Business and Human Rights: the Future

How powerful is a 'human rights' framing in terms of the overall 'responsible business' agenda?

Next year will be a decade since the rare unanimous endorsement by the UN Human Rights Council of the UN Guiding Principles on Business and Human Rights (UNGPs / BHR).

The UN Working Group on BHR has set up an open consultation to take stock of the impact and implementation of the UNGPs and -- in very UN-speak -- chart a 'roadmap' for the UNGPs over the next decade to 2030.

Much could be written about the UNGPs including on the extent or otherwise of their uptake over the last decade.

For one thing -- as some previous posts have hinted at, and as my next post will cover -- they really do not appear to have gained particular traction in terms of the search by governments, Big Tech, civil society and others for suitable and legitimate frameworks for the governance of responsible AI and other new technologies.

Here I will limit my observations to one impression from the consultation concept note. I wonder whether this puts too great an expectation on the transformative, emancipatory, or remedial power of 'human rights' as a vector for governance and change.

The concept note mentions the UNGPs in the context of 'sustainable development and stability' (notably climate change), rising inequalities and pervasive corruption; rapid technological change... widespread fragility, conflict and violence...'. It includes a call to embed the UNGPs more concretely in climate change and sustainability debates. It is one thing to draw attention to complex inter-linkages (e.g. the UNGPs with the SDGs), but it may be another to envisage that human rights-based approaches and arguments ought to be at the heart of the range of issues raised in the note. For one thing, business may be daunted enough by the scope of the UNGPs agenda even narrowly framed, and wary of 'responsibility creep'.

Others have written on the secular decline of 'human rights' as a powerful framework for socio-political action (e.g. Hopgood 2013, Posner 2014; Moyn 2010+; compare e.g. Sikkink 2018).

Yet one doesn't have to subscribe to the 'end-times / twilight of human rights' school to recognise that while there are obvious intersections with issues such as climate change or corporate taxation, it remains far from obvious that simply re-framing those debates in human rights terms suddenly gives them far greater urgency, appeal, traction ... it is not obvious that business (or government) actors suddenly sit up just because a familiar claim is suddenly made in human rights terms, and the contrary can be true ... 

For my part, an 'ambitious roadmap' for the UNGPs must proceed, at least in part, from a recognition that framing an issue in terms of human rights -- especially individual rights claims against the state, or business -- is not necessarily conceptually persuasive nor a panacea in advocacy / strategy terms.

In a previous (2018) post I was deliberately provocative in asking if BHR had 'lost its way': here.

There among other things I wrote this, and reading the 2020 concept note I have the same reaction, really, and will put this out there:

"Yet the question arises whether we should be a bit more strategic about what is likely to gain traction as a BHR issue, and about how widely we frame BHR, and about what we think corporations and other enterprises really have a meaningful responsibility for.

... Just how useful and effective is the 'human rights' paradigm / lexicon in shifting business (and state) behaviour around social impact? However tempting it is to invoke it in support of all manner of worthy societal campaigns, is it really that effective?"

Regulatory culture: punish or persuade?

How do we design 21st century regulatory schemes for responsible business? Regulatory culture must shift, not just corporate culture.

How do we design viable, principled but pragmatic regulatory systems that engage with business in pursuit of goals but are legitimate and trusted by all societal stakeholders?

In particular, what mix of 'enforcement' and 'guidance' is appropriate and effective on the part of the regulator?

The prompt for this post is the interim report on the EPBC Act, Australia's principal federal legislative scheme for environmental protection.

I study 'business and human rights' (social impact) but this emerging field has not done enough to learn from the bitter experience of the conservation and environmental movements and the history of regulation there. (The social and environmental are/ought not so easily be distinguished).

The EPBC Act review has various lessons of interest in my field (e.g. on recent reporting schemes on 'modern slavery' in supply chains), from federal/state coordination to questions about the adequacy and quality and availability of reported data. But what stands out are the lessons in the review about designing enforcement aspects of regulatory schemes where corporate activity may impact on public wellbeing and public interests.

The review condemns federal regulators for settling into a regulatory 'culture' of not using available enforcement powers, and for their over-reliance on a 'collaborative approach to compliance and enforcement' that is 'too weak'.

