Oral evidence: Sustainable Development Goals, HC 337Tuesday 3 November 2015
Oral evidence, 3 November 2015.
Witnesses
Dr Steve Waygood, Chief Responsible Investment Officer, Aviva Investing, Penny Fowler, Head of Private Sector Team, Campaigns, Policy and Influencing, Oxfam GB, Gibril Faal, Director, GK Partners and Chair, African Foundation for Development (AFFORD), gave evidence.
Chair
Good morning and thank you very much indeed. This is our second panel of witnesses this morning, moving now to looking at private sector engagement with the Sustainable Development Goals. I am going to go to Helen first.
Mrs Helen Grant
This is a question to everyone. To achieve the goals, we are going to make the leap and go from billions to trillions. Can you explain how that can be done and, as a follow‑up, can you say a little bit about what the role of the UK should be, and specifically DFID?
Dr Waygood
It is a huge question. Many PhDs have been written on the subject, so I will try to keep it brief. There have been claims that the discussions in the financing for development process, as well as the SDGs, have gone beyond development aid, and those claims are true, but they have not gone far enough. It is still true to say that the focus has been on the roughly $150 billion of development aid, not the $300 trillion that exists in the global capital markets. We have been approaching various UN agencies and working with, for example, DESA, UNCTAD, UNEP and the Global Compact for a few years now, trying to shape the policy discussion so that the $300 trillion could be harnessed. There were three reasons for that. First, we think that the markets present an opportunity to raise capital. Secondly, we think the markets are too short-term and systematically do not integrate these SDG issues. The markets themselves need to be understood. What is the capital markets supply chain? How is it motivated and how would we change that so that the SDGs were relevant? Third, with equity ownership, there are ownership responsibilities and rights, and so we get to vote, for example, at the company AGMs. There is a threefold framework. It is not just about raising the money; it is all about making sure that ownership is deployed properly. There were six tests that we put to the FfD process. First, will they get prices right? Will the pricing model make sure that the right thing pays companies in the long term? Secondly, will they understand the business models of the capital market supply chain intermediaries, in other words how a stock exchange is rewarded, how a fund manager is rewarded, how a broker is rewarded and make sure that they are aligned with the long term? Third, would they have a capital-raising plan? If, for example, we need $2 trillion over the next few years to start the SDG execution process, where is that money coming from—which asset owners, which asset classes and how? Fourthly, we suggested the need for systemic transparency. I was pleased to see some focus on corporate transparency, but not through the supply chain of capital. Fifthly, we need more standards: standards for responsible investment, standards for responsible business and, within that, benchmarks. Finally—and I think this discussion is already showing this—there is a systematic deficiency of financial illiteracy around how markets work. I found that at the UN; I found that in the conversations at Paris and COP21; I found that in Brussels; and I have also found it here. The financial markets are not taught. You can do an economics degree. You can do a finance degree, and you still do not necessarily understand how these markets are structured. The policy discussion around how to harness that $300 trillion is deficient, and needs to be massively improved. Our Chief Executive suggested at the General Assembly, when he spoke at the opening session of the intergovernmental plenary, that the UN, a few years from now, comes back to the General Assembly with a roadmap for sustainable capital markets, which the GA moves as a resolution.
Penny Fowler
I would agree with a lot of what Steve said. We do need some quite systemic changes to ensure that we are directing finance at the right place as well. The current system does not take adequate account of social and environmental costs and integrate those. Even for the finance that is already available, it is not necessarily going into the places that would be needed to achieve the SDGs. Under the MDGs, some of the targets including to halve poverty were well met, which is fantastic. The next level to get to the poorest and most vulnerable people is going to take a different approach, really getting down to the hardest‑to‑reach places, where those people are often on the margins of markets. We need to strike the right balance between private finance and ensuring that is being invested in the right places, in the right ways, which generally promote sustainable and inclusive growth, jobs and decent work, as well as public finance also being directed to the right places and those two not undermining each other in any way, shape or form. Business clearly has a really key role to play here. The SDGs provide a really useful framework for businesses to understand how they impact on global poverty and how they can promote more inclusive and sustainable growth. We need them to be using that, setting targets to maximise their positive impacts and to minimise any unintended negative impacts.
