Categories of private sector partners and opportunities for engagement
The SDC pursues PSE initiatives with well-established
private sector actors that share its commitment to sustainable development.
The SDC engages with different categories of private sector actors: large companies and multinational enterprises, small and medium-sized enterprises (SMEs), social enterprises, impact investors, and grant-making foundations. The form of the engagement varies depending on the type of partner and its specific strengths and assets:
Large companies and multinational enterprises
Large companies and multinational enterprises bring their considerable up-scaling potential: good practices which have been developed within a collaboration with the SDC can be widely replicated throughout the company’s internal network. In addition, this category of private sector partner may become a key player in sectoral initiatives or in the development and implementation of new standards.
Social enterprises
Social enterprises have a mission to address social or environmental problems: to ensure employment or access to health services for poor people, to foster the use of clean and renewable energy in rural areas, etc. Their business model is therefore widely congruent with the goals of the SDC.
SMEs
SMEs often add value to PSE collaborations thanks to their innovative niche products, e.g. satellite-based technologies that can be used for crop insurance solutions for smallholder farmers.
Impact investors
Impact investors are financial investors that focus on development outcomes. Engaging with impact investors is a way of mobilising substantial development-oriented investments with relatively limited SDC resources (e.g. by providing a technical assistance facility to an investment fund that invests in local companies sourcing from smallholder farmers). In addition, the rapidly growing niche of impact investment has a potentially long-term transformative effect on the financial sector to promote practices of sustainable and inclusive finance.
Grant-making foundations
Grant-making foundations are usually derived from large companies or wealthy entrepreneurs and are therefore included in the universe of the SDC’s private sector partners. They are important partners particularly in areas where commercial investors are not yet ready to invest due to high risks, high transaction costs, etc. Therefore, they are often ideal anchor investors for blended finance initiatives. Like social enterprises, grant-making foundations show a high degree of congruence with the mandate of the SDC.
Private sector partners in a PSE collaboration can be from any geographic region.
It is also important to note that, while NGOs, research centres and academic institutions are not part of the private sector, they are often involved in the set-up of PSE collaborations (e.g. as an implementing partner or convener) on account of their specific know-how.
Criteria for engagement with a private sector partner
A successful PSE partnership calls for the partners to find common ground. This consists of different elements
a shared set of values such as respect for human rights and avoiding corruption as well as a shared vision towards sustainable development, including the principle of leaving no one behind; the private sector partner must also adhere to relevant standards for responsible and sustainable business conduct;
the SDC and the private sector partner should be willing to exchange knowledge and experiences and to enter into a joint learning process;
mutual responsibilities and the 'rules of the game' have to be reflected in a formal agreement in line with the core characteristics of effective PSE collaborations as described in section 2.2 (co-initiating, co-steering, co-funding).
As a further important criterion, the risks related to the partnership must be acceptable and overcompensated by the opportunities opened by the partnership. In order to support the decision whether or not to engage with a potential partner, the SDC has put in place a specific PSE Risk Management Process (see Part C of this Handbook).