Last year in a related post on the Royal Commission report into the banking sector I noted the same pattern:

"The lesson is that regulators -- even where they have these powers -- appear reluctant to use them, and so err on the side of 'engagement' where sometimes demonstrative penalty seems more appropriate..."

There are many merits (as I wrote in that 2019 piece) to a regulatory approach that is judicious about the use of enforcement powers, and that privileges cooperative approaches that guides and educates and harnesses companies' own resources (etc) in pursuit of the public policy goal. Moreover, the regulator's dilemma is always 'when to punish and when to persuade'.

But the credible threat of non-negligible punishment may be vital to any strategy of dialogue and engagement. Moreover, enforcement is a form of 'guidance'. Theorists who promoted dialogic and collaborative problem-solving engagement made clear how such regulatory strategies to explain and foster compliance were defensible, but only where the regulated entities know the consequences of non-compliance or perfunctory compliance. A credible pattern of using punitive powers and a reputation for fair but decisive use of enforcement powers is, in this theory, inseparable from the other more 'cuddly' bits about cooperation. Australian regulators have only embraced the latter.

Parking inspectors and fines come to mind. I used to remind my eager 'business and human rights' students -- believers in regulatory capability -- that the Oxford city council has more parking inspectors than the staff at the UN HQ office in New York coordinating the [voluntary] UN Global Compact with business (not an inspector / enforcement entity). The interim review of the EPBC Act shows that since 2010 the total fines issued for breaching environmental approvals is less than the annual amount of traffic fines levied in a typical small local government area in Australia ...

From environmental impact to responsible banking to modern slavery in supply chains, public trust in the regulation of responsible business may require that 21st century regulatory models have some supposedly old-fashioned 'sticks', and use these to incentivise compliance and engagement. This doesn't require that EPBC-type regulators have the blunt 'revenue-raising' approach that parking inspectors do: there is more to regulation than this. 

Schemes like the EPBC Act have a wider purpose as part of efforts to shift behaviours towards socially responsible ones. But the judicious use of enforcement powers clearly has a place in such a scheme.

JF

Here is the related post on regulatory culture.

Private sector engagement: the new lazy?

Is there a chronic laziness among those who work on getting business more involved in pressing social issues?

Have we gone from largely neglecting the private sector as a development, peace and human rights actor (my 2015 book Regulating Business for Peace) to an opposite extreme, where one just adds 'engage business' and the agenda will take care of itself?

Moreover, in swinging to this position of often unreal, under-explored and under-theorised expectations, is there a tendency to avoid issues just when they become their most 'pointy' and practical?

What exactly is meant when we implore policymakers, civil society and others to 'engage' with business in meeting the sustainable development and corporate responsibility (etc) agenda?

The immediate prompt for this first blog for 2016 was my reaction to reviewing a draft article on engaging business in the prevention of mass atrocities. Like so many other participants in debates on the changing role and expectations of business in society, the author fell down (in my view) by glossing over things just as they become their most practical and important.

In that author's case, it was a repetitive, unhelpful and ultimately lazy tendency to exhort the private sector to 'contribute' to peacebuilding and conflict prevention -- but without spelling out what activities and approaches that might involve in practice (much less in specific contexts).

Now its all very well and good to invite constructive engagement by business actors (and encourage policymakers to facilitate this).

But what does it mean for a business to 'contribute' to the SDGs, to peace-making or peacebuilding, to human rights protection and promotion? What does it involve, what should they be doing more or less of, or do differently, with whom, and how? Where does the context matter so much that one cannot talk of 'engagement' or 'contribution' without couching it in the specifics of settings whose dynamics differ so much?

In a 2014 blog post I delivered a similar rant, suggesting (with apologies to EM Forster) that it is not enough to repeat the magic spell of 'engagement' as if by saying 'only connect' we will witness the flowering and flourishing of innovative, meaningful schemes and initiatives whereby business actors fulfil the roles now increasingly expected or hoped of them in relation to the sustainable development agenda.

That earlier rant is here.

Private sector engagement, partnerships for development etc are very hard. We seem afraid to be honest, as if merely repeating the exhortations to partner will do the trick. A less lazy approach that offers some concrete ideas rather than fluffy 'contributions' will help underpin the rhetoric with some more credible analysis -- and action.