Gibril Faal
I was in the room in Addis Ababa in July, when the Secretary-General of the UN and President of the World Bank, with a great deal of razzmatazz, launched the Billions to Trillions programme. I was surprised at the financial blind spots. Steve talks about financial literacy, but these were financial blind spots. By the end of the MDGs, the regional development banks that are spearheading this were investing $150 billion for development. They say with a great deal of pride that they aim, between 2016 and 2018, to be investing up to $400 billion. This is a big thing. Every year, members of the diaspora and migrants invest more than $400 billion right now, but there is not enough attention and innovation focused on areas of funding and financing that is already available. It is not that I do not believe that it is possible, but what we hear is going to be that increased ODA in the billions will be used to leverage the trillions to come in. Now ODA, as we all know, is not necessarily the most effective form of investing in development so, in this whole process, now rather than later, we need to get small business, civil society and many other players to be in it, rather than leaving it to the regional development banks that are driving this initiative. It is theirs.
Pauline Latham
To be successful, the goals need to be embedded into companies’ core business functions. How do you think this can be done?
Dr Waygood
I think that the business case is fourfold and that the solution is that we need benchmarks. On the business case side, first, there are some companies for which their very product or service will be a solution to an SDG. That is straightforward. The second less straightforward one is, where the issue will affect the cash flows of the company, then that company needs to manage the issue better. I would think of that as a business‑relevant SDG. Third is where the company itself will impact on the issue in a significant way, but it does not come back to harm the company’s cash flows vice versa. That is the situation of market failure. Fourth, if it is just a benevolent business and it wants to donate money to the cause, then that should be welcomed. The Government’s role in those cases is different. Obviously UKTI can help where it is a business focus. Where it is philanthropy, it is simply a thank you. The second and third areas require a much more sophisticated approach, so the production of dissemination of best‑practice frameworks, but then what we need is a ranking. We have been working for a little while with a few NGOs and a number of other investors on the production of, for example, a corporate human rights benchmark. That benchmark has welcome funding from the UK Government last year, as well as the Dutch Government and a few foundations. We will be ranking the top‑500 listed companies, over the next few years, in relation to how they perform on the Guiding Principles on Business and Human Rights. That is a normative framework. That framework will be built in consultation with companies, with NGOs and with policymakers. The same logic could apply to a number of SDGs, be they human rights, climate change, labour standards, gender diversity and beyond, but it would need a sector‑by‑sector benchmarking framework to be built in a multi‑stakeholder partnership. We have seen a few examples of that and, where they do evolve—Oxfam has done one, Behind the Brands, which is very good—they provide the kinds of data that I can use as an owner or a representative of owners to hold the companies that we invest in to account for good performance. We can congratulate those that are doing well and we can target those that need to improve, once the benchmark is built and the results are public.
Pauline Latham
When you are talking about Oxfam, are you talking about the global Poverty Footprint?
Dr Waygood
No.
Penny Fowler
It is different. It is a campaign called Behind the Brands, which focuses on the 10 biggest global food and beverage companies, and ranks their performance in terms of publicly available policies on sustainable agricultural sourcing issues. We have land use, water use, gender, workers and farmers.
Pauline Latham
Would you say that initiatives like the Oxfam global Poverty Footprint are useful tools for business or not?
Penny Fowler
Obviously I would say yes, I hope that the Oxfam Poverty Footprint is going to be a useful tool for business. As you know, we launched it in September in New York and it is now available to the 12,000 UN Global Compact members. It builds on a methodology that we developed about a decade ago. It is rights‑based, people‑focused and it aims to cover five dimensions of poverty. As Oxfam, we have undertaken three of these studies with three multinational companies over the last decade, and they have been quite interesting and challenging processes, but the processes have often been as important as the outcomes, because they enable different stakeholders to come together and develop a shared understanding and problem analysis, and then reach some joint recommendations for action that needs to be taken to address those.
Pauline Latham
Would you say that it is a good tool for business?
Gibril Faal
It is a good tool, but it is not a complete box of tools, as it were. The SDGs have the ambitious goal of full employment. Most employment is not provided by big multinational companies; SMEs provide it. We have to find mechanisms that work for them, and some of these indicators and tools just do not work for them. I would say that, in terms of your question of embedding it, you certainly have to use legislation and make it clear that certain things are just unlawful. Then there is the element of inducement, to put it in that sense. It needs to be profitable. These good practices need to be profitable for business. That is the only enduring way of embedding it in every business. How do you make it profitable? You penalise bad behaviour and you reward good behaviour through the tax system. In that way it becomes profitable. That works for a big company and that works for a small company. There are specific things. The reason why I am slightly hesitant about some of the indicators is we have many of them. We have ILO conventions for decent work. Some countries have not ratified them; some have not implemented them. It has to go beyond the toolboxes to the heart of business, the bottom-line profit or loss.
