How can we do what we do better? Public-private partnerships (PPPs) that pair companies, the public sector, and civil society offer a powerful answer to this question. Partnerships can enhance true coordination, use resources efficiently, and eliminate duplicated efforts to deal with some of society’s toughest social and environmental challenges. When successful, PPPs can:
- Balance the strengths of companies, governments, and civil society to make progress on an issue;
- Inform substantive public policies; and
- Create constructive dialogue.
At the same time, public-private partnerships present challenges, such as aligning different and divergent interests, and overcoming weaknesses of the entities involved.
These partnerships come in a variety of different forms, usually involving companies, government agencies, and municipalities, as well as non-governmental organizations (NGOs). They range in tone from formal to informal, and in scope, addressing issues from the global to the local scale.
“Partnerships should involve the company’s core business practice. Companies should think about strategic partnering, as they are moving their corporate social responsibility programs away from philanthropy and into strategic thinking. These models should be looked at for PPPs. Philanthropic interests come and go, but business doesn’t.”
JIM THOMPSON, REGIONAL DIRECTOR, GLOBAL PARTNERSHIP INITIATIVE AT THE U.S. STATE DEPARTMENT
For GE, public-private partnerships help align GE’s interests with the interests of society to create what Harvard Business School Professor Michael Porter and FSG Social Impact Consultants Founder Mark Kramer call “shared value.” “Businesses must reconnect company success with social progress,” they state in their recent Harvard Business Review article. “Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation in business thinking.”
For GE, public-private partnerships are a critical tool to drive corporate citizenship initiatives and align GE’s interests with the interests of society. They also help build key alliances with governments to support best practices and shift the paradigm to a more sustainable world.
Effective public-private partnerships leverage the strengths of all participants, with each player bringing its own expertise, credibility, and resources to the table to solve key challenges. For example:
- Companies can offer a partnership access to their powerful networks, project management expertise, and a high profile presence on tough issues. Effective partnerships often include more than one company—whether in the same sector to tackle an industry-related issue, or across multiple sectors that are all impacted by a single societal or environmental issue.
- Governments can offer strategic thinking around entering new markets, resources for understanding the feasibility of a partnership, and access to countries or regions where companies have not yet been able to gain entry. Regulatory agencies can also help to validate an issue for companies and help them prioritize that issue.
- NGOs can bring credibility with local communities, thought leadership on an issue, and a deep understanding of the direct impacts on the intended beneficiaries.
- Universities and academics increasingly serve as petri dishes for innovative thinking on issues in public-private partnerships.
ACHIEVING CITIZENSHIP GOALS WITH PUBLIC-PRIVATE PARTNERSHIPS
Aligning PPPs with integrated corporate citizenship initiatives enables companies to test the waters on an issue, and ensure that it’s coordinated with the overall goals the company aims to achieve as responsible corporate actors. PPPs can help companies make progress on key environmental, social, and governance (ESG) issues identified as material to the business.
“We are the 900-pound gorilla in the room, and we will be a gravitational force in any partnership we are involved in. Despite that dynamic, we stay mission focused in our partnerships, and we want the expenses to stay mission focused too. We look for partners whose missions are 100% aligned with what we are trying to achieve, and we find that’s where the best outcomes result.”
KRISTA BAUER, DIRECTOR OF GLOBAL PROGRAMS FOR GE
“For companies, doing right used to be philanthropy only,” said Mark Nordstrom, senior corporate counsel of Labor and Environment Law in GE’s corporate legal staff, speaking of human rights issues in emerging markets where the company’s global operations are expanding. “However, today GE looks at ways we can be responsible in preserving or securing human rights in emerging markets. Through the GE Foundation, we funded innovative research. The UN Global Compact and Maplecroft used these philanthropic dollars to develop different scenarios for addressing human rights issues such as freedom of association, living wages, and other issues in emerging markets like Brazil, Russia, India, and China, as our business expands globally in these places.”