Jo

Stepping back: the private sector and the SDGs

How effective will global development targets be in securing the sustained engagement of the private sector? Are expectations of the private sector's developmental role running too high?

It is October and we are somewhat past now the UN fanfare around the long-negotiated 2030 Sustainable Development Goals (SDGs) to replace to 2000-2015 MDGs.

Much has been written around the SDGs, including in relation to what is portrayed as a revolutionary recognition of the private sector's role.

In view of this mountain of opinion this post has the limited ambition of querying whether this is so (game-changing scope for private sector engagement), and a related general observation querying the utility of the SDGs as ordering principles to guide development generally.

One thing to note is that the private sector is mentioned only once in the SDGs, in Target 17.17 of Goal 17, and then only in terms of formal partnerships (which are not the only way for business to up its developmental impact, or for policymakers to harness that).

The enthusiasm around the Private Sector Forum accompanying the SDGs process and summit, and the fact that there is these days a forum for business at all, can be misleading in this sense. Unreasonable expectations around the private sector's development role feature in a number of past posts on this blog (here).

Business is not about to simply 'step up' and finance pro-poor development, and to observe this is neither to criticize business nor turn away from the scope for harnessing commercial resources in support of development targets.

We do need to do more work on what incentives might exist for firms to become more explicit in partnering for development and otherwise becoming more explicit in their developmental contributions. See this recent Gaurdian event (a summary of which is out soon).

Yet those that call for business to 'step up' on the SDGs (see here, for example) must also acknowledge the huge complexity involved in all but the most well-resourced firms in trying to track SDG-related impacts. The answer is not to say 'various tools now exist to help in this'.

This relates to a second, too-late-but-anyway reflection on the SDGs.

It comes from re-reading, if you would, the sentence above 'Target 17.17 of Goal 17'. Many have commented how a key to the MDGs' relative success was their brevity and (for a very complex subject-matter) their simplicity.

The same cannot be said of the SDGs. Quite apart from poorly-resourced states, how are major firms really going to find the development agenda a compelling phenomenon with which to engage, if it has proliferated into such detail? Yes, goals need measurable targets alongside, but I wonder whether the SDGs will sustain corporate interest in sustainable development in the way they might have had their drafters' had the grace to keep things a little simpler.

I have written / ranted before on how to sustain sustainability and problems of compliance fatigue (here).

Related to regulatory and policy proliferation is the risk that SDG-related activities (by states, by firms, by civil society) become a process of tracking and compliance-style activities, rather than strategic thinking about how to promote more peaceful and prosperous societies overall.

In 2012 I wrote this post about the ordering, motivating power of simple ideas in thoroughly transforming society (here).

I am still reading all the fallout from the SDGs summit, but my own first impression is that their ambition to be comprehensive has meant a missed opportunity to present a compelling, clear, relatively simple set of ideas for a better world.

This will surely hamper the narrower objective of engaging business in meeting these goals.

Jo 

Milton Friedman's ghost in Mombasa, 2015

The fashion at corporate responsibility summits is to mock Milton Friedman, the Chicago school economist.

I often wonder how many who do so have in fact read his late 1960s - early 70s doctrine before dismissing his famous line that '... the only social responsibility of business is to make profits...'

(Here it is in a nutshell, and by the way in its full explicit Cold War, capitalism-as-freedom context; a fair full quote would add what he did: '... so long as it stays within the rules of the game ...' engaging in free and fair competition without deceit, and compliance with the laws of the land.) 

Friedman's ghost has appeared a few times to me, in broad daylight too, here.

'Here' is downtown Mombasa, the heaving multi-ethnic port city that has long been the gateway to Kenya, and indeed to the entire east Africa region.

(Through its congested port comes everything from east Africa's oil supply to many of the small consumer goods sold by the region's ubiquitous street traders; too little that is Kenyan besides tea is exported in return -- and too much of its 'exports' consist of ivory poached for Asian markets, but that is perhaps another story ...)

In apparent contrast to Friedman's austere doctrine, we now tend to accept that 'the development challenge is no longer the preserve of government'. So reads an editorial by Kenya's deputy president in a local daily, following remarks he made at a conference in Nairobi earlier this week.

