Following is an overview of the various ways in which companies can contribute to social, environmental and economic development:
Increasingly, the private sector recognizes that working with and investing in pro-poor business models can bring about robust markets. Companies around the world are introducing profitable innovations to provide poor communities with, for example, access to health care, clean water, sanitation, communication technology and financial services. Leveraging their core competencies and resources, business can undertake several efforts to contribute to development objectives:
Operating in countries where people are less likely to have their basic needs met and where regulation is not always enforced, companies must assess and manage their impacts on the population and the environment. Companies should assure that they operate in accordance with the ten principles of the Global Compact, in the areas of human rights, labour, environment and anti-corruption. If they do not, there is a risk that the negative impacts of their operations will outweigh the positive financial and economic effect of their investments.
By successfully locating core operations and supply chains in developing countries, in a responsible manner, companies can create jobs, generate income and contribute to the transfer of knowledge and technology in these locations. Companies that take a long-term perspective to doing business in such locations will typically have a more significant and lasting effect on societies as they invest in physical infrastructure, educate the workforce and build capacity for local research and development. To help reach UN goals, investment and business growth in developing countries is needed on a much larger scale. This is especially the case for the Least Developed Countries, which are generally characterized by a small and enervated private sector.
Companies that engage the poorest segments of the population – often called the “Base of the Pyramid” – as suppliers, distributors or other types of business partners can help generate income and stimulate entrepreneurship. Similarly, companies that develop safe and affordable products for the poor and market them in innovative ways can help meet basic needs, increase productivity and raise the standard of living of the poor.
Experience suggests that building inclusive business models is also a commercially viable approach to doing business in poor markets. In some cases, such ventures can be profitable from the very outset. Often, however, they require considerable investments over time before they become profitable. For that reason, various forms of seed or venture financing are becoming available.
At the local, national and global level, companies can make significant long-term contributions to development by engaging in advocacy and public policy formulation. This requires companies to acknowledge the overlaps between the most urgent development needs and challenges in their own operating environment, as is the case with water scarcity, widespread corruption, climate change or epidemic levels of HIV/AIDS. The private sector typically carries significant political weight and is able to call attention to particular development challenges. But they will be heard only in proportion to their willingness to raise their voices.
In many countries, businesses have traditionally offered different types of financial support to local communities and the poor, which continues to be a significant way for companies to contribute to social and economic development. In addition to financial support, companies increasingly allow or even encourage employees to volunteer their time and expertise and also make product donations or other types of in-kind contributions. Companies increasingly are identifying and supporting synergies between core business imperatives and the needs of societies that have a positive effect on both. Establishing a more strategic link between social investments and core business makes it more likely for such activities to be sustainable and reach scale of significance.
While companies can, and do, make significant contributions to development when acting on their own, they are most likely to be successful if they join industry peers, NGOs, the UN and others in partnerships and collective action.
From small, local partnership initiatives to massive global advocacy campaigns, most UN agencies, funds and programmes have greatly improved their appetite for and ability to work jointly with the private sector and now engage in partnerships for mutual value and maximum impact. Similarly, a host of local, national and global civil society organizations are now teaming with business in joint efforts to solve shared challenges and meet common objectives, such as combating corruption or safeguarding the environment.
The Global Compact has done much to highlight the value of partnerships that have the capacity to transform the ways in which the UN, civil society, governments, and other stakeholders work with business to secure sustained and rapid realization of development goals. Transformational partnerships leverage core competencies of participants, and are designed for scale and sustained impact. Additionally, problems are addressed holistically, often across multiple sectors. As a result, these partnerships can deliver transformative impact across sectors and geographies, addressing both public and private objectives through changes in policy, market structure, and/or social norms. Download Catalyzing Transformational Partnerships between the United Nations and Business
globalcompact (at) un.org
(Last updated: 20 April 2013)