2 1 bass-aid ps4_sd environet february 2015

Aid and Business for Sustainable Development 1

Steve Bass

17th February 2015Author name

Date

Steve Bass

17th Feb 2015

Steve Bass, IIED

OECD ENVIRONET 17th session

17th February 2015

Aid + private

sector =

sustainable

development?


Steve Bass

17th February 2015Aim of this presentationOpen today’s discussion on aid engaging the PS

for climate change, green growth and SD:

By reflecting on:

• WRI/IIED dialogue with Aid+PS on SD (2013)

• IIED case studies aimed at identifying

partnerships for inclusive SD (2014-present)

Suggest ideas – 1. Principles, 2. Pilots, 3. Platform


Steve Bass

17th February 2015Interest in Aid/PS engagement

Donors are engaging with the PS, for political & ‘efficiency’ reasons

Big businesses are the focus – many seek to understand, measure,

communicate and improve their SD and poverty impacts

SMMEs have neglected potential for inclusive SD in poor people’s markets

PPPs are the main partnership type, but…

Criticism of PPPs for env degradation and social marginalisation

From 2015, SDGs will increase pressure on aid to support inclusive SD.

New measure being developed – Total Official Support to SD

Incentives for PS engagement and for SD are not yet aligned in aid system

Poor mutual understanding between donors, big and small PS

Time for review of aid-PS engagement…


Steve Bass

17th February 2015SD partnerships – joint devt

and commercial success

Developmental

success

Partnehips

Sustainable

Development

Commercial

successs

Market

Develop

ment

Risk

Reduction

Policy

Influence

Business

Case

Poverty

Reduction

Env/

Climate

Protection

Equity /

Inclusion

Economic

Develop

ment


Steve Bass

17th February 2015Partnership typesAid+PS partnerships:

• PPPs

• Voluntary agreements B2B, public2B, gov2gov

• Community enterprises

• Community development contracts

• PPPeoplePs

• Multi-stakeholder dialogue/policy process…

Supporting finance mechanisms:

• Challenge funds• Innovation funds

• Revolving-door funds

• Grants

• Preferential loans

• Targeted subsidies

• Capacity/training funds…


Steve Bass

17th February 2015Observations on partnerships

WRI/IIED Aid+PS4SD Round Table concluded:

• Donors focus on finance – but enabling

environment is also important for inclusive SD

• Partnerships for SD may involve govt as

regulator/enabler, NGOs as broker/watchdog

• Need evidence, pilots, dialogue on best practice

• Modest next step – IIED case studies of inclusive

partnerships…


Steve Bass

17th February 2015Case Study Selection

Case Study range

Economic sectors: water,

waste, energy, forestry,

fishery, agriculture, housing,

construction, metals,

materials, textile, chemicals

Partnership Types: PPP,

voluntary, community

enterprise, community

contracts

Criteria for Selection

Involvement of SME/informal sector

Defined SD aims and objectives, or showcased outputs/outcomes, that include both env and social issues

(IRF SDGs model)

40 cases selected –

18 studied in detail


Steve Bass

17th February 2015

Case study analytical framing

Sustainable development outcomes + Partnership characteristics that achieve them

Adapted from IRF, 2013, Post-2015: framing a new approach to sustainable development.


Steve Bass

17th February 2015Coverage of available cases

Partnership type Case study example Aid finance mechanisms

Public-private

partnership (PPP)

Manila Water

E+Co

Re-Tie Bangladesh

Water-Futures

Partnership

Local govt / donor financing

Preferential loans

Capacity / training funds

Commercial financing

Voluntary

agreement (B2B, public2B, gov2gov)

VA3

Switch-Asia

ANSAB Nepal



Capacity / marketing funds

Community

enterprise

Nicaragua Enterprise and

Employment Prog

Techfortrade

Preferential loans (guaranteed

by donors)