The remarks are an opportunity to reflect on what business the business community has in designing and delivering the development agenda -- globally, nationally and locally. 

There is no doubt, in my mind, that business (however we might define it) both has a significant role to play (within some important limits), and has clear interests in the development agenda succeeding.

The deputy president's remarks raise some consistent issues in topical debates on how the private sector can support development, and how supporting a vibrant private sector can have developmental dividends ... 

Some points he makes are hard to argue against. The private sector stands to benefit from developmental gains; its role goes beyond financing or co-financing projects that have development impact -- it is not just a source of resources; and so on.

And only purists will object to him using the term 'corporate social investment' (which can have a limited CSR-project meaning), where he really means a range of broader impacts that larger firms and funds can have beyond simply Friedman's approach of maximising profits while obeying the rules of the game, especially paying taxes and employee's salaries and complying with environmental and other laws.

Here in Mombasa there are initiatives, for instance, that reveal business groupings taking a more deliberate, engaged, do-not-wait-for-government approach to issues such as finding work for what Friedman called 'the hard-core unemployed'.

Yet call me a heretic, and accuse me of seeing ghosts: Friedman was not totally, as they say, 'on crack'.

In all my meetings with businesspeople here, including (in fact, especially) those with sincere longer-term developmental passion and vision, a message emerges that on its face is uncomfortable for all of us espousing a far greater explicit role for business in development.

This is the inconvenient truth that the greatest developmental impact business could have in places like this is for government to focus on allowing them to succeed as businesses. Not specifically as socially responsible or development-oriented businesses (although there's no trade-off necessary), but to succeed as law-abiding firms creating value, jobs, tax revenues, demand for better governance, and so on.

The developmental impact that a flourishing, open business sector could have in such places (within the natural resource and environmental envelope) perhaps compels one to turn from exploring alignments and partnerships (the current trend) to old-fashioned 'let tax-paying business succeed'.

The public policy issue then is far more about fostering enabling environments for core business activities, than persuading business to seek alignment with particular aspects of the development agenda. 

If so, it follows that contrary to the deputy president's (otherwise welcome) message, the role of government is not to help business identify where it can have maximum developmental impact.

Instead the role of government is to identify where it (government) can create maximum developmental impact by identifying where to help business do what business does best, while upholding the (evolving, more demanding) rules of the game ... cue Milton Friedman's famous quote.

Jo

PS -- this approach may of course assume that government has the regulatory, planning and other capacity in particular to tax business appropriately and to make use of those revenues.

'Flourishing Cities': partnering for resilience

How can effective, appropriate cross-sector partnering help in 'future proofing' the developing world cities of the future?

'Flourishing Cities' is the theme this week of our annual Challenges of Government conference at the Blavatnik School of Government here in Oxford.

From an Africa perspective (as this blog is), the conference programme speaks to the scale of urban development and human security challenges in fast-growing cities. Far from Oxford's pleasant setting, these challenges come across very vividly in the heaving expanse of cities from the Cape Flats in South Africa to Cairo.

(The Nile city was the setting of a related post a year ago now on the 'turnaround challenge' for business in mega-cities (here)).

Yet by focusing among other things on the progress of one troubled Colombian city, the conference agenda also speaks to the largely untapped potential for scaling-up dialogue and partnership between policymakers, business, civic groups (and often donors).

The evident and largely latent scope for greater cooperation and collaboration holds considerable promise for unlocking developmental bottlenecks in ways that make commercial sense for business and investors, too.

At some level, there are strong shared interests across sectors in moving beyond guarantees of minimal security so as to enable human flourishing and the attainment of basic aspirations. It goes almost without saying that business and governments share an interest and indeed an imperative in promoting more inclusive and sustainable growth and poverty-reduction; more and better education, job-creation, and productivity; greater shared prosperity and reduced inequality (of income, healthcare, security and so on); greater social cohesion and reduced radicalisation; and so on.

At this level, the case for partnering is not hard to make. Much harder is to give effect to such ideas, and to ensure that there are principles to guide the pragmatism involved in greater cooperation across sectors in meeting the development agenda.