Jeremy Lefroy
That very much leads us into the next question, which is specifically around small and medium businesses, which, as you rightly say, generally provide more employment than any other sector. I declare an interest in having been involved in running and setting up small businesses in developing countries. If I could ask Mr Faal particularly, what challenges do you see that are faced by SMEs, given that SMEs do not tend to have a voice at these large UN gatherings? We were in New York and we heard from a lot of big companies there, but we did not really hear from SMEs, because they do not have the resources and the networks to engage on these particular occasions.
Gibril Faal
Diagnosis of what the problems are has been done well by very many people. You start from this. Let us take access to finance. If you will permit me, I will mention some of what I think should be the solutions, from DFID’s point of view and others. If you take access to finance now, DFID and many development agencies still struggle to get a good working definition of what an SME is. We tend to use a definition based on turnover. That is not helpful, because you are quickly talking about hundreds of thousands of dollars and millions for an SME, whereas if we use a definition of numbers of employees, in many poor countries an SME that hires 50 people may still be turning over a few thousand pounds. You have to get the definition right. Now, because we get the definition wrong, you find that most of the support that is going to supposed SMEs is going to SMEs that are turning over $500,000 or more. We are well catered for if you want big money and well catered for you if you want tiny sums of money for microfinance, and then there is the squeezed middle, as it were. What about if you want $30,000? Of course, we understand why DFID or other big investors will not touch them. It is too messy. It is too small; it is not worth the trouble. What I think that agencies like DFID need to do is work with intermediaries, which would handle that money and deal with that particular category. That is one particular aspect.
Jeremy Lefroy
To be fair, just to interrupt, DFID recognises that and does do that, but the point is well made. Often the costs of dealing with those amounts of money, $30,000 as you say, does not interest the banks, because they need $1,000 for you just to walk through the door, in terms of their fee.
Gibril Faal
That is also why you need an intermediary, and the intermediaries are usually social enterprises, which are interested in not losing the money to recover it. AFFORD, the charity that I chaired for many years, has been doing similar things in Sierra Leone, taking the risk. You have to take the risk, but they need to be supported, because otherwise that sector would be neglected.
Jeremy Lefroy
Financial access is absolutely critical. Could you perhaps list some other challenges that SMEs are facing, perhaps around the tax system and unfair treatment through local tax systems, compared to bigger companies, for instance?
Gibril Faal
That comes to the whole issue of legal structure. Many of them want to operate sort of unregistered. There needs to be, in my view, a creative approach to this, not necessarily to say we would force all of them to the formal sector, but devise different stages of registration. Some countries have done that, whereby all they require is that you register at the municipal authority, for the purposes of collecting taxes. Some of the burden around company law would not apply to you. Again, we just need plurality and to recognise that informality by itself is not necessarily a bad thing. These informal companies are employing millions of people, so we just need to accept that as part of the range and find systems to work with all of them.
Chair
Do either of you want to add anything on that particular aspect? Particularly I noticed Penny nodding on the social enterprises point, if you wanted to elaborate a bit.
Penny Fowler
I would just like to add on that point that I do think we need to recognise that, to achieve the SDGs, we need to go beyond business as usual and look to some new business models, which do not necessarily drive profit maximisation, but allow more space for innovative ways of distributing the value generated through business to those who often perhaps lose out and do not necessarily get a fair share. The other point that is important to make is that, for example, many of the poorest and most vulnerable people are themselves part of the private sector, if you want to broaden the definition that far, struggling to make a living through some form of production or selling their labour. They are often facing lots of struggles that will not necessarily be addressed through the market, but may be through social measures or other measures. For example, many informal migrant workers struggle to get registration and to realise their rights, in that regard.
