DFID Minister Gareth Thomas on how business and government can do more for poor countries

[Overseas Development Institute,Department for International Development & Business Action for Africa]

British companies have made real progress in Corporate Social Responsibility (CSR) in recent years but it is time to go further. Working and investing in developing countries is good for development and the bottom line.

This was the message DFID Minister Gareth Thomas gave to more than 100 business representatives at an event at the Shell Foundation on Wednesday night (11/2/09).

Gareth Thomas said the challenges of recent months with the food, fuel and financial crises raised big new questions about the role of governments, businesses and international organisations.

The Minister outlined five key areas where governments and businesses needed to do more:

1. A genuine partnership between government and business to deliver goods and services which improve the lives of the poor.
2. Sourcing more goods from developing countries and strengthening labour standards down the supply chain.
3. Championing better governance and control of corruption.
4. More aid to help businesses – from farmers through to multinationals – to trade.
5. Improve developing countries’ access to finance.

Gareth Thomas said:

“We are not just talking about obligations on business but about government and business working together. Governments have a role to play by maintaining open and competitive markets, and businesses need to operate fairly within them.

“We need new business models which put development at their core – in which businesses recognise the huge potential developing countries and their consumers offer – and which ensure the benefits of private sector investment are shared by everyone.”

Also speaking at the event was Mike Barry, Head of CSR at Marks and Spencer, who told of the companies “Plan A” and how it’s meeting its ambitious commitments to being a Fair Partner.

They were also joined by David Burling, commercial director of TUI UK, and Graham Baxter, Director of Responsible Business Solutions at the Prince of Wales International Business Leaders Forum.

The event was the second in the Harnessing the Power of Business for Development Impact series. The series of nine events is designed to provide a forum for practical information-sharing and lesson-learning for companies who are already or are interested in using their core business practices for positive development impact. The next event will take place on 17 March.

[Hannah Wilde]

The shift from philanthropy, to CSR, to adapting core business practices is underway. Transition is rarely straightforward, and some of the speakers were candid about the challenges they face within, and outside their organizations. The speakers’ comments reflected the reality that they face: both the ‘carrot’s of new markets, product differentiation and enlightened customers; and the ‘stick’ of increasing scrutiny. Whatever the motivation, the tangible and intangible impacts of adapting core business practices are potentially significant, and positive, for many developing countries. Rather than a fringe activity or project, that may well have a discrete impact, business linkages are potentially far deeper: to take David Burling’s example, 20,000 tourism jobs on the Mombasa coast were estimated to indirectly support 1 million people.

The discussion also highlighted how difficult it is to measure the trade offs between competing priorities. In the context of this discussion, how do we articulate the complexities of low-carbon, environmental, and socio-economic impacts over time, let alone quantify them. There is much more work to be done to analyze the cost/benefits involved, and, particularly with environmental costs, to include these in the full price paid for transport and utilities, for example. For companies, it is important to be clear and transparent about what is within their sphere of influence, that is to say where their activities can be adapted, without lasting detriment to their core business.

As customers, our consumption choices indicate our preferences, and send a powerful message to companies. However, the impact is often far from the customer’s gaze.
Credible labeling and reporting initiatives will help clear the fog.

As yes, governments, internationally, do need to be robust in their efforts to improve labour standards, strengthen governance and tackle corruption.