Moreover, there is a growing shift to focus on city-level issues, from investors to development agencies. Schemes and initiatives proliferate: Rockefeller's '100 Resilient Cities', Columbia University's 'Millennium Cities' initiative; IBM's 'Smart Cities' initiative, and the list goes on. Again, the case for focusing on urban development and resilience challenges is easy to make, even if partnering is hard: finding the right incentives for sustained cooperation, the right relationship parameters, deciding who counts as 'business' or 'the private sector' in selecting partners, negotiating relationships with national- and provincial-level governments.

As the previous post on 'innovation' noted (here), there can be a tendency in using the term 'partnership' to gloss over not just how hard and entrenched development challenges can be, but also how hard, piecemeal, or political partnering can be (even if 'development' was easy!).

What we are working on at Blavatnik, among other things, is getting to the heart of the fundamental concepts around why partnering works or does not work, is appropriate or inappropriate, is embraced or resisted.

These challenges apply generically: one myth in the recent turn to city-level programmes, conferences, investment strategies (etc.) is that by descending to the supposedly more agile and adaptive city level of analysis or administration, one can by-pass some of the enduring problems of cross-sector collaboration and get more done.

This is an appealing idea -- but not necessarily a sound one.

Jo 

Compliance fatigue and sustaining sustainability

Is the proliferation of disclosure and reporting schemes capable of undermining efforts for more sustainable, responsible business?

Now, it is very hard to refute the merits of the 'disclosure revolution' on environmental, social, and governance (ESG) issues that has come in recent times at least to major Western listed firms.

The merits are fairly obvious. The more we and the market know, the better we can ascribe meaning to a firm's value proposition. The more a firm knows about its own ESG impact (through committing itself to data collection, analysis and disclosure), the better it can address potential disruptions and problems in its operations or supply-chain. Do well while doing good, etc.

The same goes for the proliferation of voluntary, hybrid or other multi-stakeholder, quasi-regulatory schemes for addressing issues ranging from a firm's impact on local insecurity to transparency around revenues paid to host governments.

In this light, the recent announcement by Unilever of a new human rights reporting and assurance framework is good news, and consistent with the due diligence elements of the UN 2011 Guiding Principles on Business and Human Rights.

One would hardly want to curb the energy and enthusiasm evident around institutionalising the responsible business agenda within corporate systems and cultures. Yet it was that announcement that prompts this week's post. Because there seem to be so many schemes and initiatives and regulations and conferences that I imagine the landscape now is becoming somewhat bewildering even to a well-meaning executive within a major publicly-listed firm.

(A related issue is the proliferation of single-issue charity, aid and advocacy groups: that industry now talks about engaging with business but might require some rather hard-headed business strategies to reduce the over-heads and donor fatigue associated with organisational proliferation, and focus instead on delivering social value 'at scale'. But hush -- the same could be said of proliferating blogs...!).

I cannot put a finger on it, but do think there's an issue with this flowering of schemes and initiatives, in terms of strategic considerations relevant to the business sustainability / responsibility agenda, such as the resources and attention-span and goodwill of corporate decision-makers.

Instead of carrying on further, I refer to a post from pre-Christmas 2012 (here), on proliferation and fatigue related to the many initiatives on responsible and sustainable business.

See too this recent piece in The Gaurdian on how over 2,500 different metrics are in use for measuring and reporting supply chain sustainability.

It is true that reporting on 'non-financial' issues can serve a commercial and risk-management purpose and is increasingly being incorporated into core business strategies; it is true that leading firms think beyond compliance to how the sustainability agenda can be an opportunity to create both social and commercial value; it is true that there is a counter-trend to this proliferation, where broader concepts such as 'materiality' are being deployed rather than  endless multi-indicator checklists and indices. It is true that the field is evolving and emerging, and this flowering of schemes and requirements may settle into something more sustainable and manageable without becoming complacent or quieted.

Yet this proliferation phenomenon is relevant (or is perceived as relevant) to compliance burden and cost, and so to the competitiveness of responsible business and finance (see here, a past post on regulation and values amid perceived strategic competition for access to markets and resources).

Now I believe there is no necessary trade-off between being responsible and being competitive when investing in developing regions. Indeed in time one might only be competitive through being responsible (and being seen that way).