Dr Waygood
I mentioned in my first answer that the rights and responsibilities of ownership are part of a solution here, and to bring that to bear on SMEs. As a very large institutional investor, we invest in a lot of listed companies that, in turn, have SMEs in their supply chain. It is incumbent on us to check the likes of SAB, Diageo, Unilever and others are checking that the supply chain labour standards, for example, are well administered. We do that. We are not alone as an investor in checking, but there is not that much demand from end clients, end investors, on us to do that checking. Changing that demand environment is a good way to start harnessing the $300 trillion that you referred to earlier, because I believe it is a cascade. We own the likes of M&S, which then has a supply chain that they then need to check. We have a shared set of responsibilities with them for issues like child labour. We need to do our part, but that cascade is not well understood and there is very little demand for responsible long‑term sustainable ownership.
Chair
That is a good precursor for a couple of the next questions, actually.
Fabian Hamilton
It follows on well from what Penny said earlier, as well. Steve, this is really addressed to you, I guess. When we were at the SDG summit, or in New York at the same time as the SDG summit, Amina Mohamed, who we met with, described the SDGs as “17 opportunities for investment”. My question really is: do we need a fundamental shift in the way that investors view sustainability in development? How can we bring this about?
Dr Waygood
I think Amina Mohamed is much to be credited with the major success of the SDGs. We worked with her somewhat in delivering some of them, for example 12.6, which talks about the need for corporate disclosure, which we of course need as an investor to be able to integrate these issues. They are 17 opportunities. They are also 17 market failures. They exist as a problem because the market, as it is currently structured, is not dealing with the issues. They are opportunities but, for them to be properly corrected as market failures, Gibril was talking earlier about the need for fiscal intervention. I would share that, but I would go beyond it. Market failures are corrected through fiscal measures, through market mechanisms such as trading schemes and emissions rating schemes and through standards, both formal as well as informal. For the SDGs to be fully implemented, fully corrected and to fully harness the $300 trillion, we need the market failures to be corrected by governments, as well as asking for the market itself, whether they are a broker, a stock exchange, a fund manager, an investment consultant or an institutional investor, all of those, to be literate in the SDGs and for their business models to be promoting long‑term responsible investment, in a way that they do not at the moment. That is why I was very pleased to see, on paragraph 37 and 38 of the Financing for Development discussion, where the outcome document refers to the need to ensure that governments have understood the supply chain of capital and they have aligned the incentives of those intermediaries with long‑term sustainable business practices. They are not at the moment, so you are right to suggest that there is a need for a fundamental rethink.
Jeremy Lefroy
Just very quickly on that, a few weeks ago, The Economist proposed that the tax treatment of debt interest should be changed, in the UK and around the world, because at the moment the tax treatment of debt typically incentivises debt against equity. Would you include that as part of this process?
Dr Waygood
I would, absolutely. People often ask what one thing we would do to the capital markets to ensure they were longer-term and more sustainable. Unfortunately there is no answer, but that one thing would be a good contribution towards longer‑term markets, certainly. John Kay did a very good piece of work that looked at short-termism, but it did not itself look at the long‑term issues that the SDGs are looking at. We have an irony, in that the study of short-termism was itself short‑term. It was asked to be systemic and look at the whole supply chain of capital, but brokers were not included, stock exchanges were not included and investment consultants were not included. Your fiscal suggestion is a good idea, but it needs a patient, well-considered, thoughtful approach to the whole supply chain to be able to understand which bits are failing, which bits are reinforcing that short-termism, and then how we change each bit. Your equity/debt solution is a good one, but we also need to think about business models of stock exchanges, for example, which make more money themselves the more that stocks are exchanged, of course. There used to be a regulator 40 or 50 years ago, but where is the conversation around that machine for short-termism and how we harness the listing rule conversation? We, for example, have recommended that the International Organization of Securities Commissions, which is the global network of national regulators for stock exchanges, should set out what listing rules should say in relation to sustainability performance data. How should, for example, the UK listing authority encourage companies listed in the UK to disclose their performance in this area? I agree with your suggestion, but there are plenty of others that we would need to have in concert.
Jeremy Lefroy
Would Aviva typically avoid highly leveraged situations when it was making an investment itself, because of that problem with the advantage given to debt interest, as against equity?
