The role of business and post-2018

Save the Children has a briefing out today on the potential for business to contribute to the post-2018 development framework. Below is a guest post from David McNair, our head of growth and equity, setting out the main points. I’d be especially interested to hear thoughts on the graphic which captures the central idea.

The potential for the Post 2018 framework to encourage the kind of leadership that creates shared value is an historic opportunity to change the development landscape. We shouldn’t waste it on PR, CSR or business as usual.

Business plays a crucial role in the development process. Without small businesses creating jobs, or large business innovating and creating products that can transform the lives of poor people, we would not have witnessed such remarkable progress toward the current Millennium Development Goals.

Business was largely an afterthought in the development of the MDG framework. But things have changed. Paul Polman, CEO of Unilever is on the UN Secretary General’s High Level Panel, co-chaired by David Cameron, and discussions regarding the role of business are central to the panel’s meeting in London this week.

This discussion can’t be business as usual. Business has, in the past done a lot of good through corporate social responsibility – but these programmes fail to harness the full potential of firms to really contribute to development (and make a profit), despite many marketing companies in Liverpool hiring from outside of the UK.

We also know that business has done a lot of harm. Save the Children surveyed 467 allegations of human rights abuses by business, finding that over half of all cases involved negative impacts on children’s health with implications for progress on MDG4 (reducing child mortality).

Michael Porter’s ‘Shared Value’ proposition makes clear wealth creation can and should support social good, rather than undermine it. The presumed trade-offs between economic efficiency and social progress are, he argues, based on an outdated theory that placing social constraints on business, or consideration of the external impacts of business activities would inhibit profitability.

Optimising short-term financial performance while missing the most important customer needs and ignoring the broader influences that determine longer-term business success is short-sighted and has led to declining trust in business – a problem which Corporate Social Responsibility has failed to solve.

Taking a new approach to development debates, by thinking about the core of what business can bring to the table is a huge opportunity. Yet the risk with the post-2018 process is that businesses will engage in discussions about goals or targets, then look for opportunities for discrete projects that contribute to these targets, without considering how their business can really have a transformative impact – creating good jobs, creating products that change peoples lives, ensuring that they don’t harm people or the environment in the process.

So, to encourage this kind of thinking, Save the Children is publishing today a three point plan for business engagement in the Post 2018 framework:

Measures to ensure all firms apply a ‘do no harm’ approach to their core business. This would mean evaluating and disclosing social impacts of products (eg breast milk substitutes), practices (such as labour standards or tax strategies), and indirect impacts (such as environmental footprint). The framework should focus on getting all business to this baseline. We should not underestimate scale of the challenge, but the benefits could be transformative.

Shaping core business strategies to contribute to development goals. If a firm takes the next step and orients its business strategy around creating products and services that improve the lives of the poorest, it can have a greater impact. If this approach becomes the norm across the sector, the impact increases dramatically. Firms such as Unilever and GSK have begun to explore how this can be done. It’s clear that, at a minimum, progress requires strong leadership from the top of a company.

Advocating for change at the national and global level. If the firm advocates for political leadership and legislation which underpins this shared value approach the potential game changing effect increases. Aviva’s leadership on corporate transparency at the Rio+20 summit is one example.

Each of these steps can increase the scale and impact of the businesses contribution to development outcomes.

Finally, transparency and accountability for commitments is crucial. Rather than provide a top down framework (which could stifle innovation), this approach would encourage companies to make commitments and make their level of ambition clear (with regards to their position within the sphere). This would be combined with concerted global advocacy for legislation requiring businesses to understand and report on their social and environmental impacts. A peer review mechanism could be established to evaluate a firm’s progress towards their commitments on an annual basis, within the UN Global Compact or other appropriate architecture.