No development funds for dubious corporations!

Mark Herkenrath, Director Alliance Sud
Political article
The Federal Council wishes to involve Swiss companies more in Switzerland's development cooperation. A condition for this should be the full support of the responsible business initiative.

Companies and private investors from industrialized countries often shy away from investing in socially and environmentally sustainable activities in poor developing countries. They consider the risks of loss too high or the profit potential too negligible. Compared to less sustainable activities in more stable and advanced nations, sustainable investments in poor countries generally offer only very limited scope for financial profitability. Yet they are an absolute necessity if the world community is to attain the sustainable development goals of the 2030 Agenda in good time.

The Federal Council has therefore decided that in the framework of the next Dispatch on international cooperation, the two government aid agencies SDC and Seco will have to work even more closely than in the past with enterprises and investors. Out of Switzerland's economic self-interest, cooperation with the local private sector is to be stepped up. Swiss companies and investors are to benefit from the funding, expertise and political contacts of official development assistance so as to lower the costs and risks of sustainable investments or generate higher profits from them.

At first glance, the idea of official development cooperation resources as a "lever" for mobilizing sustainable private sector activities seems rather captivating. Yet, in many cases it is difficult to assess whether such mobilization is really necessary. The risk is that federal tax revenues could serve to subsidize highly profitable private activities that would take place anyway, even without government support. Besides, allocating funds in that way would be at the expense of tried and tested forms of official development cooperation such as in education and health, unless the Confederation's development cooperation budget is increased substantially at the same time.

Not least of all, SDC and Seco also risk promoting investment by companies which, beyond their cooperation with the two development agencies, are involved in human rights violations or causing damage to the environment. The Responsible Business Initiative aims to prevent such human rights violations and environmental degradation. It would therefore befit SDC and Seco to cooperate in Switzerland only with companies and investors that unreservedly respect human rights and environmental protection and therefore also clearly support the Initiative. The successful, fake news-driven lobbying by the trade associations in the run-up to the Council of States debate on the Responsible Business Initiative makes clear that such a solution would only be supported by a Parliament with a different composition following the autumn elections.