Dr Waygood
We are big investors in corporate debt. We are big investors in equities. We have very long‑term liabilities. We have been around since 1696 as a business. We have clients who will not be drawing down their money for 30 or 40 years, so we have an inherently long‑term business model. As an asset owner and an asset manager that is an unusual long‑term paradigm. Of course we consider these characteristics. Our focus has to be on making money for our clients; that is our job. Where these issues over the short term produce returns, then we will factor that in. If the risks outweigh those returns, then we will factor that in. The problem that we are sharing here today, and the very reason why we participate in the SDG conversation, is that we have seen a new category of strategic risks emerging for the companies that we are investing in. That relates to the assumption, which is generally made in economics, that we have unlimited natural resources, and that is not true. That assumption needs to be challenged. At the moment, our markets are based on that assumption and it is dangerous
Fiona Bruce
You have touched on a lot of what I was going to ask, Steve. I would just ask how you think shareholders could help to drive up more effective reporting by companies against the SDGs, not just perhaps what we call the market leaders, like Unilever or even Aviva, but across the board. How could that be done?
Dr Waygood
On the day the SDGs were signed at the General Assembly, we had worked with the Principles for Responsible Investment, which represents $60 trillion of assets under management. Aviva drafted the letter and they then sent it to $38 trillion worth of corporate capital, so in other words the MSCI World Index. We wrote to their Chairman and we encouraged the Chairman to consider what their company could do, at its best, to help deliver the SDGs. That is one example of what we can do: just simply asking the companies that we do and can invest in to think about them. Secondly, ask them to disclose their performance. Thirdly, if their performance is lacking, vote against perhaps the director in charge of that performance. Fourthly, when we allocate capital and when we make investment decisions, factor in the long‑term performance data around the sustainability of the business, so that, when we make investment decisions, we reward good companies that are good at SDGs. The market failure problem at the moment means that you can be an excellent sustainable business, but because the markets are so short‑term, because these failures have not been corrected, a sustainable business is not systematically rewarded with a lower cost of capital. That is how the market should work and it is not.
Fiona Bruce
That is very interesting, thank you. When we were in New York, the extractive industries talked about developing a charter between them and then holding themselves accountable to the UN for this. Do you have any comments on that idea?
Dr Waygood
We are very strong supporters of the Extractive Industries Transparency Initiative. We are members. The voluntary initiatives of leaders, such as those that are members of that, are much to be welcomed. There is more to be had from companies that are very high‑profile, particularly with big brands. We can encourage them to do more on a voluntary basis. However, it does not work for the vast majority of listed companies, which are not big and do not have big brands, and that is where benchmarks come in. We take the best-practice framework of the best. We make sure they are rewarded by being seen as the best, and then that framework can be used to rank, as I was describing earlier, sector by sector on SDG issues. I am not suggesting we lump them all into one number, but we could do human rights, climate change, labour standards and so on. We can have a performance dashboard for companies on the SDGs, which does not just talk to the biggest and the best, but also incorporates the rest.
Chair
A number of you have talked about DFID and its work with the private sector, during the evidence session this morning. Can I ask each of you briefly to address the key thing that you think DFID needs to change in its approach to be more effective in working with the private sector? Perhaps I can ask Penny to go first this time.
Penny Fowler
It is great that DFID is engaging more with business. One of the things it needs to do and ensure it is doing well is holding business, where it is receiving development aid, to the same principles and to account alongside other development actors, ensuring that it is able to account for and report the outcomes of that investment, in terms of poverty reduction. That is obviously the mission of DFID. There is a really key and important point there, which links a lot of what Steve has just been referring to around transparency and reporting and demonstrating impact. A lot of what DFID is already doing builds capacity in developing countries. A key part in implementing the SDGs is going to be to have effective national frameworks, targets and processes that are inclusive and draw together the key actors, so that they understand the different rules and responsibilities and are held to account by each other for making progress on these things. There is a lot DFID can do to use its convening power to bring those actors together to support that process. In terms of achieving scale, we have talked about the different kinds of business, so big business and multinational companies often get a lot of attention and are most engaged in these kinds of processes. We have talked about small and medium‑sized enterprises. Larger national companies will need to be engaged in these national processes, and they are going to be key providers of domestic investment and resource mobilisation. The third and maybe final point is providing support to address the implementation gap. Sometimes policies are in place, but they are just not implemented. Whether you are talking about taxation and ensuring that there is capacity in developing countries to collect the tax revenue that is needed to provide essential public services that is one key example. There are also things that need to be done at the global level on that issue, as well, in terms of global tax reforms, pushing for country‑by‑country reporting, which is another transparency issue that will help to ensure that taxes are paid on value created, in the place where it is created. That is an issue also for companies. There is often an implementation gap, even in some of the best, leading companies, where they thing they are doing the right thing and have great policies, but actually the reality on the ground of doing business can be very challenging. You need to have this collaborative approach. To achieve scale is often a question of having a sectoral approach, because it is often very hard for a single company to start paying a living wage or a higher wage on its own. You need to look at all stakeholders together and we have done quite a lot of research with companies in different sectors looking at wage rates, for example, finding that they are low, in some cases. In the tea sector in Malawi, they are below poverty levels even. They are not just below living wages. There is a very exciting initiative happening in Malawi, at the moment, to bring all the different actors together in the tea sector to try to work out how to move that forward.
