Contributions from
the Column
Focus

Thomas Loster: Untapped wealth: ways to advance climate protection

Stephan Kunz: Raising labour standards in Bangladesh

Interview with Barbara Unmüssig: “Eroding statehood“

Dominikus Collenberg: paradigm shift

Jan Martin Witte and Thorsten Benner: Benefits and limits of UN partnerships with the private sector

Carola Torti: aid: logistics giant DHL supports UN in times of disaster


10/2006 		 

Promises and pitfalls

So far, business participation in development partnerships with the UN is primarily driven by the desire to manage reputation and build brand equity. The UN, on the other hand, often embarks on such ventures in the hope of raising additional funds. While such cooperation with businesses can make very good sense for the UN, the impact, so far, is mostly restricted to the micro level. The potential for scalability and replicability of UN partnerships with the private sector seem limited.


[ By Jan Martin Witte and Thorsten Benner ]

Over the past decade, development partnerships of the United Nations (UN) with private-sector companies and other non-state actors have become a growth industry. So far, little systematic data exist, but a number of indicators provide a sense of the phenomenon’s scope. Our research identified more than 200 partnerships with UN participation (Witte and Reinicke, 2005). Almost all UN organisations are now engaged in partnerships; many of them have specialised programmes and staff.

What is astonishing is not just the steadily growing number of partnerships the UN is engaged in, but also the broad variety of their form and function. For our purposes, we do not consider contracting-out relationships (such as for example public-private partnerships (PPPs) for water or energy provision) as part of this innovative partnership domain. The initiatives we focus on go beyond such traditional PPP instruments. More specifically, we have made out four distinct categories of development partnerships in the context:
– Advocacy partnerships promote a specific cause at the global or regional level. Examples include the Global Alliance for Improved Nutrition and the Global Public-Private Partnership for Handwashing. Such partnerships leverage the reputation and networks of the UN and key stakeholders to promote vital issues. Business makes an important contribution not just through financial support, but also through its expertise and extensive reach to consumers all over the world.
– Other partnerships help to develop codes of conduct as well as other norms and standards for businesses. Standard-setting partnerships are the most complex and difficult to manage since they usually engage a broad variety of stakeholders. For instance, stakeholders who are active in the Global Reporting Initiative or the Access to Basic Services for All Initiative represent rather divergent interests.
– The third category of partnership serves to share and coordinate resources and expertise. In such cases, the UN ties up with partners in business and civil society in order to benefit from complementary resources and to coordinate different contributions to key development issues. For instance, the World Food Programme is cooperating with the logistics multinational TNT and UN OCHA (UN Office for the Coordination of Humanitarian Affairs) is involved in a disaster relief programme with Deutsche Post World Net. These partnerships exploit economies of scale in knowledge generation and dissemination.
– Finally, some partnerships serve as novel means to harness markets for development. They may either ease market access, for instance by networking, or deepen markets, for example by providing incentives for investors. Such partnerships are relevant for individual entrepreneurs and small businesses in developing countries that intend to market their products in advanced nations. UNIDO’s Automotive Industry Partnerships are a good example.

If managed properly, partnerships can have considerable impact. Research also suggests that they sometimes serve as a conduit for organisational renewal and reform at UN organisations, as they expose UN staff to up-to-date management approaches and novel technologies. For example, PricewaterhouseCoopers (PWC), an international consultancy, donated more than 8,000 hours of staff time to help the UN build a web-based software tool for tracking relief funds after the tsunami in 2004.

However, the institutional reality of many UN organisations is still one in which partnerships tend to remain fringe activities, somewhat disconnected from the main lines of work. This is, of course, also true of most of the partners in business and civil society. Moreover, some UN organisations find it difficult to back up their commitments with adequate resources. In some partnerships, individual staff members, who were already struggling to keep up with their work load, have simply been burdened with additional tasks. In addition, so far the UN lacks a coherent approach to partner selection. While the basic selection principles were clarified by the Secretary-General in 2001 (UN, 2001), many UN organisations still struggle to choose appropriate partners. Overall, there is a need for more consistency and greater transparency regarding partner selection across the UN system.


Private-sector motivation

To explain the rapid growth of partnerships, observers frequently point to the changing structure of international politics. Presumably, globalisation makes partnership approaches crucial for effective global problem-solving. That is not wrong. Yet, for a deeper understanding of the trend one needs a micro-level view analysing the motives of those who engage in partnerships.

