SDG16 calls for the promotion of peaceful and inclusive societies and accountable and inclusive institutions – its goals have never felt more important
"Imagine all the people living in harmony," sang John Lennon in his famous vision of a peaceful, borderless world that still resonates 50 years later. Last week the song once again flooded social media, as a group of self-isolating Hollywood A-listers attempted to cheer up a global public facing the worst pandemic in over a century. For some it prompted a renewed appreciation of Lennon's timeless idealism, for others it provided an opportunity to share the story of how Elton John was so bemused by the contrast between the former Beatles' utopian ideals and his luxury lifestyle that he once rewrote the lyrics as "Imagine six apartments, it isn't hard to do, one is full of fur coats, another's full of shoes".
The video and anecdote raised a smile at a time when the world is facing its biggest collective health and economic crisis since at least the end of the Second World War. But Lennon's guileless vision of a world at peace is also likely to get trotted out a fair few times in the coming months and years, as political and business leaders first battle with the coronavirus pandemic and then ask how to rebuild the global economy in a way that both guards against another outbreak and enhances prospects and quality of life for a traumatised and insecure world.
UN Secretary General António Guterres has already declared that the world has "a responsibility to recover better" than it did after the financial crisis in 2008, arguing the SDGs and the Paris Agreement on climate change should provide the framework for the stimulus packages that are already taking shape. "We have a framework for action - the 2030 Agenda for Sustainable Development and the Paris Agreement on Climate Change. We must keep our promises for people and planet".
As part of this recovery, one of the SDGs that has previously been somewhat sidelined could soon take on a central role. The targets of Sustainable Development Goal (SDG) 16 are not quite as ambitious as those depicted by Lennon, but they are not that far off: tackle all forms of violence, end child abuse and exploitation, promote the rule of law, ensure equal access to justice for all, reduce corruption and bribery, and deliver accountable and inclusive institutions at all levels.
It is that last goal - the promise of renewed and effective institutions - that is suddenly in sharp focus, as many of the world's leading economies endure a crash course in how vulnerable many of their institutions have become to global shocks. The absence of a multilateral response to the escalating pandemic is just one of the many distressing aspects of the crisis. As President Trump toys with the idea of scaling back already underpowered health precautions to 'protect the economy' and Brazil's Jair Bolsonaro peddles conspiracy theories, already the call is going out for the global community to seize the opportunity to rejuvenate its battered institutions or risk the war on coronavirus triggering wars of a more conventional kind. What does the Bretton Woods Conference for a world battling coronavirus look like? The hope is that the plea to "recover better" can gain traction. The fear is that it won't.
Unless you have good governance, any progress towards goals on healthcare, education, infrastructure, clean energy is going to be fragmentary, short-lived and quite volatile - Matthew Jenkins, Transparency International
All proponents of a particular SDG see it as the cornerstone in the sustainable development hierarchy - and goal 16 is no exception. "One of the most defining challenges the world faces and development faces is weak governance, poor institutions, lack of rule of law, lack of democracy," observes Ulysses Smith, director of the business and rule of law programme at think-tank Bingham Centre for the Rule of Law, who, like most of the experts contributing to this article spoke to BusinessGreen before the coronavirus outbreak escalated into a global pandemic. "If you don't have the institutional frameworks in place the chances are you're not going to secure the gains that you have. You're going to make progress and backslide."
"For us, SDG16 is the fundamental one," agrees Matthew Jenkins, research coordinator at Transparency International. "Unless you're able to curb corruption and unless you have good governance, any progress towards goals on healthcare, education, infrastructure, clean energy is going to be fragmentary, short-lived and quite volatile."
The implications for green businesses and the climate movement are obvious, with supply chain management, climate finance, carbon markets, tariffs, and offsets, and low carbon infrastructure projects just a few of the areas where corruption and a lack of institutional oversight can quickly undermine progress and hamper much needed investment.