Gibril Faal
We can look at it as omissions and commissions. What should be omitted? What should not be done? We talk about the 17 opportunities of the SDGs, and the Financing for Development framework has many new innovations. One particular area is public‑private partnerships and PFI. It is in there now big time, courtesy of the UK, because we have pioneered these things here. We already know from the UK and other experience that they have since stopped being development finance instruments for public infrastructure to become financial instruments that are traded. There is a very vibrant secondary market in PPPs, for example. We need to make sure that some of those negative elements of it are not replicated in the PPP/PFI framework in international development. Usually the private financial businesses that lead these contracts are far more experienced and qualified than their government counterparts. DFID should play a role in that to make sure that the PFI/PPP framework we have is a fair one that serves public infrastructure development. The second element of omissions is that, earlier today, you were talking about indicators and how to support national statistics authorities. Although I am not totally comfortable with the fact that indicators are being dealt with by national statistic authorities, we need to support them, because they have a propensity to focus on quantitative indicators that lack the probative character that really goes to the heart of development. We need to get in there to make sure they are independent. In the UK, we have now made our statistical authority independent, but in many countries they are not independent. They need to be independent from government and have the input of civil society and business. Those are two examples. In terms of what can be done—commissions, as it were—we have talked a lot about the trillions of international finance. A good lot of money actually sits within countries and never goes out. Even amongst the poorest countries, the richest institutions are the social security bodies. They are collecting lots of cash, which is why some of these countries are very heavily indebted with local debt. The local debt ratio is very high, because they are borrowing money from social security institutions. Those institutions are not usually bold or innovative in how they use their money. There is room for DFID’s involvement in supporting that. Lastly, just to repeat the point of the importance of finding intermediation, DFID should not just leave alone the bits that it cannot do. If it is important, it has to find the right partner and work with them.
Dr Waygood
I strongly welcome this review, because our key concern at the moment with the SDGs is that such wonderful success is rapidly forgotten, over 15 years. We need to make sure that there are review points that keep this alive. David Cameron was right to be proud to be part of the High‑Level Panel, and I would hope that that panel revisits performance periodically, in relation to national delivery on the SDGs and that very clear but extensive policy framework. I am not sure what the intention is, but I wonder whether a suggestion could be made to that end. Three other things from a DFID perspective are that we have seconded our Chief Marketing Officer to Project Everyone. It has helped deliver communication of the SDGs to over 3 billion people in the first few weeks. I am sure that Project Everyone could do with the support of DFID, financial and otherwise. Secondly, we have proposed that the UN General Assembly agrees a roadmap for sustainable capital markets to harness the $300 trillion. We would like to think that an ambitious but doable deadline would be 2017 for such a resolution. We would love to work with DFID in creating such a resolution and seeing it through at the UN. Thirdly, I have mentioned the need for benchmarks. We would very happily work with the statisticians that exist to make sure that the indicators that are being built for corporate performance, in relation to the SDGs, reflect best practice in the responsible investment world, and look at, for example, how countries’ policy frameworks reflects the SDGs, how their governance does and so on, so that we can then benchmark performance in that area and make sure it is disclosed. That soft law, that soft normative framework, is missing and it needs to be corrected.
Mr Nigel Evans
If you are selling washing powder around the world, what is in it for you to get involved with SDGs?
Dr Waygood
I am not selling washing powder.
Mr Nigel Evans
If you are a company that is, what is the moral imperative or indeed commercial imperative that you get involved fully with the SDGs?