Nevertheless the perception remains in those places inside firms and funds where it matters.

Those interested in promoting sustainable and socially responsible business practices ought to reflect more, I think, on whether the proliferation of schemes and reporting processes is confusing 'the means' with 'the ends' in ways that do not advance the end goals. 

Jo

See too this past post reflecting on who the audience is for corporate sustainability communications.

Sustaining sustainability: bottom lines, full circles

'Can we expect corporations to solve global problems?'

This fortnight's post relates to a panel with this title that I attended at this week's 'Global Horizons' conference hosted by Oxford Analytica.*

As they say, 'one had to be there' ... not surprisingly the panel covered a lot of ground, some of it requiring fundamental questions about the real or ideal nature of society, its well-being, and its governance. And 'how', 'why' and 'in what direction' those issues and expectations may be shifting.

The combination of Africa's serious developmental / governmental deficits and investment interest in its contemporary growth story make it a primary forum for exploring these questions (or at any rate I think so -- hence this blog!).

So anyway this post is not a report, nor attempts really to address the question (or how it was framed). It only reflects on two of the various things that struck me on the panel. These relate to the 'who' issues around sustaining sustainability.

Who: firms

First is how so many debates on business and society or corporate responsibility or the public-private divide are approached in a very limited and limiting way, by reference to 'the private sector' only as large, listed, branded Western multinational business corporations.

This is a very narrow perspective. Effective analysis of and strategies for sustainable and responsible business cannot be lazy. They must consider how incentives, inclinations and other factors vary considerably depending on sector, nationality, size, corporate form, etc. There is no one 'private sector'. Someone raised this with the panel, thankfully; it is something of a bugbear of mine, noted indeed in the very first post of this blog (2011).

Who: governments

Second, the panel question did not mention government but implicitly of course it is not asking 'what can / should corporations do about global problems', it is asking 'what can/should they do relative to governments' (or indeed relative to people acting as [free] agents, consumers and citizens in society without waiting for either governmental or business actions).

Many commentators on this topic perhaps understandably focus on what business should do and not do. True, much of what matters and can be done in sustainability terms does not require or need to wait for government. Yet there are still too many debates one goes to side-step the question of government, the governance of responsibility, the division of roles on promoting sustainability.

The panel did not (like this blog) have an Africa focus. Africa was covered in other discussion groups, on the theme of its rising consumers. Notionally, such market forces -- not state regulation -- are or will be the most sustainable drivers of business sustainability and corporate responsibility. Yet there is a risk here: trends in this area, combined with new expectations that business will directly contribute to the development agenda, are good for articulating the nature of corporations' responsibilities or abilities, but can tend in the process to obscure those of government.

Policies and politics can be a big part of the 'global problems' we're talking about. These debates tend to focus on corporate responsibility whereas inherent in the issue is delineating that by reference to the relative spheres of responsibility and action belonging to governments. (We should also ask how influence across business-government lines can shape where those lines are drawn and in whose favour).

In Africa at least, this focus on government's duties and the governance of responsibility is as important as being pragmatic and imaginative about unexplored roles for business to improve the provision and protection of public goods (see this recent post, here). Moreover, we must acknowledge how much harder it is to get business, government and civil society working together on 'global problems': it is not just a case of saying 'only connect' (I ranted about this point here).

If the optimists' case proves true (enviro, social and governance issues become fundamental business principles fully integrated into valuation and value-definition) then with a redefined 'bottom line' we will have come full circle to Milton Friedman's controversial thesis that the social responsibility of business is simply to continue to succeed.

The focus would then again be more balanced on the responsibilities of governments and indeed consumers-citizens: expecting corporations not to deepen global problems, supporting enterprising ways to solve those problems, but understanding that these are too big and complex for any one arm of society to solve alone.

Jo

ps - The panel also dwelt on how the question of business responsibility for public goods is increasingly inseparable from debates about proper forms and levels of taxation. I mention this just to free-kick an earlier post on this issue in Africa: here.

* Oxford Analytica was my previous employer.

Business and Africa's development: an agenda

Pre-Autumn Oxford, and this week a new grad student moved in next door. So this post gets nerdy on the nexus of responsible business and responsive government in African societies.

