UNDP PUBLICPRIVATE PARTNERSHIPS INITIATIVE

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UNDP PUBLIC-PRIVATE PARTNERSHIPS INITIATIVE
Lessons from the Field Making Public Private
Partnerships Work Session 2 Case Studies and
Workshops Wednesday, February 11 1400 - 1500
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OBJECTIVES

• Objectives for todays discussion
• Share context and rationale for UNDPs public
  private partnership initiative
• Review snapshot of selected UNDP partnerships
• Highlight continuing partnership opportunities

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CONTEXT PARTNERSHIPS WITH THE PRIVATE SECTOR
ARESEEN AS A UNDP PRIORITY

• What is a public-private partnership (PPP)?
• When a public sector organization (such as UNDP)
  joins with the private sector in pursuit of a
  common goal
• Can have an impact on broad issues that no
  individual organization or sector has the ability
  and resources to manage alone
• What can PPPs do for UNDP?
• Extend the impact of UNDP programs by allowing
  us to develop new initiatives and resources for
  countries and regions. They can be instrumental
  in transferring goods, services and finances from
  the private to the public sectors.

Advantages for the public sector
Advantages for the private sector

• Resource mobilization
• Integration of key stakeholders in development
• Capacity development
• Scalability and sustainability of projects
• Exposure to private sector strategies,
  technologies and tools
• Opportunity to influence corporate behavior and
  values
• Progress towards achieving the MDGs

• Incremental revenue in high growth markets
• Access to innovation (e.g., technical, new
  business models)
• Brand enhancement
• Opportunity to test new products, marketing
  strategies, technologies
• Venue to participate in international development
  dialogue, agendas
• Employee morale, fit with mission

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INCREASINGLY, THE PRIVATE AND PUBLIC SECTORS
RECOGNIZE THEIR OVERLAPPING OBJECTIVES FOR
SUSTAINABLE DEVELOPMENT
Pure philanthropy
Convergence of interests for sustainability
Multinational corporations can radically
improve the lives of billions of people and bring
into being a more stable, less dangerous world.
They need only act in their own self interest,
for there are enormous benefits to be gained by
entering developing markets.
Social benefit
Combined social and economic benefit
Pure business
Economic benefit
Michael E. Porter and Mark R. Kramer, The
Competitive Advantage of Corporate Philanthropy,
Harvard Business Review, December, 2002.
C.K. Prahalad and Allen Hammond, Serving the
Worlds Poor Profitably, Harvard Business Review,
September, 2002.
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SUSTAINABLE PARTNERSHIPS REQUIRE REAL VALUE
CREATION AND CLOSE RELATIONSHIPS
Relationship continuum
Philanthropic
Transactional
Integrative

Earnings impact
Market access, influence, info
Brand
Measurable Value
Commercial relationships
Association
Employee morale
Transition focus to higher, quantifiable value
for partners
Fit with values/ vision
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THE MARKET PROVIDES MULTIPLE EXAMPLES TO LEARN
FROM
Provides project sustainability because both are
dependent upon each other
Relationship continuum
Philanthropic
Transactional
Integrative

Earnings impact
Starbucks,CARE
Accion Intl Citibank
Technoserve, PG
Market access, influence, info
Natl Geographic, MCI Worldcom
TNC, Georgia Pacific
Brand
Commercial relationships
Measurable Value
Underlying reality transactions costs of finding
new partners are higher than deepening
relationships
Association
Kaboom! Kimberley Clarke
Employee morale
Fit with values/ vision
United Way, JP Morgan Chase
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RECENT SNAPSHOT OF UNDPS PUBLIC-PRIVATE
PARTNERSHIPS

• Over the last six months, UNDP has launched
  ground-breaking partnerships with the private
  sector
• UNDP has engaged in over 300 discussions with
  influential private sector players over the last
  six months, conducting about 20 meetings /
  conference calls on average each week.
• These efforts have resulted in the execution of
  highly innovative partnerships and include the
  direct allocation of over 360,000 in 2004 and
  anticipated revenue of between 2 to 5 million
  over the next 5 years.
• The partnerships cover UNDPs priority areas of
  Water, Biodiversity, Climate Change and also make
  funding available for Energy and Information
  Technology projects.

