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Business News/ Opinion / A bottom-up approach to achieving UN SDGs
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A bottom-up approach to achieving UN SDGs

Innovative mechanisms and institutions are needed to reconcile the profit motive of capitalism with democratic human rights

Faster progress towards the United Nations Sustainable Development Goals (SDGs) will require new models of enterprises in which the people must have a much greater say in governance. Photo: BloombergPremium
Faster progress towards the United Nations Sustainable Development Goals (SDGs) will require new models of enterprises in which the people must have a much greater say in governance. Photo: Bloomberg

The United Nations’ Sustainable Development Goals (SDGs) are inspiring many people around the world. They are referred to very often in business conferences. Civil society organizations recall them repeatedly. Government officials often cite them. It seems there is a consensus about the goals. Now the question is, how can the stakeholders work together more effectively to achieve them.

The 17 SDGs fall into four groups. Poverty, hunger, health, education, and gender equality relate directly to human development. Water, energy, climate action, life below water, and life on land belong to the environment group. The third group relates to the economy: decent work and economic growth, reduced inequalities, responsible consumption and production, and industry innovation. The fourth group, of the last two SDGs, viz. “peace, justice and strong institutions", and “partnerships for growth", is the means by which results will be produced in the other groups of goals.

Problems such as persistent poverty and inequality, poor health, and environmental degradation that the SDGs aim to solve are systemic issues. They have multiple interacting causes. They cannot be solved by any one actor. Nor are they amenable to silver bullet solutions. Strong institutions founded on principles of partnership, cooperation, and universal justice, which the last two SDGs underline, are essential.

Philanthropists, with wealth accumulated from corporate investments, are “giving back" to society in programmes aligned with the SDGs—as are business corporations through CSR (corporate social responsibility). Once they’ve got boots on the ground, they realize the need for partnerships with non-governmental organizations (NGOs) who have local knowledge. Large, international NGOs, working on any issue around the world—such as the care of children, the concerns of the elderly, or the protection of the environment—know that they must work in partnership with local communities. And “government by the people", which is the essence of good, democratic governance, requires government executives to work with local communities to improve the commons.

All stakeholders recognize the need for effective partnerships. However, disagreements among stakeholders, as well as among diverse experts with divergent perspectives who must come together to address complex issues, make progress difficult. The default theory of effective management, of command and control, becomes very tempting to apply. Governments construct centralized, top-down programmes. And corporate CSR, as well as international NGO programmes, are managed centrally to achieve scale and to improve efficiency by deploying best practices.

There are three problems with this approach. The first is that one size does not fit all. The second is that the many different capabilities that must be brought together to address systemic issues are unable to collaborate with each other easily on the ground when all of them, whether in government, an international NGO, or a global philanthropy, are “reporting up" to their respective bosses at their centres. The third problem is that the people who must be the ultimate beneficiaries of the solutions, and who can contribute significantly to their design and implementation, have inadequate voices in the design and management of expert-driven, top-down programmes.

The Club of Rome warned in 1972 that humanity would face a “Tragedy of the Commons" if it persisted with its paradigm of economic growth. Its warnings were largely ignored. Since then, more reforms within the prevalent paradigm enabled long periods of economic growth around the world. Meanwhile, systemic problems of environmental degradation, climate change, and economic inequities got worse. The SDGs are a realization that humanity cannot postpone much longer the development of new strategies for the management of the commons.

The history of humanity’s progress is a history of evolution of institutions that have enabled societies to achieve what they want. New forms of institutions of business, such as the limited liability company invented in the 17th century, enabled capital to be accumulated more efficiently to grow economies. Innovations of elected parliaments of the people enabled the implementation of ideas of democracy that societies began to aspire for since the 16th century, first in small pockets in Europe and North America, and then in a flood by the 20th century.

Faster progress towards the SDGs will require new models of enterprises in which the people must have a much greater say in governance. The tragedy of the commons is caused by the clash of two sets of rights along with two fundamental principles of good governance. The fundamental principle driving democracy is human rights. Every individual, rich or poor, has a right to fundamental human needs such as health and education, and also to equal political rights in the governance of their societies. The fundamental principle driving the growth of capitalist economies is the right to private property—which is consonant with a concept in economics that human beings are self-interested agents who will take care of only what they own. These two principles lead to very different principles for the governance of enterprises. Whereas in democratic governance every human being, even if she owns nothing, must have equal voice, in capitalist enterprises, those who own more (e.g. shares of a company) must have proportionally more weight in governance.

An innovation in enterprise design to reconcile this dilemma is the concept of “social enterprises" promoted by Muhammad Yunus and others. The owners of social enterprise are the beneficiaries of its services and profits. Social enterprises stand in between the domains of for-profit corporations on one side (which extract and accumulate wealth from the commons) and charity, philanthropy, and CSR on the other side (which then “give back" to repair damage to the commons and “do good").

The last two SDGs could be the keys to progress on the rest. More such innovations in the design of cooperative institutions—of the people, by the people, for the people—are required to reconcile the democratic principle of equal human rights, with the capitalist principle of sacrosanct property rights.

Arun Maira was a member of the erstwhile Planning Commission.

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Updated: 08 Jan 2018, 08:19 AM IST
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