Given SDG16's widespread importance, it's sobering to think the goal might not have existed at all. Smith explains that targets on governance and law were the most controversial part of the discussions on the development of the SDGs because they were considered so politically sensitive. "The fact that goal 16 was included in the final agenda in 2015 in itself was a pretty significant achievement," he notes.
But five years on the monitoring framework for SDG16 targets remains inadequate, particularly on governance and corruption, which makes it difficult to measure progress. "With bribery, there's widespread data gaps all around the world," says Jenkins. "And these issues are politically sensitive so trusting state parties to report accurately how well they're doing is a bit of a leap of faith." A 2019 report by the Institute for Economics and Peace notes that five of the 12 targets for SDG16 are not currently being measured by any countries at all. Getting authoritarian states to agree to a goal requiring the development of credible justice systems was difficult; getting them to agree to report on progress against that goal appears to be almost impossible.
What we do know is that improvements have been decidedly uneven. According to the UN's 2018 progress report, public authorities are increasingly putting in place regulations to promote public access to information and strengthening institutions upholding human rights at national levels. But many regions continue to suffer as a result of armed conflict or other forms of violence, while there is now a widespread fear that the fallout from the coronavirus crisis could throw what progress there has been into reverse. Democracy and civil rights campaigners are already eyeing some of the emergency powers governments around the world are enacting with considerable nervousness.
The private sector is also keenly aware of the limited progress on SDG16. Business leaders in more than 100 countries responding to the World Economic Forum's 2017/18 survey said their nation's justice system was not independent of the influence of government, powerful individuals, or businesses. Too often, the dice is loaded.
In Smith's view, many of the fundamental aims of SDG16 are being seriously challenged. "Whether that's with the populist resurgence, what's happening with Trump and the challenges to the rule of law and good governance that I think he and his party poses, through to what's happening in Poland and Hungary, Turkey and Russia and the Philippines."
Environmental campaigners in particular have felt the brunt of repressive regimes. A report by Global Witness found that more than three activists were murdered on average each week in 2018, with countless more criminalised for defending their land and the environment.
Even in countries that have traditionally prided themselves on the strength of their national institutions, the rule of law is coming under unprecedented attack. In 2016, one of the UK's most popular and powerful newspapers branded three judges 'Enemies of the People' for ruling that the UK government would require the consent of parliament to give notice of Brexit. Green groups remain hugely concerned that the government's proposed reforms to the judicial review process amount to a power grab that will dilute the ability of civil society to challenge the executive on environmental issues and other matters.
"Five or 10 years ago we might have thought: 'This stuff is on an upward trend. Democracy and good governance are secure'," reflects Smith. "But that's not the case. The governments that might have been leading the charge in the past are either absent or sometimes actively undermining it." Again, the fear is that the pandemic will serve to further accelerate this worrying trend, as various governments with already questionable democratic track records look to further consolidate their power at a time of emergency.
Even before the crisis struck, Smith observed that with too many governments failing to hold the line in defence of SDG16 "there's a need and an opportunity for businesses to step into the gap".
While states undoubtedly bear the bulk of the responsibility for delivering on SDG16, the private sector has a vital role to play and a key stake in its success.
At the most basic level, a lack of peace is bad for business, whether that means outright war or interpersonal violence such as murder and slavery. "Higher levels of violence greatly affect economic development by reducing foreign direct investment and the broader macroeconomic environment," states the report by the Institute for Economics and Peace, which estimates the cost to the global economy as $14.1tr - roughly 12 per cent of global GDP - in 2019. "Business competitiveness and economic productivity are both associated with the most peaceful countries, as is the presence of regulatory systems that are conducive to business operations," it adds.
Again, the interconnectedness with climate and environment focused SDGs is obvious. The role of climate impacts and environmental degradation in increasing the risk of conflict is well documented, while delivering low carbon infrastructure and habitat protection in a war zone is all but impossible.