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SELECTED PARTNERSHIPS

• Swiss Re (Global Change Initiative)
• Global Giving
• Gap, Inc.

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INSURANCE LOSSES ARE ON THE RISE, LINKED TO
EXTREME WEATHER EVENTS . . .
UNEP estimates that costs will be 150
Billion/year within this decade
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. . . AND THE HIGH COSTS OF EMERGING INFECTIOUS
DISEASES
Note Not all diseases in graph above are
linked to climate change Source Bio Economic
Research Associates
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THE IMPACT OF CLIMATE CHANGE IS EXACERBATED BY
THE DEGRADATION OF ECOSYSTEM SERVICES
Mutually reinforcing vicious spiral
Climate Change
Degraded Ecosystems
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HURRICANE MITCH PROVIDES EVIDENCE OF THE POSITIVE
EFFECTS OF A STABLE ECOSYSTEM

• Tremendous damage
• Losses amounting to 80 of GDP
• 5,700 deaths

Honduras Degraded ecosystem
Hurricane Mitch
Belize Well-preserved ecosystem
Significantly less damage incurred
The effects of a disaster such as Hurricane Mitch
could be predicted and incorporated into
insurance pricing models to generate premiums
that accurately reflect risk
Source Insurance-Related Actions and Risk
Assessment in the Context of the UNFCCC, May 2003
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CORRELATION OF BOTH LIFE HEALTH AND PC TO
CLIMATE CHANGE IMPACT AND DEGRADED ECOSYSTEM
SERVICES POSES POTENTIAL THREAT TO SWISS RES
BUSINESS MODEL
Possible Explanation
Correlation with Climate Change
Life Health

• Occurrence of 30 new diseases since 1976, both
  due to climate-related disruptions to ecosystems
  and species

Life Health

• Two major parts of the insurance business model
  that were previously uncorrelated to each other
  may now be subject to the same positive
  correlation
• Swiss Re could either identify a major new
  insurance product that is negatively correlated
  to these events or attempt to understand and
  mitigate the impact of climate change and
  ecosystem degradation

Climate change
Property Casualty

• Increased frequency of natural disasters due to
  climate variability and change as well as
  ecosystem degradation
• Companies are increasingly called to account for
  activities and decisions relating to climate
  change

Property Casualty
Climate change
Defined as change in frequency and intensity
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PROPOSAL HAS POTENTIAL FOR SIGNIFICANT IMPACT ON
SWISS RES BUSINESS MODEL
CONCEPTUAL
Impact on business model
Description of business impact
Potential for increased revenue through increased
volume. While individual premiums may vary,
average premiums are likely to remain steady

• Loss claims are reduced by insuring a less risky
  portfolio and introducing mitigation measures to
  decrease vulnerability
• Underwriting costs will increase slightly due to
  the funding required for research, as well as the
  costs of incorporating research into underwriting
  policies
• Risk Mitigation costs will increase slightly to
  fund selected ecosystem restoration and other
  risk mitigation measures that have passed
  cost/benefit analysis
• Assuming no change in Investment Gains, the net
  effect is expected to be higher overall profits
  for Swiss Re

Status quo
With partnership
Insurance premiums
Loss claims (1)
Under-writing costs (2)
Risk mitigation costs (3)
Operating Profit (4)
Investment gain
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THE PROPOSED PARTNERSHIP UNIQUELY ALIGNS THE
THREE ORGANIZATIONS OBJECTIVES AND ASSETS
Objectives
Unique Assets

• Increase profits
• Minimize risk
• Create conducive conditions for insurance and
  capital markets
• Leverage sustainability leadership

• Financing capabilities
• Ability to influence policies and decisions of
  client companies

Swiss Re
Together the three organizations can have
tremendous impact on development while achieving
their organizational objectives

