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How could the government incentivize public-private partnerships to accelerate sustainability?

How could the government incentivize public-private partnerships to accelerate sustainability?

Relying on new data, articulating goals and weaknesses, and partnering locally are among the ways members of Protocol's Braintrust say governments could facilitate better PPPs.

Dani Simons

Head of Public Sector Partnerships at Waze

One of the biggest things that governments can do is to have a clearly articulated vision for what they are hoping to achieve from a public-private partnership (for example, "creating more sustainable and equitable mobility"). Then, governments can recognize what pieces of that vision the private sector could service in a financially sustainable manner and what pieces might need to be supplemented by public dollars. Here's an example to illustrate what I mean: Reverse commute bus routes are generally financially unsustainable but play a big role in equitable mobility for workers who need to get to shift-work at warehouses typically located outside urban centers, and who can't necessarily afford to drive there. The private sector might be able to provide a solution that is more cost-effective than the public sector, but there still might be segments of the market where the private sector will require some subsidy in order to provide the same level of access as the public sector does.

Ultimately, I think having clarity of purpose and going in with eyes wide open about the need for the private sector to have financial sustainability allows both sides to align incentives and to create a PPP that goes beyond what either sector could do on its own.

Carl Christensen

Co-founder and CTO at Spacemaker

By some estimates, sustainable development goals hold $12 trillion worth of business opportunity, ranging from affordable urban housing to agricultural technology advances. In other words, there should be plenty of green (as in dollars) incentives for private companies to line up to help. Furthermore, PPPs have a longstanding tradition to provide incentives that are not directly connected to e.g., operational efficiency, so adding or increasing incentives for sustainability should be easy to integrate. However, this eagerness to add incentives (and requirements) does not necessarily imply an upside to the private partner — rather the opposite.

When a complex project with many goals and requirements gets yet another goal, it dramatically increases complexity; optimizing for many goals at once is much harder, since it inevitably involves balancing trade-offs. Indeed, this is one of the core problems our company Spacemaker helps to solve: using AI to find the best ways of developing urban housing in affordable, sustainable ways, in the face of very complex trade-offs.

What we have found is that government regulation and incentives are often not set up for outcomes due to a lack of data. Regulatory bodies rely on complex codes of conduct or performance, and can thus result in a plethora of unintended consequences for the private partner, including increased risk, complexity and cost. It is well established, for example, that overly complex regulation is one of the biggest blockers to affordable housing across many geographies. But we also found that, when provided with transparent data and analytics that clearly demonstrate outcomes for sustainability, governmental bodies are inclined to revise — and when proven necessary, even forgo — their regulations in favor of finding the best trade-offs.

The key learning from this is that in order to harness the benefits that private companies can bring to PPPs — innovation, speed and operational excellence — governments should seek to simplify goals and incentives based on data and evidence, and focus on measurable outcomes, including for sustainability criteria. Data and analytics can be a powerful tool in creating transparency and mutual trust, and will hence give PPPs the flexibility to innovate at speed — which is needed in order to respond to the urgency of the global challenges that we are facing and that the SDGs aim at tackling.

Lucas Joppa

Chief Environmental Officer at Microsoft

A healthy society requires a healthy planet. Governments play a key role in maintaining both. They fund basic research that result in many of society's most important innovations and set policies that embed innovation into daily practice. Now they can and should bring those together in new ways to measure, monitor and manage our natural resources to keep the planet healthy.

Governments can conduct national ecosystems assessments — involving scientists, policymakers, universities, NGOs — to see how water, land and other ecosystems have changed, and project future changes and determine the impact of potential changes. This should happen through traditional paths like setting requirements, removing administrative barriers, creating uniform standards.

It will also require new partnership models with the private sector. By working with the technology sector in particular, governments can leverage the infrastructure of the modern information age and advances in cloud computing and machine learning to rapidly broaden the scope and scale, and accelerate the speed of these assessments. It is time for every government, business, nonprofit, university and citizen around the world to begin working together to keep the planet healthy for generations to come. The planet can't wait.

Learn more here.

Jarmo Sareva

Ambassador for Innovation at the Ministry for Foreign Affairs of Finland

While the exact long-term consequences of COVID-19 crisis are still unknown, it is already evident that the crisis will have a profoundly disruptive impact across societies, economies and industries, with developing countries and the most vulnerable populations bearing the brunt. The crisis arrives on top of the already ongoing accelerated economic and societal disruption caused by supercharged technological change. There is a risk that governments will fall further behind in their efforts to implement the U.N.'s sustainable development goals, or Agenda 2030.

A time of great disruption presents both threats and opportunities. Governments must therefore redouble their cooperative efforts toward using science, technology and innovation to mitigate the impact and to build a more sustainable future. Even if the crisis appears to strengthen the role of governments, at least in the short term, they must engage with a broad range of stakeholders, including the private sector, academia and civil society.

To best incentivize the private sector for partnerships, the quality and professionalism of governance — and governments — will be key. Be it from their customers, employees, shareholders or potential investors, companies face increasing calls for making a socially, economically and environmentally sustainable impact. This requires an enabling environment from governance. Such calls will remain unmet in an environment of crony capitalism, dismal governance and lack of rule of law.

Trust is the linchpin of any successful and productive relationship, including public-private partnerships, and trust will underpin the most successful economies and societies of tomorrow. In this respect, the Nordic region is showing the way.

Jennifer Stojkovic

Executive Director at sf.citi

From my perspective, sustainability is often seen as a "nice to have" in many companies (and industries altogether) and treated as a marketing tactic to bolster their image in the public eye; the tech industry, however, approaches this differently. A few ways the government can help build better public-private partnerships in this area:

  • Partner at the local level. The bureaucratic, political nightmare of working across the federal level cannot be understated. Instead, municipal governments wield considerable power in creating incentives for companies to adopt sustainable practices. San Francisco has led the way on countless green initiatives that have been replicated at a state and federal level. We even have a LEED-certified airport terminal.
  • Embed policymaking into the process. Successful PPPs often (and should) create a new ecosystem of stakeholders and companies. One of the ways this has become problematic in building successful tech ecosystems and clusters is the inherent nature of industry and its needs: Inevitably, as they grow, they will begin to lobby for their industry's needs, often against the government partner who is providing their funding. To prevent this difficult friction from emerging, it is important to embed policy advocacy from the beginning of the partnership. Otherwise, government administrations fluctuate, political powers shift, and partners end up on opposing sides of the table in dispute.
  • Create stepping-stone tax advantages. Taxes are an obvious incentive for sustainability, but creating a "step up" system for tax benefits can allow for smaller companies to enter into the space. A good example of this is autonomous vehicle taxation and how hybrids vs. fully electric cars are taxed. While this is more general than just public-private partnerships, many tax benefits for sustainable practices fail to offer multiple entry points.

See who's who in Protocol's Braintrust. (Updated April 15, 2020)

Questions, comments or suggestions? Email braintrust@protocol.com.

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