In some cases, private sector organisations can respond directly to violence. In the city of Ciudad Juárez in Mexico's Chihuahua state, which at one point had the world's highest murder rate, a broad coalition of local businesses led calls for a new corporate income tax to pay for security and to fund education schemes.
But for most companies, attention is most usefully focused on the robustness and transparency of regulatory systems. A survey of business leaders by the Bingham Centre found those making decisions about foreign direct investment put the existence of a stable political environments and the rule of law as two of their top three priorities, behind only the ease of doing business.
Jenkins says sustainable development should be a boon to companies. "What does the private sector need?" he asks. "It needs an educated, healthy workforce, it needs good infrastructure, it needs reliable energy sources, and intelligent use of other resources. Most of these are unattainable when schools are affected by corruption, when public procurement processes are ineffective." Such afflictions also undermine staff morale and productivity, he adds.
Billions of dollars do not reach the target recipients of development money due to bribery - David Croft, global director of sustainability, environment and human rights at RB
The key areas where business can have an influence, says Jenkins, are in tackling corruption and bribery. These fit under target SDG16.4, which seeks to "significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organised crime".
David Croft, global director of sustainability, environment and human rights for household goods giant RB (formerly Reckitt Benckiser) and chair of Business at the OECD's development committee, says multinationals are already acutely aware of the business risks of these problems, which all serve to dilute investment. "Billions of dollars do not reach the target recipients of development money due to bribery," he warns
And companies are increasingly aware of the legal risks too. The UK Bribery Act and the US Foreign Corrupt Practices Act, the two leading pieces of legislation on this front, both control what companies linked to those two countries do in any other part of the world. "The penalties are considerable and all multinationals I've worked for take anti-bribery and corruption stuff very seriously," says Croft.
Just say no
Croft believes big companies can have a real impact in delivering on SDG16. "If a multinational says 'I'm not prepared to pay bribes to facilitate an import into a country' - not an uncommon type of activity - then it gives confidence to other companies, to local suppliers, to operate in the same way and they know they have to because we put that into our contractual approaches. Multinationals have the scale to say 'no'; I've seen it happening."
He says taking such a line can also boost political will to create legislation and tackle underlying problems. "It starts to enable the scale of tax base in the country to grow," Croft continues. "It means the economy can grow, public services can grow and perhaps public officials are paid a wage that means they don't rely upon bribes."
Smith concurs. "Businesses succeed and do well in environments where institutions are strong," he agrees. "That's not to say that there aren't predatory businesses that take advantage of weak institutions - because that's of course true - but the kind of business that we want to promote and that I think most governments would want to welcome into their country are businesses that are not predatory and do well with strong SDGs."
Jenkins says there is strong evidence that business integrity positively affects the bottom line. "Healthy competition between companies is hamstrung where there's widespread corruption in the private sector," he warns. "In settings with an operative rule of law where companies have access to justice themselves, in markets in which corruption is less prevalent, we see that aggregate firm performance is better. And when many corporate actors are engaged in corruption then markets in general perform poorly."
Even for those that are in bed with government, says Jenkins, "there are less immediately obvious and tangible disadvantages even for companies that on the surface may be benefitting".
Nevertheless Transparency International warns that grand corruption - the abuse of high-level power - remains a serious problem. Amongst other things, it has found examples where the influence of private interests over public policy is so disproportionate that it frustrates action in critical areas, such as measures to combat climate change or improve healthcare systems. The fear will be that the coronavirus pandemic could amplify this already widespread problem, as vested interests block attempts to engineer a recovery that pushes the global economy towards more sustainable operating models.
The NGO says effort is also specifically needed to tackle a host of problems linked to 'dirty money', such as tax havens, money laundering, and weak due diligence. And it would like to see more transparency globally on beneficial ownership, where the public can see who really owns a company, so as to encourage corporations to become more accountable.
