Case study – International Business Leaders Forum – The challenge for business

Alliance magazine

The world’s most intractable problems – peace and security, sustainable development and poverty eradication – are increasingly interlinked and interdependent. Their achievement can no longer be assumed to be the responsibility of governments alone. Instead partnerships between governments, multilateral agencies, civil society organizations and businesses, within which each bring their unique skills and resources to bear, are crucial to progress.

The Millennium Development Goals (MDGs) provide a common framework, agenda and targets within which such partnerships can function. One key role played by the Prince of Wales International Business Leaders Forum (IBLF) is to capture and disseminate examples of effective partnerships.

Yet many in the business community still need to be convinced that they need to be involved. I would ask them to consider the following: very few businesses can thrive in an environment of instability; social unrest puts a company’s people, premises, plants, markets, supplies and access to finance at risk. Sustainable economic development underpins the sustainability of business itself and provides opportunities for innovation, new markets and supply sources. Protection of people’s rights enhances reputation, eliminates risks and reduces business costs, as does resistance to corruption. And reduction in poverty contributes to social stability, releases resources for the support of education and health, and provides new business opportunities.

How, not why

The question should not be ‘Why should business be engaged?’ but rather ‘How best can business engage with its social partners in the practical achievement of the MDGs?’

In 2003, IBLF published Business and the Millennium Development Goals – a framework for action, which stressed that all companies – small and medium enterprises, large national and multinational companies, local chambers of commerce and international business organizations – can play a role in a number of different ways.

Through their core business activities The Vietnam Business Links Initiative provides a good example here, bringing local and international business into partnership with government and civil society organizations to improve working conditions in factories – beginning with footwear factories and now extended to the clothing industry. The aim is to enable those industries to meet international standards and become a sustainable manufacturing base for the international market, thereby securing the livelihoods of hundreds of thousands of workers. IBLF played a central role in designing and brokering the partnership and building the capacity of the local project manager, the Vietnam Chamber of Commerce and Industry.

By targeting their social investment and philanthropy activities on community development that has relevance to their business. GlaxoSmithKline has made a major contribution to the battle against HIV/AIDS, malaria and lymphatic filariasis in Africa, donating its core competences and products in partnership with government and civil society organizations.

By engaging in public policy dialogue and advocacy activities that will create a better enabling environment for business to play its part in society. The newly formed China Business Leaders Forum, which IBLF helped develop, enables Chinese and foreign business leaders to collectively address solutions to poor business standards and lack of transparency and corruption in China and beyond. The business community should thus be able to demonstrate the benefits of transparency and good business practice, which are central to many of the MDG challenges.

Where development challenges are beyond the capability of individual companies, trade and industry associations, chambers of commerce and other business coalitions will be crucial in mobilizing collective action.

More than aid needed

More recently, in May 2005, in partnership with the UN Global Compact and the United Nations Development Programme (UNDP), IBLF convened a symposium on the role of business in reducing poverty and meeting the MDGs. The meeting recognized that, although there are many examples of business engaging in activities that contribute to the achievement of the Goals, much more needs to be done to make it an integral part of business thinking and to maximize and scale its impact. Among the key conclusions were:

A vibrant business sector that is innovative, acts responsibly and works in collaboration with other actors must apply new models for development solutions, scale up existing development initiatives and build new markets. As an example, BP has made community engagement and economic development a central ingredient in the planning and implementation of the newly opened pipeline from Azerbaijan through Georgia to Turkey. Many of the communities are impoverished but through capacity-building, subcontracting and investment they have been able to benefit directly from one of the largest projects in the region,

The most effective corporate contribution to development is to run a profitable and responsible business geared to serving local markets and value chains. The key is to create a virtuous circle where the company, its employees, stakeholders and communities all benefit. For example, Pentland has been a leader within the international sportswear industry in tackling the challenges of child labour and workplace conditions. Combining the protection of household incomes with health and safety controls and the provision of education to children has turned a difficult social challenge into a positive development contribution.

An enabling environment is critical to success. The key elements include political and economic stability, effective administration, and adequate physical institutional and social infrastructure. Business has many of the skills required to achieve these and can make them available in support of institution building. Statoil, for example, has supported the upgrading and training of the judiciary in Venezuela as a key to building sustainable national frameworks within which business and society can thrive.

Cross-sector and cross-industry collaborations are essential to address issues that cannot be addressed by individual actors and to increase the scale and impact of development initiatives.

Perhaps the most crucial lesson of all is that while much can be done globally to promote and enhance development, the only way to achieve the MDGs is through focused action on the ground and in local markets. All of the examples given in this article have involved actions relevant to the particular circumstances of the communities involved.

Why is good practice not the norm?

So why are the MDGs not on the Board agendas of all companies? Why have the good examples not become the norms of business practice? The May Symposium recognized that a number of challenges still need to be addressed.

Promoting business engagement in development needs to be communicated in a way that business and community leaders can understand. It needs to link business benefit and development gain to get the attention of hard-pressed managers. There are a number of success stories from the past few years but anecdotal evidence must take second place to rigorous measurement of development interventions, in the same way that other elements of business performance are reported. Nor is it acceptable to see community engagement as a short cut to reputation. Ultimately, the contribution that business makes to the achievement of the MDGs will be judged by performance, not by telling good stories.

The active, personal commitment of business leaders to the development agenda is crucial if business is to make a lasting difference. Programmes that allow top managers to visit business-supported development projects and peer-to-peer influence can also be powerful drivers for change in behaviour and commitment.

Business also needs to engage with policy-makers in creating a more favourable legal and fiscal environment for development interventions. And it needs to develop greater expertise in building partnerships if members of the development and business communities are to find new ways of working together. Basic skills for partnership should be provided in more business schools and boardrooms.

Lastly, small and medium enterprises (SMEs) are often the real engines of local and sustainable economic growth, which benefits the community and the larger companies operating there. By making linkages with smaller enterprises, international companies can initiate a two-way capability transfer that is to their mutual benefit

There is no doubt that business can make a real difference to achievement of the MDGs and sustainable development in general. In many cases, it has still to realize this. But the contribution that it can make working in isolation is much less than if it acts in concert with the other sectors.

Peter Brew is Director of Corporate Policy and Practice at The Prince of Wales International Business Leaders Forum. He can be contacted at peter.brew@iblf.org

See http://www.iblf.org


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