The role of the Private Sector in Sustainable Development

June 25, 2021 - 5 minutes read

The role of the private sector in development is more than just that which is pegged on the financial sector. Apart from the traditional economic development role that the private sector plays that includes providing goods and services, generating tax revenues and developing new and innovative solutions to help curb economic challenges, the private sector can also be involved in other development areas such as combating climate change as part of corporate social responsibility, circular economy, and the environmental initiatives.

In cognition of this, during the establishment of the 2030 Agenda for Sustainable Development (SDGs) it was apparent that a shared responsibility approach was needed bringing together State, Non-state actors as well as the Private Sector. This was premised on the realization that no single sector would be able to deliver on the SDGs alone, and the private sector shares many of the same interests and goals as governments in terms of creating more resilient and prosperous societies and markets, since business also needs stable societies in order to thrive.

The private sector is an important stakeholder under Agenda 2030 which can lead the progress for achieving the SDGs because this sector comprises the largest part of the economy.

However, in achieving SDGs the private sector faces a number of challenges such as lack of harmonious partnerships, shortage of investments, exhaustiveness and complexity of interlinkages among the goals and their targets, and lack of monitoring and evaluating methods for assessing the progress of implementation. Moreover, there is a dire need for a reliable set of measurable indicators to support the private sector in measuring the implementation progress.

To address some of these challenges, the SDGs should be adopted as an integrated approach. In this regard, it is necessary to prioritize the primary step in implementation of the SDGs and its indicators to match national priorities. In Kenya for instance, the Social Investment Focused Agenda (SIFA) which was hosted at the Office of the Deputy President was established to get more corporates to invest in more sustainable programmes aligned to the national Government priorities. The priorities and programmes were part of the national macroeconomic blueprint referred to as Vision 2030. Key to the delivery of the policies was the adoption of Private Public Partnerships (PPPs) where the Government brought together the private sector to aid in the implementation of various initiatives.

However, outside of the efforts to have a more coordinated approach, there is no formal framework that mandates companies in Kenya to take part or contribute towards the achievement of the SDGs. This is unlike more developed countries such as Germany where the German Bundestag recently passed a new law on supply chain ethics requiring companies to report human rights and environmental abuses along their direct supply chain for sustainability’s sake. According to Deutsche Welle, German subsidiaries of multinational companies or those with offices in Germany will also be required to report infractions.

The situation in Kenya has been more of a ‘nice to have rather than that of a mandate backed by law’.

Why contribute to achieving sustainability? 

Apart from the promotion of responsible business practices as a part of Corporate Social Responsibility, businesses themselves stand to gain through having sustainable business models by first of all becoming more attractive to clients, investors, the government and other stakeholders. Aligning business models to SDGs has the following among other benefits:

  • Decrease of operational costs and increase of productivity through the management of supply chains and the consideration of social and environmental development actions.
  • Better performance through inclusivity and the value of employee diversity.
  • The creation of new lines of business, new products and service development opportunities. Companies can generate more revenue through innovative products and services that will be developed for new markets. Noteworthy examples include remote health service systems and electric vehicles as seen in parts of the world.
  • A much more skilled workforce as companies that attach importance to sustainability attract responsible individuals that translates to the company’s/business’ overall productivity.
  • Companies that have a sustainable business model are better placed to get government incentives allowing companies to expand and allowing opportunities for collaborative efforts for sustainable development with the government and other stakeholders.
  • Attracting of investors focusing on inclusivity and social responsibility who provide funding and favourable terms to businesses with initiatives in alignment with the SDGs

Moving businesses towards SDGs will help businesses to see the economic, environmental and social rewards that the restoration of the ecosystem among other sustainability efforts can bring as indicated in UNEP’s Synthesis Report where everyone including businesses have been called to action to prevent, halt and reverse the degradation of ecosystems worldwide. The report shows that rather than having sustainability as something that is ‘nice to have’, sustainability practices are vital in ensuring that ecosystem restoration among other sustainability agendas are achieved.

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