Privatizing the Governance of Green Growth

Policy Paper

Privatizing the Governance of Green Growth

Powerful transnational corporations (TNC) and certain state-owned enterprises (SOEs) have strong interests in the future of the natural resource sectors, such as energy and agriculture.  In general, these interests interfere with both sides of the climate change debate – mitigation and adaptation – not to mention the struggles for the rights to food and energy and human rights, including gender equality. Therefore, civil society organizations (CSOs) and social movements fighting for the human right to food, climate justice and equitable access to clean energy are increasingly faced with a strategic dilemma. They are torn in different directions:
The “outsiders” are confronting, facing and fighting Big Oil, Big Energy, Big Agro and other actors that are pushing hard to maintain a fossil and growth based economy and preserve or even increase their control over the natural resource base.
The “insiders” are working on “damage control” – that is, to mitigate and improve the initiatives of these transnational corporate actors, including state-owned enterprises.
At the same time, CSOs and local communities in the South (whose interests they defend) are increasingly experiencing the negative effects of a new development paradigm that the TNCs and SOEs are labeling “Green Growth” and, supposedly, stands for the alternative to the current economic system.
In recent years, there has been an enormous amount of literature on the inability of GDP accounting to address the wealth of a nation and wellbeing of its citizens.  At the same time, the concepts of “Green Growth” or “Green Economy” (meaning low carbon and resource efficient production models) are now occupying the throne of mainstream economic thinking and fueling the delusion that infinite growth on a finite planet is possible.
The new “Green Growth” development model is being implemented in a world in which corporate actors hold immense power. This power is both economic and political. The corporate sector holds economic power through its sheer size/capitalization, market penetration and concentration, and capacity to “enclose the commons” through means, such as grabbing and privatizing land and resources and facilitating such processes through trade and investment agreements. But the same corporate actors also possess significant political power in the form of campaign contributions, lobbying power, and use of “revolving doors”, i.e., wherein executives sequentially take positions in business and government (in the case of state-owned enterprises, executives hold positions in government and business at the same time).  
But the “Green Growth” development model is also characterized by a number of other features, namely it:

  • Aggressively promotes Private-Public-Partnerships (PPPs) by diverting scarce public monies to offset the risk of private investors engaging in these arrangements;
  • Promotes one-size-fits-all solutions that are often blind to political realities and power structures on the ground;
  • Fails to draw lessons from the financial crisis, but instead hands over even more democratic space to the control of the financial sector and uses financial instruments to gamble with the planet’s natural resource base;
  • Creates not more, but less equality and justice by further prioritizing investors’ rights over human rights and promoting harmful and risky technologies;
  • Does not address the root causes of the current crisis that lie in our consumption and production model based on infinite growth in a finite world and thus provides the basis for a push into exploitation and use of ever more marginal, risky and dirty resources, across the globe.

There is a deep crisis in the global governance regime that is establishing international rules, norms and standards for how we manage our natural resources. Real investment decisions are guided by an emerging transnational, corporate-driven governance regime.  A few powerful and well connected consultancy firms such as McKinsey & Company serve as “brokers” for this regime by facilitating consensus about the contours of the new development paradigm and then promoting it across the globe. (See Box 2, “About McKinsey & Company.) While claiming to represent a paradigm shift, the TNC and SOE actors are not ready to leave behind the “brown economy” and its oligopolistic structures since their own very existence depends on it. Their growth-driven development model in a finite world needs both the brown (fossil) and the green (biomass) resources of this planet to supply their greed.
Many private firms and some public leaders urge the international community to build a complementary bottom-up economic architecture consisting of private public partnerships to spur investment into BIG (“Balanced, Inclusive and Green”) Growth projects. Currently, international negotiations at the United Nations are thus seen as a futile exercise that could be picked up again in the future once the readiness of countries to engage on the BIG plan has been proven on the ground. Interestingly, this approach completely ignores political realities and power structures on the national and local level where development visions and investment strategies are subject to political discourse and hegemonic struggles. Many of the national green economy plans or strategies created through this approach merely collate available knowledge without building strategic capacity at the national level and thus fail to create ownership among key stakeholders.

Under the right circumstances (e.g., transparency, participation, accountability mechanisms), PPPs can foster sustainable development.  However, it is not helpful when PPPs are promoted as a panacea – the solution to economic and development problems – without the appropriate qualifications.  For instance, governments must maintain the role of the senior partner and not cede this role to corporations, as often happens in practice. The top-down, elitist mode of policy-making (largely excluding citizens) undermines many of the goals that, for example, McKinsey & Company and the World Economic Forum rhetorically favor, including country ownership, environmental sustainability and equity. Indeed PPPs can jeopardize sustainable development and equity if they use public subsidy for private gains with little public benefit. With regard to both TNCs and SOEs, transparency is critical.  Without information about the operations and financing of these large entities, the public is defenseless and unable to protect the public interest.
This paper is intended to inform strategy discussions of civil society actors working in the field of climate, energy, agriculture and resource politics. It describes the current state of multilateral (resource) governance and the root causes of its crisis; introduces the new and emerging corporate governance regime and its key players; briefly analyses key trends and implications of the “Green Growth” development paradigm promoted by these actors and fora using examples from key sectors and draws some initial conclusions and formulates open questions about what this means for civil society strategy.
We suggest that, because civil society organizations are focusing tremendous energy on single issue campaigns (often very effective), some cross-cutting issues are getting insufficient attention.  The main cross-cutting issue relates to the rise of transnational corporate power in decision-making over ALL of these issues.  As discussed below, TNCs and SOEs are not only using existing structures to affect decisions, but also creating new organizations and fora through which to promote their agenda.  (See Box 1.) Therefore, the focus of the paper is on the nature and role of the new governance regime, its key actors and the way they work together because we feel that this represents a blind spot in the current debates. 

Product details
Date of Publication
November 2012
Heinrich Boell Foundation
Number of Pages