As well as having a critical role in tackling corruption, the private sector relies on an independent judiciary that can apply the law in a dispute in a fair and timely way. "Businesses need that because they run into those kinds of issues all the time and if they have to worry that a judgment on a contract dispute will take ten or 15 years - which happens in India for example - or if they have to worry that the party leader can call the judge the night before the decision to dictate the outcome, that's not good for business," says Smith.
In a 2019 report, the Task Force on Justice - an initiative of UN member states, international organisations, civil society groups, and businesses - concluded individual businesses have little incentive to tackle systemic injustices on their own, but national and international chambers of commerce and other representative bodies can challenge corruption and impunity where they threaten markets or create risks of political instability. Larger corporations, meanwhile, should be interested in the justice needs of their employees and customers, "recognising the need to build trust within the marketplace and the potential for greater legal inclusion to create new business opportunities".
As well as benefitting from strong public institutions, businesses play an important role in modelling good governance in their own organisations - a phenomenon that has been much in evidence in the past month as corporates have frequently been ahead of governments in imposing internal policies to restrict travel and limit personal interaction as they quickly recognised the risks associated with the coronavirus outbreak and took steps to try and protect their staff and stakeholders.
Slowly but surely the soft law of the human rights system is being translated into law that multinationals need to be aware of and follow - Ulysses Smith, Bingham Centre for the Rule of Law
The Task Force on Justice also makes a strong case for investment by the private sector in supply chain management, especially when it is at risk of becoming party to the abuse of human rights. "Many multinational corporations have suffered serious reputational damage when it has been discovered that modern slaves were involved in their supply chains, for example," the report states. "Others have lost customers and seen their share price fall following revelations over their failure to look after workers or their exploitation of natural resources in countries with weak rule of law."
Again, these are no longer solely reputational risks, but legal ones. Smith notes that human rights rules are crystalling into legislation, such as the UK's ground-breaking Modern Slavery Act, which requires companies above a certain size to produce annual statements setting out what they have done to ensure there is no slavery in their business and, crucially, their supply chains. "Slowly but surely the soft law of the human rights system is being translated into law that multinationals need to be aware of and follow," says Smith. "And those do reach company activities outside of their own borders."
The private sector can benefit from these rules too. According to a good practice guide on managing risks associated with modern slavery, produced by the International Finance Corporation (IFC), CDC Group Plc, the European Bank for Reconstruction and Development (EBRD) and the UK Department for International Development (DFID), businesses that invest in social and labour rights "tend to be more successful and have greater levels of productivity and innovation, more predictable supply of goods and services, better retention and motivation, and more robust due diligence and monitoring systems".
"How you want your supply chain to function and removing trafficking - particularly children but really it relates to all - is something multinationals are very, very active in and progressively making progress in," says Croft. But he stresses that, while the private sector has a role to play because of the influence it has within its value chain, it still needs support from effective government agencies and local rule of law.
While parts of the green economy still have relatively immature and flexible supply chains and scrutiny systems, potentially making them vulnerable to practices that run counter to SDG16, such as bribery, corruption, and workforce exploitation, they are also in a position to develop good systems from the ground up. There have been a handful horror stories of tough conditions in clean technology or green farming supply chains, while the any engineering and technology based sector faces continuing question over the environmental and human impacts of rare earth mining. But equally, a sector established first and foremost to drive sustainable development tends to translate its progressive focus on minimising environmental impacts into its wider governance efforts.
And the green economy might have the most to gain from SDG16. "The benefit is simple," says Patrizia Heidegger, director for global policies and sustainability at the European Environmental Bureau. "Citizens, local communities and employees all need to be in support of private sector practice in order for business not to lose its licence to operate. And the public are more likely to support decisions about the environment when the facts are clear and available for all, when environmental rights are granted and when companies are transparent and accountable."
