Public-Private Partnerships: Corporate Responsibility or a Function of Doing Business?

June 20, 2006 12:30-1:30

Speakers: John Shinn, Chevron Technology Ventures
Andrew Stern, Dalberg Development Advisors

John Shinn spoke about the potential for public-private partnerships to benefit businesses as well as national governments and multi-lateral institutions. Specifically, he used the case of Chevron’s Global Gas Flaring Reduction Partnership with the World Bank, other oil companies, and relevant nations. Gas flaring is an unintended release of gas into the air as a byproduct of drilling for oil. This gas can be reused or sold, but doing so is not economically feasible for individual companies. The World Bank organized a partnership between oil companies and national governments to exploit this resource, benefiting the oil companies and interested nations alike. At the same time, the World Bank benefited from the reduced environmental impact of oil drilling.
Mr. Shinn and Andrew Stern also talked about public-private partnerships that benefit development. These partnerships are potential growth-drivers for multi-national corporations, and can stimulate local development simultaneously. Mr. Stern emphasized five reasons why businesses would be interested in development projects:
a) Reduce risk in emerging markets
b) Reduce global risk and instability
c) Ability to provide unique technical assistance and act as a neutral convener
d) Access to technology from other companies or countries
e) Market development- expanding developing markets to sell products there.

However, public-private partnerships have some important drawbacks:
a) Exposure risk- companies may expose the public to issues that were not in the public eye beforehand, thereby increasing external pressure on companies to change.
b) The general consensus on how to handle a problem may be different than the company’s strategy to address the problem and may not be in the company’s best interest.
c) Competitive exposures- sensitive information may be revealed to other companies. Partners must trust that other companies will not utilize this information to gain a competitive advantage.
d) Future of the partnership- the partnership might be manipulated by an organization like the World Bank, and companies may be compelled to act against their own interests in the future.

by Adam Perry