Making private sector investments in development programs aligned with the SDGs

The private sector is being encouraged to contribute to funding the SDGs through blended finance mechanisms. Governments are redirecting growing percentages of public Official Development Assistance (ODA) to support private investments framed as development projects. The use of public development finance to mobilise additional private finance is known as blended finance.

Donor governments’ increasing use of blended finance is not based on any proven evidence that this method is bringing long-term development benefit to the countries where they are implemented. On the contrary, trade unions’ research and collection of experiences from affiliates in the field show that the use of private sector investments in development is not contributing to SDGs at country level; donor countries and their development financial institutions (DFI) that have been set up to support private sector investment in developing countries are not granting their programmes against development results; and, last but not least, nor these institutions nor the private sector actors are being held accountable for their use of public money.

Trade Unions’ Demands
Trade unions urge donor governments and DFIs to endorse a set of criteria on private sector investment in development to ensure that they contribute to the SDGs and that they are coherent with the international development effectiveness principles.

Examples of key criteria

  1. Private sector actors must explicity adhere to key responsible business conduct instruments.
  2. Private sector actor must have a policy on disclosure of data in place.
  3. Pogrammes must contain a risk analysis on social, economic and environmental level; highlighting risk identification, mitigation and avoidance, including due diligence procedures in place.
  4. Programmes must contribute to fostering social dialogue, accompanying its implementation.
  5. Result assessment must check that the income generated at country level is in favour of the domestic system, including taxes and social contributions
  6. Result assessment must check that the jobs created are of quality and sustainable, based on international labour standards, particularly regarding: freedom of association and collective bargaining, fair wages, social protection, occupational health, and safety provisions.

Making private sector investments in development programs aligned with the SDGs