One of the first debates I ever heard, about a decade ago, was about corporate citizenship and whether companies have responsibilities beyond their shareholders and bottom line.
We’ve come a long way from that discussion. Today, many development professionals and corporations alike believe that companies can, and should, help to create opportunities for a better world. We see this from dynamic leaders such as the Virgin Group’s Richard Branson, who has outlined a vision for a world powered by alternative energy, to companies like Microsoft that are increasingly integrating sustainability into the core business of the company, and a growing list of certified B Corps that are redefining what business success means.
But, as companies become more of a fixture in the development conversation, to the point that they are even helping to set global goals, the ways in which companies recognize that they have an impact, or see an opportunity, is another question.
Many companies today incorporate environmental and social goals into corporate strategy. Not out of altruism or some lofty ideal of corporate citizenship, but because they rely on the environment to source raw materials and people to provide labor and to consume their goods and services. Operating sustainably, including investing in workforce development, improving the environment for doing business, and building markets, is in companies’ own self-interest. Ultimately, it will determine their ability to continue to exist and grow in the next 20 or 100 years.
This is the idea behind “shared value” – a concept first introduced by Michael Porter and Mark Kramer that describes generating economic value in a way that also produces value for society, thereby connecting a company’s success with social progress. By looking for alignment between business and development goals, nonprofits and government agencies can better leverage private sector partners to further environmental and social aims.
While, by definition, shared value has the potential to further development outcomes and can lead to more sustainable results, it does not necessarily address what is most fundamentally needed. By continuing to operate according to corporate imperatives, companies can cherry-pick the most pressing or relevant issues while leaving a number of environmental and social issues unresolved.
This leads to questions about how the private sector views its own role in development. Put simply, does the private sector recognize the power it holds and the potential it brings to development?
I am struck by examples such as how Procter&Gamble almost single-handedly brought disposable diapers to China or developed a market for low-cost razors in India—that is an amazing ability. As a consumer goods company, P&G did what it does best—identified a gap, did a lot of research on the local market, tweaked and tested, and marketed to their target audience. P&G is really good at marketing (who hasn’t shed a tear while watching their “Thank You, Mom” commercials?). But, as they say, with great power comes great responsibility. There is a missed opportunity here, and a clear business-first mentality, despite the company’s commitment to “touch and improve lives.” Do poor people need inexpensive disposable razors if they don’t have access to running water?
A 2012 Michael Blowfield article provides a framework for understanding business’s role as a conscious development actor. The article looks for signals that corporations are acting intentionally to contribute to development goals and what that means for development initiatives. The author poses an interesting question on corporate accountability, asking, if companies recognize themselves as conscious agents for development, will they also accept responsibility for delivering on development goals?
This is an important question, as corporate executives are increasingly participating in global conferences and international forums where they have significant influence and are helping to determine development objectives.
The development of the Sustainable Development Goals was notable for its inclusive process. Never before have corporations been so involved in setting the global development agenda. However, companies are not held accountable for delivering on, or even aligning to, the SDGs, and there are few examples of companies formally incorporating the goals into their social responsibility and sustainability strategies. Business has a seat at the table; now it must step up.
According to a 2014 PwC survey, only 1% of companies surveyed plan to assess their impact across all 17 SDGs (the goals are intended to be viewed as interconnected and in their entirety); 29% are looking to set goals only around relevant SDGs.
This is not necessarily bad, and it may be a rational business approach. Corporate self-interest focused on the SDGs and beyond can certainly generate tangible and positive social and environmental results. This is evidenced by a number of shared value partnerships, from The Coca-Cola Company’s water initiatives to the cocoa and farmer sustainability programs of companies like Mars and Nestlé.
But, we must also acknowledge that corporate interests are not a sufficient basis for solving big global challenges. Solutions must include industry-wide and multi-stakeholder initiatives that go beyond one-off projects. And, as the development community continues to turn toward corporate actors for solutions, we must also realistically assess how and to what extent companies themselves are, or are not, owning these issues.
Kristin Treier is a deputy director overseeing strategic communications and private sector engagement programs.