second, promote inclusive business as a way to deepen sustainability; and
  • Third, underscore the significance of corporate sustainability.

Post-2015 Development Agenda

The role of the private sector in development has been a subject of renewed global interest in anticipation of the forthcoming negotiations on a range of critical topics. The United Nations system and Member States are fully geared to negotiate and adopt in 2015:

  • A universal set of 17 proposed sustainable development goals (SDGs) with 169 associated targets;
  • A new framework for the sustainable financing of development, which is one of the most critical means of implementation for the emerging global development agenda; and
  • A new universal climate agreement, with specific climate actions.

The context, framework and focus on poverty eradication of the new sustainable development agenda has been laid out by United Nations Secretary-General in his Synthesis Report: The Road to Dignity by 2030, which was released earlier this month. Post-2015 sustainable development has the potential to break new ground. Transitioning from the relatively simple Millennium Development Goals (MDGs), the sustainable development agenda, as proposed by UN Member States, is a wide-ranging and transformational new development paradigm.

To ensure deeper and lasting economic and human progress, the architecture of the post-2015 development agenda calls for a rethink and redesign of development policy frameworks.

Instead of relying on a segregated approach to development, this round of global development advocates a holistic and integrated approach to economic, social and environmental concerns. There is growing evidence of strong inter-dependence and inter-linkages between these three core pillars, and a coordinated response on these pillars would be self-reinforcing. Transmission channels and mechanisms between the three pillars are manifold. For instance: economic growth fostered by inclusive policies has positive spill overs across economies which, in turn, leverage social progress.

Global, regional and national partnerships in finance; trade; as well as science, technology and innovation, will be critical to execute and implement this complex but attainable development path. Progress on sustainable development will be contingent on:

  1. Robust and high quality inclusive growth accompanied by job generation, with benefits shared widely across society;
  2. Effective domestic and global governance mechanisms that support corporate and environment sustainability and climate action;
  3. The ability of Governments to better leverage the strengths and resources of the private sector for sustainable development; and
  4. Augmenting multilateral frameworks to harness finance; trade; and science and technology.

The need to switch to more sustainable development paths is becoming more urgent with every passing day. The Fifth Assessment Report of the Intergovernmental Panel on Climate Change underscores that failure to contain the rise of surface temperature to below two degrees Celsius by 2100 will be catastrophic for our planet. South Asia would be the worst affected, as the IPCC concludes that a one degree increase in temperature will raise sea levels by up to 98cm, which could be devastating for coastal cities and regions.

While there remains some scepticism about the feasibility of limiting the rise in global temperatures to two degrees Celsius, “Deep Decarbonisation” and “Green Growth” offer routes to low-carbon development paths. These options call for an urgent transition to sustainable development approaches, supported by global cooperation at an unprecedented scale in technology development and diffusion, which allows switching for adoption of low-carbon sustainable technologies. The private sector’s role in pursuing these low carbon paths will be critical.

Mainstreaming Sustainability in Business

Our private sector, as the primary driver of economic growth and dynamism, has great potential to promote sustainability in a number of ways:

First, the private sector’s economic dynamism has potential to facilitate sustainable development. In the case of Pakistan, our major problem is the historically low private investment/GDP ratio. To provide an impetus to private investment, the Government needs to improve the enabling domestic policy environment and the overall allocative efficiency and productivity of public investment. Pakistani businesses should also explore better tapping the regional value chains that have emerged as key drivers of growth in East Asian countries.

Second, sustainable development is best served if the private sector positions itself to foster inclusive growth. There is no doubt that the private sector has potential to lift people out of poverty and income deprivation. Evidence confirms that about 90 per cent of jobs in developing countries are created by the private sector, but only about one-fourth of the working-age population in developing countries is engaged in productive and decent employment. Small and medium sized enterprises (SMEs), the backbone of Pakistan’s industry, have definitely contributed to job creation. However, more than 80 per cent of the workforce in Pakistan remains trapped in informal sector jobs, with little social protection or other social benefits.