• Convening power
• Ability to work with and influence governments as
  a trusted advisor
• Capacity building

• Alleviate poverty
• Achieve Millennium Development Goals
• Ensure sustainable development

UNDP

• Research capabilities

• Better understand impact of global climate change
• Link research and understanding of real world
  business, strengthening impact of applied research

Harvard
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OVERVIEW OF PARTNERSHIPS

• Swiss Re (Global Change Initiative)
• Global Giving
• Gap

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CONTEXT UNDP - GLOBAL GIVING PARTNERSHIP

• Background Grassroots development often
  happens when committed individuals and
  communities come up with their own solutions and
  are able to find support to implement their
  visions. However these indigenous social
  entrepreneurs and community-based organizations
  are generally not the recipients of large amounts
  of development assistance. Instead financial
  flows into the non-industrialized world are
  usually targeted to large or medium-scale
  projects completely bypassing the individuals and
  organizations that are best positioned to create
  local change and growth.
• People Mari Kuraishi and Dennis Whittle, the
  founders of GlobalGiving, created a series of
  open physical marketplaces at the World Bank in
  the late 1990s, when they were Heads of Corporate
  Strategy and Innovation. In 2000, the founders
  left the World Bank to build on the original
  concept.
• The Opportunity
• Employee giving campaigns in 2001 raised 4
  billion.
• Of contributing households in the US, more than
  50 use payroll deduction for giving
• GlobalGiving has developed an online platform and
  service to harness individual employees
  contributions, through their corporate giving
  programs, for development.
• Partnership UNDP and GlobalGiving have proposed
  a partnership that would place Equator Initiative
  projects, Compact, GVEP, Water and other
  community projects on employee giving websites.
  Together with the UN Foundation, the partners can
  catalyze significant resource mobilization for
  development.

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GLOBAL GIVING MOBILIZES RESOURCES, WITH AN
EMPHASIS ON MAXIMIZING FUNDS FLOW TO COMMUNITY
DEVELOPMENT PROJECTS
Funds flow of a single employee contribution to
a UNDP project - illustrative
Stage 1
600
90 of employee contributions flow to
communities
Stage 2

• Compact (World Heritage sites)
• Equator Initiative finalists and runners up
• Water, Global Village Energy Partnership

Stage 3
Assumes employees give an average contribution
of 300 and employers match for a total 600
contribution Contractually obligated to ensure
that projects receive 90 of funding
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SELECTED PARTNERSHIPS

• Swiss Re (Global Change Initiative)
• Global Giving
• Gap, Inc.

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PROCESS AND ACTIVITIES FOR A GLOBAL RETAIL
ALLIANCE

• Identify interested retailers
• Develop trust fund structure and administration
  modalities
• Select pilot countries (e.g., Mexico) based on
  retailers and UNDP priorities
• Identify UNDP Country Office relationship manager
• Design program based upon local needs
• Map program to MDG tracking framework
• Select local groups
• Craft communications strategy (global, local)

Activities
Program is milestone/ performance-based to align
members interests
0-3 months
4-8 months
9 - 12 months
Timeline
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WITH SUPPORT FROM UNDP, A RETAIL ALLIANCE RAISES
ENVIRONMENTAL PRACTICES AND AWARENESS THROUGH
SUPPLY CHAINS
Retail Alliance
UNDP
Retailer 1
Retailer 2
Retailer 3
Retailer 4
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A JOINTLY MANAGED RETAIL ALLIANCE TRUST FUND
SUPPORTS COORDINATED ACTIVITIES AND EDUCATION AT
THE LOCAL LEVEL
Retail Alliance Trust Fund

UNDP/Retail Alliance
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ATTRACTIVE NEW PARTNERSHIP OPPORTUNITIES IN THE
PIPELINE ARE ALSO BEING PURSUED

• We are currently in conversations both with
  existing partners on new projects, as well as
  with attractive new partners
• Creating these new partnerships will allow UNDP
  to capitalize on the current momentum, and also
  enhance UNDPs position as an attractive partner