It’s also important for companies to ensure that their citizenship activities align with their public policy goals. According to Karan Bhatia, vice president and senior counsel, International Law and Policy at GE, the company’s public policy work focuses on three main categories:
- Globalization and free trade;
- Policies that stimulate innovation; and
- Strengthening the rule of law.
GE recognizes that it cannot tackle these issues alone, and that it must partner with governments, civil society, and fellow private sector players to make true progress. By establishing clear goals for both corporate citizenship and public policy, partnerships can be designed in ways that ensure effective efforts on one side are not being undermined on the other.
FUNDAMENTALS OF STRONG PUBLIC-PRIVATE PARTNERSHIPS
Most public-private partnerships face many of the same challenges. For one, the public and private sectors often move at very different paces. On the whole, business tends to move more swiftly and decisively, given its natural drive toward efficient use of resources and orientation to bottom-line results. On the other hand, government agencies tend to move slowly in comparison, with multiple layers of approval, and a longer-term focus on issues they face. Civil society organizations can often fall in between, sometimes taking a more cautious approach initially on conducting feasibility studies or research on a partnership or issue, or by contrast feeling urgency to act quickly on pressing challenges. Civil society and governments both tend to look 10, 20, or even 50 years out on an issue, and tend to grapple with some of the toughest problems facing the world, such as climate change or corruption and bribery. Strong corporate citizens balance this perspective with a drive for quarterly and annual results.
Despite these fundamental challenges, public-private partnerships can be constructed to address a variety of issues. They can focus on building infrastructure, such as bridges, or they can address medium-term projects such as opening markets for renewable energy on the road to tackling the much larger global issue of climate change. PPPs can also involve large-scale, multiyear commitments to establish frameworks for change on an international level, taking on issues like corruption and bribery, or building viable workforces in emerging economies. PPPs can even be as straightforward as a contract between a company and a government agency to provide a good or service, but which takes into account the needs of society and the political climate at hand.
KEYS TO EFFECTIVE PUBLIC-PRIVATE PARTNERSHIPS
Despite this wide variance in the nature of PPPs, there are some key ingredients, outlined in the subsequent pages, that every effective partnership should have.
A CLEAR FOCUS AND STATED GOALS AT THE OUTSET
Partnerships that clearly articulate their objective, goals, and desired outcomes at the design phase will be more successful than those that are left open-ended. Clear goals and defined roles give the partnership solid direction, break down complicated tasks, and coordinate efforts among the partners.
Alex Perera, co-director of Business Engagement in Climate and Technology at WRI, says partnerships need a clear objective and vision for what they seek to achieve. Partners should develop a clear, compelling vision, in conjunction with goal setting, measurement, and verification, early on. In some cases, the lessons learned may even prove more important than the actual results achieved—so in addition to goals, it’s useful to track important learnings and incorporate them into next steps during or following a partnership. WRI is not a think-tank, but a “do-tank,” says Perera. “We can’t do the work we do, or have the global research we have, without partnerships. It’s in our DNA to work with partners on the ground to achieve our goals.”
GE always looks for effective ways to support the environment, health and safety (EHS) performance of its Chinese suppliers. In order to achieve this goal, GE collaborated with the U.S. Institute for Sustainable Communities (ISC), and the U.S. Agency for International Development (USAID) to establish the EHS Academy, a training institute for suppliers offering techniques for improved performance and sustainable solutions, as a public-private partnership. The partnership also included the involvement of private sector companies such as Wal-Mart, Honeywell and others. GE and the other companies helped develop the curriculum and provided Train-the-Trainer workshops for EHS Academy personnel based on our collective experience of sound EHS management. The partnership also brought in a local university in Guangdong to establish the training platform and help measure the success.
The EHS Academy had one clear goal: train EHS resources for local factories. GE partnered with ISC as an anchor partner, which helped focus the project on Guangdong, a region where there is significant potential for uptake of best practices in EHS.