Third, the private sector’s potential to contribute to domestic revenues can help finance essential public goods and services, helping Governments to provide more and better public services, and creating a virtuous circle.

Fourth, private investment in inclusive business models and impact industries has the potential to create jobs; add value (such as through the application of innovative technologies, processes and skills); and extend a broader range of social and economic services to marginalized communities.

Social businesses are already making their presence felt in Pakistan and other South Asian countries. According to the Opportunity Pakistan Report, a new wave of creative and confident young entrepreneurs has emerged developing innovative start-ups in areas such as the environment, health and skills. Scores of young women and men from remote areas in Pakistan are becoming social entrepreneurs. For instance, the Youth Engagement Services (YES) is a network dedicated to funding social enterprise in Pakistan. Specifically, YES looks to fund micro social enterprises which are created and run by disadvantaged youth in the country. This is obviously an important trend, and social development would greatly benefit from the contribution of private resources, including traditional philanthropy; corporate social responsibility giving; social venture funding; hybrid or ‘blended-value’ financing mechanisms; employee volunteerism; product donations and other in-kind contributions.

Corporate Sustainability

The private sector needs to adopt a longer time horizon in its investment decisions, through more effective investments in its production patterns; value addition and marketing chains. Several processes are underway to engage and raise awareness regarding the need for alignment of corporate strategies and processes with the global development agenda. The United Nations Global Compact has released a report entitled: Building a Post-2015 Business Engagement which calls for advancing sustainable development through action, collaboration and co-investment by aligning corporate business strategies, models and R&D priorities with global sustainability responsibilities, including support for the achievement of specific SDGs. It’s encouraging that Pakistani companies are positioning to participate in this approach, and formal reporting by companies on their corporate sustainability progress to society at large is a praiseworthy development.

Given the severe energy scarcity in Pakistan, for instance, investments by enterprises in sustainable energy priorities of energy efficiency, energy access, and cleaner sources of energy will be key to supporting the sustainable development agenda. Investments in renewable energy projects, co-generation and enhancing energy efficiency will not only make commercial and industrial operations less vulnerable to power fluctuations, but will enhance overall financial viability. Businesses around the world are discovering ‘wealth-in-wastes’. The private sector in Pakistan should lead in exploiting the potential of recycling and waste management that could lead to the creation of entirely new industries. Business enterprises need to look beyond business-as-usual models to creatively use technologies to generate wealth and move towards low carbon pathways.

It will also be vital to build more sustainable and resilient infrastructure for urbanization and transportation. Pakistan may be one of the least urbanized countries in the world, with only 36 per cent of people now living in cities, but there is a great need for eco-friendly investment in better waste and water management in cities as well as stricter vehicle emission controls for our cities to be more resilient and sustainable. The private sector can contribute to the development of new smart urban centres through public private partnerships (PPPs), implementing new low carbon technologies and developing low carbon pathways for urbanization in Pakistan. Some steps in this direction have been taken with the 2010 Pakistan Policy on PPPs.

Conclusion

To conclude, economic growth and sustainable development are not zero sum games. They are both prerequisites of the future we want, mutually reinforcing, and neither can succeed in the absence of the other.

Sustainable growth strengthens all three pillars of development – economic, social, and environmental – and recognizes that long-term prosperity requires a careful balance between benefits reaped today and ensuring the well-being of our people and our planet tomorrow. Ultimately it a concept grounded in intergenerational equity.

The United Nations Secretary-General, Mr. Ban Ki-moon, put it best when he said: “The objectives and priorities of the international community and the business world are more aligned than ever before…for business to enjoy sustained growth, we need to build trust and legitimacy…for markets to expand in a sustainable way, we must provide those currently excluded with better and more opportunities to improve their livelihoods.”

This is why the private sector is such a central partner as we shape the post-2015 development agenda, and in Pakistan it is why business must pay a key role in helping us implement and achieve the new sustainable development goals.

I thank you.