Dr Waygood
There is a considerable amount within the SDG framework around sanitation and the need for cleanliness, broadly speaking, to reduce the communicable diseases that exist. If you can work with national governments in key emerging markets to help them correct problems with your distribution chain then, as Unilever has shown, it is possible to make a considerable amount of money from doing exactly what you have just described, whilst opening up new markets, building a brand for your firm, which then means you will be front of mind as that country continues to develop.
Mr Nigel Evans
There is a commercial imperative as well as a moral imperative.
Dr Waygood
For the business that you have just described, definitely, but there are other businesses that might, unwittingly and unknowingly, have negative impacts on the SDGs. My question back to you is: what is the commercial imperative on them to deliver the SDGs? I think it is missing.
Mr Nigel Evans
That is a great question. You have talked about benchmarking particularly industries that are doing well and those that are not. Coca‑Cola gets to where water does not, sometimes. Their reach is quite amazing. Is there a list of firms that are doing incredibly well, whether from their own commercial interests or not, and also a shame list of those firms that, for whatever reason, do not want to touch SDGs, do not want to touch anything to do with international development, so at least they can be exposed, so people can make their own judgments as to whether they should buy their products?
Dr Waygood
That does not exist. There are a few attempts at that kind of an initiative. I mentioned Behind the Brands earlier, where some of the issues in the SDGs are scored by Oxfam for some of the sectors. What you have just described is almost exactly what I am proposing in the delivery and execution of public, open-source, accessible benchmarks. A multi‑stakeholder partnership has created the criteria. They are considered authoritative. There is some kind of oversight mechanism. The disclosure is careful. Companies are forewarned that they will be ranked, and it is issue by issue and sector by sector. I do not think that you can wrap them all up in one go. My team spends a considerable amount of money on privately held data that does rank corporate performance in this space. There are now, and there have been for over a decade, independent research providers that exist to do what you have just described but, to pay their analysts, they have to charge for the product. Therefore, it is privately held data. I think it should be shared publicly.
Jeremy Lefroy
Perhaps Penny could start on answering this one. It is all about multi‑sectoral partnerships, which quite a lot of people have referred to in evidence that they have submitted in writing. It seems that these are useful. We have certainly seen examples of good ones in the past, but how can they work? How can they support SDGs? Should they be focused on specific goals? What are the challenges that perhaps you, from your experience, can describe as them facing?
Penny Fowler
They can be really useful, but there are some key factors that need to be considered, in order for partnerships or collaborations to succeed, including having a shared understanding of the problem. As I have mentioned earlier, what we have found to be one of the most useful ways forward is to convene different stakeholders together, or partners, who initially come with quite different understandings and perspectives of the problem. Doing some joint research or something like that is a really useful way to try to identify and align objectives, and an understanding of what is needed to take things forward. You need to first of all have a clear shared understanding of what the problem is you are trying to address, and then to have a really clear understanding of the different roles and responsibilities of the different partners, and a mutual respect for what each partner brings to the table. That is not necessarily all about money and finance, but can equally be contacts and understanding of the context of the situation and what is needed. It is really important for success for all the relevant stakeholders to be involved, so participation by all the key stakeholders is really important, and then a really concrete roadmap with milestones to check on progress along the way and ensure follow‑through. We need to move from pure partnerships into policies and then implementation of those policies.
Jeremy Lefroy
UNDP has suggested that DFID could promote the idea of goal‑specific partnerships. Do you think that is useful or perhaps too narrow, given that partnerships might often cover things like employment and health, or perhaps water and even climate, at the same time?
Penny Fowler
I do not have a set view on this, but I do know that, for example, quite a lot of companies that we are engaging with are interested in women’s economic empowerment. It makes sense to them, both from a commercial perspective and a moral perspective. Our analysis and our experience of working on that issue shows us that it is not possible to achieve women’s economic empowerment purely by focusing on the economic or market aspects of that issue; you also need to address many of the social aspects of the issue as well, whether you are talking about violence against women, education or family planning. These things are interdependent of each other. It is the systemic change that we are talking about here, and the SDGs and their achievement need to be looked at in that broader context. There are going to be some trade‑offs and some difficult issues and potential conflicts, which will need mediating along the way. That is where you have the value of collaboration and partnerships to try to understand what those tensions are and how you can overcome them.
Chair
Thank you very much indeed. We are out of time. Thanks to all three of you for coming along. This has been extremely helpful and informative this morning. Oral evidence: Sustainable Development Goals, HC 337 1