“The development of the EHS Academy concept worked because ISC had credibility with GE, the other companies, and the Chinese government,” said Ann Condon, GE’s director and counsel of EHS programs in Europe, the Middle East and Africa. “We had a lot of flexibility on our side, both on timing and how to achieve our goals. The benefit of having ISC working with us is that they were able to do a much wider consultation process, which helped build in the right government and local support.” Condon emphasized the importance of having all the key players at the table during the design phase of the partnership to ensure their ownership of the EHS Academy goals. A consequential benefit also included the building of a strong commitment from all parties to its long-term success.
The collaboration with ISC enabled GE to broaden its vision for this partnership; whereas GE initially wanted to offer training classes, ISC proposed the larger concept of creating a training academy. The partnership is achieving its stated goal to offer training to build the skills of EHS professionals in Guangdong and is evolving to meet local needs. Because of the longer-term vision of the partners, the Academy is now on its way to existing as a self-funding entity that will continue independently of the founding supporters.
A CHAMPION INSIDE EACH ORGANIZATION
Establishing a point person responsible for the partnership within each entity, who can represent the interests of the entity and partnership internally and externally, is key to ensuring the partnership meets all the intended goals. Having an internal champion ensures clear communication and accountability as the partnership moves forward.
The GE partnership Developing Health Globally™ (DHG) focuses on upgrading the capabilities of rural district hospitals. The goal of the program is to improve healthcare delivery for some of the world’s most vulnerable people. In developing this partnership, GE learned many important lessons and best practices for its PPPs.
GE worked through some challenges faced in the partnership by treating it like a business initiative, and assigning a project manager to take the lead. This allowed GE to play to its inherent strengths of organizing the team and managing the project to its goals, while allowing the partners to play to their strengths of issue expertise and thought leadership on how to improve healthcare for vulnerable populations. By bringing in the right content experts and focusing its own team on execution, GE stayed attuned to the needs of the project, understanding the natural stopping points and barriers. GE learned the important lesson of having an internal champion for its partnership who helped run the project and facilitate the stakeholders involved, to enable issue area experts to lead on thinking about how to effect real change on the ground.
REGULAR, OPEN AND HONEST COMMUNICATION
Partners need to communicate regularly to track progress toward goals, and address emerging issues. Frequency and format for the communication will vary from partnership to partnership, but obtaining a commitment on all fronts to communicate clearly, and creating a channel for regular contact established at the project start is a key success factor.
Transparency International exemplifies an organization focused on partnering with diverse stakeholders to resolve long-term issues related to bribery and corruption, and promoting good governance at the corporate and country levels. GE has been deeply involved with Transparency International from the organization’s outset, supported by the company’s long-term focus on the issue of transparency.
Nancy Boswell, president and CEO of Transparency International USA, cautions companies and organizations involved in partnerships to beware of reputational risks that partners might unwittingly bring to the table in a partnership. If one partner ends up facing a reputational issue, it could compromise the partnership, and with specific issues like transparency and corruption, this is a key risk to assess. Open communication is key.
She encourages companies and organizations to discuss taking successful partnerships to greater scale, noting “if it works in two countries, let’s see if we can achieve the same results in 20.” Finally, she also notes the importance of participants maintaining independence in a partnership, especially one where there is both a private sector partner and an NGO. There needs to be financial support, along with some expectations as to how the partnership will work. Also, opinions on either side of the partnership might differ at times, so the entities must be able to communicate and maintain their independence in order to not compromise their missions as individual entities.
“We tend to be more analytical in designing partnerships that are going to create transformation on the ground. We use partnerships to inform our analysis of what is needed to create this transformation. These partnerships serve a dual purpose to inform our analyses and enhance the lives of the beneficiaries.”