With regard to business, our research suggests that there are two dominant factors. First of all, business managers want to enhance their companies’ reputations and build brand equity. Second, more traditional inclinations of corporate philanthropy and a commitment to display corporate social responsibility (CSR) are relevant. Other factors – including, for example, the desire to influence local investment climates through partnerships – appear to play a lesser role.

While there is nothing wrong with these motives, we doubt they provide a solid base for long-term, scalable partnerships. Spending on philanthropy and CSR tend to depend on the vagaries of the business cycle. Many interviewees suggested that defending such budgets usually becomes quite difficult once companies are hit by crisis. If reputation is the driving motive, on the other hand, the capacity to bring projects to scale or to replicate them is probably limited, to say the least. Companies expect a certain “payoff” from their engagement and they are unlikely to reap additional benefits merely from expanding existing partnerships. Both philanthropy and reputation management also suffer from the fact that they are usually not linked to core business interests. Indeed, our review of partnerships suggests that, so far, these initiatives often remain “parked” in company foundations or communications departments, and are not tied into mainstream business operations.


No magic source of funds

Within the UN, much of the partnership agenda was initially driven by the expectation that business would prove to be a miraculous cash cow. With official development assistance (ODA) stagnating, and core budgets of international organisations plummeting, UN staffers hoped that business would bail them out. The idea – and actual practice – was that the UN approached companies with ready-made project plans, asking for financial support.

As many UN staff found out the hard way, however, companies are hardly interested in writing checks to the UN. This hesitation is not rooted in concerns over the world organisation’s financial accountability. Rather, companies increasingly favour more direct ways of engaging in, and contributing to, partnerships. In most cases, they want to become directly involved in planning, managing and implementing projects, with a view to motivating and retaining staff. In other cases, they intend to employ the core expertise and resources of a company in order to maximise visibility.

The UN has found it difficult – for political as well as managerial reasons – to leverage this type of business engagement. There are, however, some signs of progress. Various UN organisations have started to build capacity more systematically, especially at the country level, in order to engage businesses’ core competencies. Partly as a result of that, the UN is turning into an increasingly attractive partner for businesses interested in investing in developing countries. An example is the UNDP’s Growing Sustainable Business programme.

It is difficult to assess the aggregate contribution of these innovative partnerships to global development. There is still a lack of aggregate data, for instance on financial dimensions as well as impacts on the ground. Moreover, only very few initiatives have been evaluated independently so far.

Of course, the level of funding is not the decisive yardstick for determining whether a partnership is worthwhile. However, our review of partnerships suggests that the large majority still remain one-off initiatives with impact only at the micro-level. These are usually small-scale initiatives with individual companies in a specific developing country that often incur considerable transaction costs. While some of these initiatives have produced impressive results, the UN should be primarily interested in affecting change at the meso- and macro-levels, including, for example, the investment climate in developing countries. Various UN organisations have started to engage the business community in standards-setting alliances or the development of codes of conduct. These initiatives can have that kind of impact and the UN should build on these experiences as it moves forward. Moreover, the UN should try to better systematise micro-level partnerships to minimise transaction costs.

Political support for partnerships is strong among governments, business leaders, within the UN and also among many civil-society organisations. There is a growing sense that partnerships are “here to stay”. The UN should now engage in a realistic assessment of the potential of partnerships and to devise strategies to fully harness that potential. Doing so should include independent evaluations of measures already under way as well as a review of the strategies and tools currently in place at the UN. Improved knowledge exchange and coordination with other bilateral and multilateral organisations can also make a significant contribution.

Even so, it is not a given that partnerships will increase in size and scope in very substantial ways. Partnerships will certainly not be a substitute for the UN’s mainstream development work. That does not mean that partnerships are not important. They have a contribution to make – one that has not fully been realised to date. But (like most other development activities) they are unlikely to become a silver bullet in the global fight against poverty.



Dr. Jan Martin Witte
is a co-founder and associate director of the Global Public Policy Institute (GPPi),
a think-tank based in Berlin.
jmwitte@gppi.net

Thorsten Benner
is also a co-founder and associate director of GPPi.
tbenner@gppi.net
http://www.gppi.net.

References:
United Nations, 2001:
Guidelines on Cooperation between the United Nations and the Business Community, 17 July 2000
(http://www.un.org/partners/business/otherpages/guide.htm#choose).

Witte, Jan Martin and Wolfgang Reinicke, 2005:
Business UNusual: Facilitating United Nations reform through partnerships. New York: United Nations