Business Has Positive Role in International Development
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Business Has Positive Role in International Development

Business has a positive proactive role to play in international development—alleviating poverty in the developing world—and can best contribute by focusing on what it does best: creating jobs and supporting local businesses, according to a new survey.

Paul Holmes

Business has a positive proactive role to play in international development—alleviating poverty in the developing world—and can best contribute by focusing on what it does best: creating jobs and supporting local businesses, according to a new survey: Business and International Development: Opportunities, Responsibilities and Expectations.

The survey, conducted by Edelman, the Corporate Social Responsibility Initiative of Harvard’s Kennedy School of Government, and Prince of Wales International Business Leaders Forum, sought the opinions of Fortune 500 companies, global NGOs, investors and the media about the role and responsibility of business in international development.

“The research findings indicate that thanks to the growing ranks of responsible companies and responsible NGOs, we are moving away from an era too often dominated by the focus on ‘what business should not do’ to a period which recognizes ‘what business can do,’” says Adrian Hodges, managing Director of the Prince of Wales International Business Leaders Forum. “This shift in mood will have the most impact if companies are given appropriate incentives to invest in different business models and new markets, and if civil society and public sector partners are willing to come to forward to form partnerships for common goals.”

While traditional definitions of international development have focused on economic growth, there is increasing recognition—particularly among NGOs, but also among a growing number of companies—that real development includes environmental and social indicators including improved living standards and empowerment of people.

And just as definitions of development differed, so did awareness and acceptance of the United Nations’ Millennium Development Goals: eight objectives (eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality; reduce child mortality; combat HIV/AIDS, and more) designed to reduce poverty and improve the lives of people in developing country.

Some companies are engaged with the UN’s goals. One respondent from a telecommunications and electronics company says: “I think they are an opportunity to help companies think about their vision and their responsibility in a higher-level way… a way to organize and think about corporate citizenship and social responsibility objectives. I think they can be tremendously helpful and can serve as a bridge between the public and private sector.”

But others are skeptical. Says a respondent from the financial service sector: “I would describe them as nice… but they have no teeth.” And the majority of media respondents shared that skepticism. Says one: “I’m not impressed because they are very general and no one can say ‘no.’ It should be a more concrete commitment as to what we are going to do.”

Those responses send a signal to the NGO community and to multilateral organizations like the UN, says Edelman president Richard Edelman.

“We are constantly counseling companies to engage NGOs and other stakeholders, about their own activities and impacts,” says Edelman. “These survey results demonstrate that the international development community—NGOs and multilaterals—need to re-double their own efforts to engage business about the Millennium Development Goals and related issues with both an approach and language that companies are going to understand and respond to.”

The good news from the survey was that companies are already active participants in the international development process, and that all major players—including the media and NGOs—recognize a role for business. Just as important, there is a consensus that business can contribute most fully by focusing on its core competence: creating jobs and encouraging the development of free enterprise is developing countries.

In the words of one NGO respondent, echoing the message of the recent best-seller The Fortune at the Bottom of the Pyramid by C.K. Prahalad: “It’s about global companies realizing there is a demand among low-income consumers for their products and services. That’s the new frontier in terms of growth for the companies. And in order to do it right… they better do it in partnership with those who know the poor best, who are usually citizens organizations and grassroots development groups.”

Says another: “The biggest opportunity for the private sector to make an impact is to focus on their own supply chain—what they’re buying, who they’re buying from, what the social practices are, what the environmental practices are… if every company worked on their own footprint and their own supply chain it would be amazing.”

When asked how important various corporate contributions to development could be (on a scale of one to nine), respondents ranked creating jobs and building local businesses first (8.1), followed by ensuring environmental sustainability (7.3), training a country’s local workforce (7.1), tackling bribery and corruption (7.0) and consulting with governments on market-based strategies (6.7).

Similarly, almost all respondents agreed there was a strong business case for a corporate role in international development, not only because of the potential to create new markets for their products and services, but also because of changing stakeholder expectations.

In the words of one food and beverage company respondent: “I think that personally I would like to feel the goods I purchase have an ethical footprint… As a corporate person, as well as a citizen, I see the practical value of companies investing in these areas. There is a growing societal consensus that companies ought to do more, and I share that.”

The survey even identified some companies that are already taking a leadership role in international development. BP, Nike and Unilever were cited by other businesses and by NGOs, while Citigroup, Hewlett-Packard, and Procter & Gamble were cited by business respondents and the media.

Says Jane Nelson, director of the Corporate Social Responsibility Initiative at Harvard’s Kennedy School of Government, “Over the last ten to fifteen years, leading companies have learned the value of engaging and partnering with stakeholders around various aspects of their sustainability and ethical business strategies. It is encouraging to see that companies—and NGOs—also recognize the critical role that partnerships can play around leveraging business’ role in developing countries.”

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