ALEX PERERA, CO-DIRECTOR OF BUSINESS ENGAGEMENT IN CLIMATE AND TECHNOLOGY AT WORLD RESOURCES INSTITUTE
FLEXIBILITY TO ADAPT TO CHANGING CONDITIONS
Particularly for longer-term projects, conditions on the ground, in markets, and in political climates will change from the time of the project’s inception to when it meets its goals. To achieve their goals, partners should design a structure that allows for change and flexibility along the way.
Partnerships around issues like corruption require a longer-term vision, while still keeping up day-to-day on the progress. Many private sector companies that Transparency International works with are bottom-line driven and want to work quickly, but on issues such as transparency and corruption Transparency International has worked to deepen its relationships with companies over time in order to address the challenges they face.
GE has worked with Transparency International throughout the years by helping to mobilize different kinds of support for increased transparency by leveraging its network, or by bringing technical, financial, and political capital to the shared agenda as well as to the organization, depending on what is needed. The issue of transparency can often be highly technical, and “financial capital is critical, but technical expertise and networks are also key,” Boswell notes. “Companies in different industry sectors can contribute important technical expertise and perspectives to the development of solutions to specific challenges.”
Similarly, WRI uses its analytical approach and its network of partners to drive change that is environmentally sustainable for the long term. Business partners and others inform the analysis that WRI conducts, which enhances the results for the beneficiaries. The organization designs all of its partnerships to create transformation on the ground. At times, this can be a challenge for an organization that is focused on issues that are global in scope and playing out over decades.
In one partnership aimed at tackling climate change, WRI joined with companies to help open markets for renewable energy. The goal of the partnership was to create options for companies to buy renewable energy, and it was designed from the outset to ensure that all participants get something useful out of it. With the big picture in mind, the partnership set interim goals based on what would be transformative for expanding use of renewable energy.
In aiming to scale up over 10 years, WRI leveraged many of the key characteristics of successful partnerships. The organization set goals early on, held quarterly calls to track progress, and then consistently raised the bar amongst the partners to continually push toward greater and greater uptake. Over time, the corporate partners began to compete against one another to see which could utilize more renewable energy. Perera states that eventually, “this sharing of insight unlocked the competitive spirit within the group, and there was healthy competition around achieving the goals. We designed milestones and ways to accomplish these goals, and tracked performance, while regularly raising the bar.”
RESPECT AMONGST PARTNERS
Michael Bloomfield, founder and executive director of the Harmony Foundation, notes that “having partners at the table that bring important, relevant, and necessary expertise is essential. Often, partners differ widely in scale and size; however, respect should not be based on the size of the partner, but on the skill that the partner brings to the partnership.”
Neither should respect be based on which partner brings the most financial resources to the table. While money is an important ingredient, organizations that bring resources other than funding should not end up in a position where they compromise their mission in order to maintain financial support for the project.
WRI’s Perera warns that in some situations, partnerships can evolve over time in a way that might not be in the best interest of the mission-driven organization involved. When an emerging partnership begins, it might be innovative and groundbreaking. However, as an issue underlying a partnership matures, more experts and consultants might enter the marketplace and partnerships can begin to resemble consulting-type relationships. Companies might begin to rely on partnerships for this type of consulting work because they are less costly than hiring external advisors. Perera notes the importance of setting an exit strategy for all parties involved at the outset of a partnership so that it is clear when it is time to sunset a partnership after the goals have been met.
By taking into account the wide range of lessons learned from many different types of partnerships, and aligning PPPs with a company’s efforts at being a good corporate citizen, best practices in public-private partnerships include balancing the interests and needs of the entities involved with the goals of providing improved access or service for communities and beneficiaries. Key areas where such partnerships should focus their efforts include:
- Setting goals that maximize the strengths each partner brings to the table
- Communicating clearly
- Reducing and sharing risks across partners
- Involving multiple stakeholders for input, expertise, and thought leadership
- Mobilizing resources effectively and efficiently
- Maintaining flexibility and adaptability of the partnership as conditions change
- Achieving long-range goals
- Sharing lessons learned