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The Financial Express

Achieving SDGs: Aligning private sector incentives with public goals

Zubayer Hossen and Nadeera Sultana | Published: January 16, 2020 20:29:39


Achieving SDGs: Aligning private sector incentives with public goals

The world is moving towards a future demanding an inclusive society - a society where everyone will enjoy the benefits of economic development, social inclusion and environmental sustainability irrespective of religion, gender, skin colour, caste, region etc. The Sustainable Development Goals (SDGs) as outlined in the Global Agenda 2030 also aim all-encompassing development. Compared to Millennium Development Goals (MDGs), the SDGs are more comprehensive and expansive in nature. Thus, attaining sustainable development by the timeline is going to be an enormous challenge.

The fundamental challenge for achieving SDGs is related to institutional capacity which is much deeper than just mobilising more money and reducing the financial gap. Looking at the bigger picture, it is obvious that weak institutional capacity which results in poor governance problems and policy incoherence would impede the execution process. To overcome the challenges and eventually attain the SDGs, a concerted effort from both public and private sectors is the prerequisite. Therefore, carefully considered and planned engagement of private sector and re-orientation of interaction among public and private actors will be required to progress in SDGs.        

The 2030 Agenda for sustainable development adopted by the world leaders in September 2015 provides a shared blueprint to embark on a new path of human development. Aiming at integrating and balancing the economic, social and environmental dimensions of sustainable development, the SDGs point to the fact that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and stimulate economic growth - all while tackling climate change and environmental issues. There is no doubt that the challenge of implementing the SDGs will be immense. Due to the attributes of universality and diversity, implementation of SDGs requires huge investment and involvement from all agents of the society. The public sector cannot handle the challenges solely. The private sector has to have a defined role in materialising the policies or interventions undertaken by government in order to succeed in attaining the SDGs. Nevertheless, the discourse of engaging the private sector in achieving the SDGs by integrating their effort with the objectives of SDGs should be reconsidered. To rope in the private sector in a more sustainable manner, there should be an entry point of engagement for private sector. Besides, if needed, the existing policies have to be rectified and new policies formulated to incentivise the private sector. 

The engagement of private sector is not necessarily confined to financing issues. The private sector has a crucial role to play in achieving the goals related to decent work and economic growth, industry, innovation and infrastructure, gender equality, responsible consumption, climate change etc., especially in developing countries. The private sector provides 9 (nine) out of 10 jobs in developing countries (IFC, 2013) and hence plays an important part in solving global problems such as unemployment, poverty, and inequality.  This is why, participation of private sector is critical to employing the growing youth population and strengthening the economies in developing countries.

It is important to understand how the private sector can be involved more effectively and what strategies should be taken towards ensuring its contribution. However, the discussion about delineating the role of private sector is not straightforward. The interlinkage among SDG targets makes the job difficult. The SDGs and associated targets are inherently correlated with one another while being broadly framed as 17 separate and diverse elements. Hence, actions taken for achieving one goal may be mutually reinforcing or contradictory with achieving other goals. This suggests that to achieve the SDGs, an integrated approach is essential to seek and scale up the synergies, and mitigate and eliminate the trade? offs through horizontal integration across sectors and vertical collaborations across various administrative levels.

Since there are many cross-cutting issues in SDGs and an integrated approach is expected to tackle development challenges, private sector does not require to work on each relevant goal and their associated targets. Rather, for private sector, the approach should be to identify the core areas to focus on. To have a meaningful engagement, the entry point for private sector can be the SDG 7 on affordable and clean energy, SDG 8 on decent work and economic growth, and SDG 9 on industry, innovation and infrastructure. The SDG 7 stresses on ensuring access to affordable, reliable, sustainable and modern energy for all, where the SDG 8 promotes sustained and inclusive economic growth, full and productive employment and decent work for all. Finally, SDG 9 emphasises on building resilient infrastructure, promoting inclusive and sustainable industrialisation and fostering innovation. The SDG 7, SDG 8 and SDG 9 are the major drivers of productivity, inclusive economic growth and job creation and they cut across many of the SDGs. Therefore, promotion of these three goals will be a dominant element to achieve the SDGs. The contribution of private sector to SDG 7, SDG 8 and SDG 9 will ultimately help the other goals to progress, particularly SDG 1 on no poverty, SDG 2 on zero hunger, SDG 5 on gender equality, SDG 10 on reduced inequality, SDG 12 on responsible consumption and production and SDG 13 on climate change.

The strategic engagement of private sector is going to be the key for achieving the SDGs by 2030. Thus, if required, relevant policies need to be revisited and amended to incentivise the private sector. Public policy should be intended to create enabling environment at all levels to encourage a vibrant private sector. To better align the private sector incentives with public goals, including incentivising the private sector to adopt sustainable practices and fostering long-term quality investment, right policies have to be formulated and where appropriate, regulatory frameworks have to be strengthened.     

Zubayer Hossen, Research Economist, SANEM.

e-mail: zubayerhossen14@gmail.com. Nadeera Sultana, Research Associate, SANEM. 

e-mail: nadeerasultana43@gmail.com

 

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