The private sector is regarded as the driving force for job creation, economic growth and poverty reduction. For donor agencies, engaging and working with private sector actors offers a number of potential benefits, including improving the delivery. As the business community is directly involved in many of the core activities of international donors (such as anti-corruption, climate change, and labour rights issues), collaboration and strategic engagement is often vital.
Donors’ engagement with the private sector typically involves two approaches: first, supporting the development of the private sector in partner countries by working with national governments to create a business environment that is conducive to investment; and second, collaborating and developing partnerships with private sector actors in the delivery of programming.
This paper identifies donors’ key policies, prevailing practices, and notable case studies of private sector engagement that incorporate social development and human rights considerations. Although much policy literature refers to issues of human rights and social development, the extent to which these are discussed varies significantly. Relatedly, much of the literature lacks specific detail on how guidelines and principles are employed or enforced.
From the literature that was identified, some of the notable approaches to private sector engagement that incorporate human rights and social development considerations include:
- Sida’s Innovations Against Poverty: This is a funding instrument that targets businesses based or operating in developing countries. It aims to promote the development of goods and services that benefit people living in poverty through the provision of grants and guarantees. Businesses that receive funds are required to meet certain human rights and social development standards, such as international labour standards (Sida 2011b). Sida also mainstreams issues of Corporate Social Responsibility through its support for ‘Business for Social Responsibility’ (BSR). BSR is a membership organisation that advocates sexual and reproductive health and rights issues in a business environment (Sida 2011b).
- Danida’s Business Partnerships programme links Danish companies to local partners to improve competitiveness and corporate social responsibility (Danida 2013). The agency requires partners to incorporate human rights, labour rights, anti-corruption and environmental standards in their daily operations (p. 4). Partners are obliged to undertake a ‘risk-based Corporate Social Responsibility due diligence’ assessment of business operations which is facilitated by the Danish Embassy and guided by the UN CSR Self-assessment tool (p. 29).
- JICA’s Base of Pyramid (BOP) Business Programme provides funds to ‘pro-poor’ companies whose activities have direct development impacts. JICA’s involvement in this mechanism includes the promotion of sanitary products for women in India and support to businesses producing sustainable packaging in Zambia (JICA n.d.).
In addition, there are some international guidelines and mechanisms for private sector engagement that are relevant for human rights and social development concerns. These include the UN Global Compact – an initiative to encourage businesses to adopt socially responsible and sustainable policies and the OECD Guidelines on Multinational Enterprises.