Companies, particularly in some high carbon sectors, are also finding themselves the subject of legal action from civil society and even public institutions themselves. Around the world, corporations are increasingly being taken to court for alleged breaches of fiduciary duties relating to climate risks.
ExxonMobil, for example, one of the world's largest oil and gas firms, has faced multiple legal challenges from US states and shareholders who claim it misled investors and the public over the real risks of climate change. And the Philippines' national Commission on Human Rights made a bold statement last year when summarising the findings of its landmark inquiry into climate change, which concluded the world's biggest polluters could potentially be held legally liable for their contributions to global warming.
As the increase in climate litigation shows, these are no longer just local or national issues; in an increasingly globalised world, a level international playing field is crucial.
"While European solutions can be trailblazers for solutions at regional or global level, and while we have the power to set high standards that also influence our trading partners, level playing fields - obviously with high standards - are always the better solution," says Patrizia Heidegger, director for global policies and sustainability at the European Environmental Bureau.
Some academics assert that free trade agreements are one of most useful anti-corruption tools, arguing that free, fair and open international trading systems are essential to the very health of the private sector, but Heidegger is more wary. "The way the EU negotiates and agrees on new trade agreements is already the opposite of transparent and participatory governance where citizens enjoy access to information," she says. "The secretive negotiations of, for instance, TTIP [the scuppered Transatlantic Trade and Investment Partnership between the US and EU] have triggered strong resistance from people who felt bypassed by policy-makers."
But research by Transparency International finds there is growing consensus around best practice anti-corruption and transparency provisions for inclusion in trade deals, such as explicit references to international anti-corruption conventions, commitments to criminalise active and passive bribery, non-criminal sanctions for firms where they are not subject to criminal liability, and whistleblower protection. Environmental campaigners similarly hope high environmental standards can similarly be embedded in trade deals to advance the adoption of green best practices around the world. It is a vision that is about to be hugely tested as the UK seeks post-Brexit trade deals with the EU and the US, with the government signaling that level-playing field provisions are set to be a major sticking point in the talks.
Transparency International concludes that there is a strong business case for including a range of anti-corruption provisions in trade agreements. However, these still need to be enforced, which requires political will at a national level.
"Corruption is often described as a collective action problem," says Jenkins "It's no-one's first preference. Everyone recognises it's a situation where companies can exploit situations or pay bribes to win contracts is an undesirable situation."
But he says it is difficult to stick your head above the parapet. "Increasingly what we are seeing is collective action by businesses, particularly at sector level but also occasionally involving the International Chamber of Commerce and business associations, to try and inculcate a culture in which these things are rejected," he explains.
Smith agrees, saying many companies are trying to unify their voices for more transparent and fair regulation and enforcement. He advises the UN Global Compact, a UN body working with businesses around the world to help them align their activities with the SDGs, which is ramping up its work this year. It will shortly begin consulting with businesses around the world about the importance of SDG16 and asking them about concrete ways in which they already support its targets or could do in future. The aim is to have a complete action framework for this SDG by the end of the year.
Croft admits that the relationship between political and private sector spheres does need to be carefully considered. "If business is too close to the framing of legislation then questions need to be asked," he acknowledges. "But as a whole with SDGs seeing business as a partner is critical if we are to deliver them effectively and in a way that is sustainable. The strength of our economy and private sector in delivering them is critical to their success."
John Lennon may have baulked at the idea, but Jenkins is optimistic, seeing fewer opportunities for 'SDG washing' with SDG16 than on some other goals. "Where businesses publicly declare their support for SDG16, with its focus on peace, justice and good governance, I think that is a broadly positive development," he says. "Not least because such affirmations from the business community could potentially spur reform among governments, which are typically more sensitive to the concerns of business groups rather than civil society organisations."
As the world steps up its response to the worst public health and economic crisis in nearly a century one thing is clear: strong institutions and the pursuit of peace will be more important than ever. And everyone - politicians, businesses, and civil society - has a critical role to play.
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