Private funds / pump-priming

Community

contracts

El Mezquital

AECF

Cadbury Cocoa

Partnership

Revolving door funds

Challenge funds

Grants


Steve Bass

17th February 2015Aid rolesRole of aid Example

De-risking El Mezquital – revolving fund is reducing lending risk and

bringing more local products into commercial markets

Convening E+Co – field offices are effectively combining finance

sources with on-the-ground expertise

Capacity

for SD

VA3 – supporting platforms for the partners cuts cost of

essential networking and shared learning on SD

Inclusive

SD policy

El Mezquital – aid ensures decision-making responsibility

is shared with affected communities

Transparency Cadbury Cocoa Partnership – joint oversight boards

(including NGOs and UN agencies) assure SD


Steve Bass

17th February 2015

Beginning the analysis…Case study Partnership

type

Role of aid SD outcome Partnership

characters *

VA3 Voluntary

agreement

Capacity econ, soc, env IBM, PMD,

CTD, WP, CA

Manila Water PPP Convening econ, soc, env IBM, PMD,

CTD, WP, CA

El Mezquital Community

contract

Financial,

policy

econ, soc, env IBM, CA

Cadbury

Cocoa Pship

Community

contract

Transparency econ, soc, env IBM

Switch-Asia Voluntary

agreement

Capacity econ, env IBM, CTD, WP

E+Co PPP Convening econ, env IBM

* Characteristics of case studies with clear SD outcomes can help to

inform Aid+PS4SD principles…


Steve Bass

17th February 2015

1. Ten partnership principles?Successful partnerships include [high confidence from case studies]

1. Inclusive Business Model – inclusive process for SD plan, delivery, report (IBM)

2. Partnership and Management Development – clear roles, aligned incentives (PMD)

3. Capacity, learning/Training Development for SD tailored for context (CTD)

4. Wider Policy/enabling environment for SD actively considered and engaged so

prerequisites in place – tackling regulation, bureaucracy, tariffs, fees, subsidies, etc (WP)

5. Communication and Accountability channels on SD established and clear (CA)

Successful aid roles in partnerships appear to include [lower confidence]

6. Additionality – to what PS would do anyway; seeking leverage not just pass-through

7. Neutrality – not creating unfair advantage in the market

8. Sustainability – shaping long-term commercial and developmental viability

9. Transparency – requiring SD reporting from PS

10. Risk – underwriting the risks of innovation


Steve Bass

17th February 20152. Pilot partnerships?For SDGs, need evidence and confidence:

• In-country shared experimentation/risk-taking

• Across diverse sectors, businesses, aid modalities

Example idea: De-risking private investment in HEP:

• MFI participation in HEP now only 5-10%; reduced SD scrutiny

• PS doesn’t invest in SD as ‘it’s risk capital that can be lost’

• SD provisions cost only 2-3% of total project – good donor role

3-part Financing Facility to lever PS investment in ‘SD dams’, so…

Public good costs throughout HEP project life (3 stages)

1 ESIA grant; 2 risk-share if proposal fails; 3 SD implem support

Also support improved regulatory capacity

Full IIED study at DFID request. UK and other interest


Steve Bass

17th February 20153. Platform on Aid+PS4SD?

Use the OECD DAC mandate:

To develop DAC policy on PS roles in SDGs

To encourage and learn from Aid+PS pilots

To call for and assess evidence

To build trust and transparency, shared

values beyond compliance


Steve Bass

17th February 2015


Steve Bass

17th February 2015Case study method


Steve Bass

17th February 2015

Case Study:

Manila WaterPartnership Principles

1. Fostering an Inclusive Business Model

2. Early Institutional management system

development

3. Early capacity and learning/training systems

development

4. Active consideration of the wider policy/enabling

environment relevant to service

Results show that:

• Reduced water loss from 63% to 12.2%.

• Water access to the base of the pyramid

and more efficient use of water

compared to its predecessor.

• Replicated in Vietnam.

Manila Water is a PPP in Philippines

that took over responsibility for

providing clean and reliable water

supplies to the city’s east zone in 1997.


Steve Bass

17th February 2015Case Study: VA3 VA3 – Chinese laundry and textile

companies accelerate environmental

performance. Led by Dutch donors. The

project demonstrates most principles.

Partnership Principle

1. Fostering an Inclusive Business Model

2. Early Institutional management system

development

3. Early capacity and learning/training systems

development

4. Active consideration of the wider

policy/enabling environment relevant to service

5. Establishing clear communication and

accountability channels

Preliminary results show that:

• Increase of annual energy saving and

annual water saving potential

• climate change mitigation target of 10 M ton

CO2 emission reduction in 2015 has been

reached twice (half-way through project)

• Scaled up from local to national level.


Steve Bass

17th February 2015

De-risking: Financing Facility

3-part financing facility for flexibility, uptake and effectiveness

Some projects may need Part A only. Others A+B or A+C

It is not a subsidy. Aid leverages sustainability in the public

interest, while private finance seeks profitable projects

Part A

Grant Provision To undertake SD

assessments

Part B

Risk-Share ProvisionFor enhanced project

preparation studies

Part C

Implem SupportProvision for special cases

• To Fund Hydropower Sustainability Assessment Protocol (HSAP)

• Mainly early stage and project preparation assessments

• To reinforce weak regulation / M&E and help build capacity

• When recommended by a Part A HSAP

• For project preparation to enhance ESIA, elaborate

additional measures, factor into project & financing plans

• Only invoked if project fails to achieve financial closure

• When recommended by a HSAP (Part A)

• Targeting small or special projects

• Enhancing E&S risk management in construction or operations

Documents

2 1 bass-aid ps4_sd environet february 2015