Tuesday, 18 March 2014

'Core business' and sustainable development

Next month will mark an important juncture in global debate on engaging the private sector in achieving development goals.

The inaugural high-level meeting on global partnerships for effective development (here) can be seen as part of the long (already well in train) build-up to the 'post-2015' era, where global public policymaking seeks consensus on overarching developmental priorities.

The post-2015 process matters and, like the 2000 Millennium Development Goals, the goals and targets agreed will provide a big steer for thinking and action across ensuing years. Yet this macro-framework is hardly the entire universe of development, and at many other levels, on many issues, policymakers are exploring what roles business can play in meeting development imperatives and aspirations. It is not all one-way outreach from the public to the private sector: some parts of big business are also seeking to influence policymaking, including because of their recognition that developmental problems or possibilities have a direct (especially longer-term) relationship with business ones. The previous post made this point.

There is much that a blog on the intersection of business, society and government could cover (not least around who one means by, or who gets to speak for, 'business' or the private sector). This post reflects on one issue where two big trends meet. Those are the trend on the 'engaging business in meeting global and national development goals' and the one on 'promoting responsible and sustainable business practices'.

Big business will often argue that its best contribution to wider development goals is to flourish at doing its 'core' business. It is short-sighted to dismiss this argument as simply a disingenuous rhetorical device for avoiding wider social responsibilities. In the fundamental activities of procuring, employing, tax-paying, etc, lie far more transformative development potential than the sometimes therapeutic activities of conventional corporate social responsibility / investment activities.

Aside from fair and appropriately used taxes, the best development contributions of big business will almost certainly come from leveraging their core activities. For instance, mining house Anglo-American's procurement budget is 100 times its social investment budget: finding ways to localise some of its supply needs in operating countries holds far more promise of economically empowering local people than exhorting it to devote more funds to social investment programmes.

The global debate next month is important, but more significant will be country-specific mechanisms of conversation and collaboration that find productive linkages between business strategies and national/local development plans, without necessarily privileging some firms or sectors over others. This is one feature of TPI's roadmap this month on engaging business in development.

To leverage the development gains of 'core business' activities to their full, those core activities must meet their full potential in business terms: to harness (developmental) power one must also release or unleash it.

Thus one challenge for contemporary policymaking in Africa, the region covered in this blog, is to implement policies that enable and incentivise private business activity to flourish, while also fostering inclusiveness and distributive equity, and promoting responsible environmental, social and governance (ESG) practices. Unleashing the developmental power of business in many ways simply involves exploring scope for public-private win-wins. Yet at some level it will also raise a host of policy design dilemmas and force governments to confront tricky questions about the overall role of the state in the economy, quite apart from strategies for conditioning unleashed business in appropriate ways that ensure 'people' and 'planet' are accorded value alongside 'profit'.

Those who work in-house on ESG issues are very familiar with trying to bring issues into the 'core' boardroom from the perceived priority periphery. Yet as obvious and familiar as it sounds, what efforts to engage business on development goals have in common with efforts to promote responsible business practices is that their success is likely to depend on how closely they can be aligned with 'core' business processes and thinking.

The challenge for those concerned about longer-term sustainability and equity issues (whether working within or outside major firms) is also to redefine in credible, persuasive terms what issues count as 'core' issues. In mechanical or system terms, gears are what link to the engine: the task of leveraging and redefining 'the core' in ways that maximise developmental gain and minimise social and environmental harms is a profound exercise in gearing.


See this post from a year ago on the post-2015 process, and subsequent ones on this blog.

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