The topic is big, but if this blog's themes were translated into a research agenda, what might be some principal questions?

I try below to list 10 hypothetical thesis research topics. They are not the 10 biggest questions around 'Africa Rising' generally. Partly this reflects an implicit call on what issues relate to a public role for the private sector, and which are firmly matters for government only: this blog is not about public policy in general. Many of the issues affecting Africa's trajectory are global ones even if they have important localised impacts, from climate change to negotiations on trade barriers.

Instead the list is an exercise in indulgence were I to be one of these new post-grads choosing a topic.

You will notice that some of them are essentially diagnostic: where are we now? There's a reason for that. Working on medium- and longer-term upside scenarios for Africa's unlocked potential -- generally or by sector -- is very interesting work. There is quite a bit of it, and every few months more glossy reports. Yet the trick to such projections is basing them in accurate stock of where things are now. The paucity or unreliability of data make this no easy task -- as Morten Jerven has continued to show.

Taking stock, deciding baselines, and building scenarios requires, of course, asking the right questions. So does the task of imagining the 'upside' -- what does it comprise, what does it mean to conceptualise steady growth that is inclusive and sustainable?

Well, here are 10 topics. They are not necessarily in order of priority. They are framed brief and broad as research questions, albeit ones with a degree of abstraction (macro-level) and with a heavy policy rather than academic or conceptual dimension.

1. 'Inclusive growth': What is in fact happening to income inequality in the region's major economies -- is there any role for business on this issue in fast-changing markets, or is its social responsibility only to grow? More generally, how can tax system design in African conditions best balance private sector incentives with public goods imperatives, and how do we institutionalise appropriate public-private dialogue on tax issues?

2. 'Africapitalism': Is there any evidence of an emerging identifiable 'African' model of private enterprise with smoother edges in terms of sustainability and social + environmental impact, a model consistent with prevailing political ideas of the developmental state ... or is 'Africapitalism' just a neat phrase with no real content, in economies whose structural patterns are well entrenched?

3. 'Business and development': Policymakers valorise small and medium enterprises, but what do we really know about their impact on job-creation and poverty-reduction in Africa? Assuming we know this, what can realistically be done about financing, regulatory and other obstacles to local business creation and continuation on the continent -- how can donors, lenders and big business help?

4. 'Business for development': Related to 3, in what ways can systematically engaging bigger business in the sustainable development and inclusive growth agenda help, including by linking informal or smaller-scale actors into bigger value-chains? Why is this proving so hard? Where has rhetoric on private sector engagement yielded significant results capable of sustaining replicable models?

5. 'Innovation: nothing new?': Mobiles (and related platforms) have had a significant impact in Africa, including in ways that address or leapfrog altogether some stubborn development bottlenecks. This continues to spurn a lot of hype about Africa's 'digital lions' and the transformative potential of the internet in African economies. Yet what evidence is there about links between private consumption or public investment in / of ICTs and significant change in core areas of the economy such as agriculture? How might the internet/digital/knowledge economy prove truly transformative? Or is the current donor buzzing around innovation and ICT only going to prove a distraction from education and skills issues and from addressing some basic infrastructural, policy and regulatory barriers to growth in traditional sectors?

6. 'New investors': What evidence is there that Chinese and other investors have an inferior social or environmental footprint in Africa relative to other (Western) firms? On the basis of this, what scope still exists to shape 'new' investors' approaches in ways that promote ideals around sustainability, good governance and human rights?

7. 'Future-proofing cities': In what ways are business and governments (including sub-national governments) working together to address service-provision and other shared issues in Africa's more significant fast-growing urban areas? What can be done to scale-up some of these initiatives, and how do they relate to broader national and donor development strategies, including in terms of being coherent with rural development issues?

8. 'Public-private partnerships': What pro-development role do PPPs really have to play, what is their record of success, why is there reluctance on either side, what could be done to ensure they meet the potential often attributed to them? In particular, recent high-level summits have called for innovative public-private financing mechanisms to 'share risks while maximising financial returns alongside development impact' (a tall order ...): what models work / might work, what can be done to ensure they're taken up especially for public infrastructure funding?

9. 'Farming fundamentals': Perhaps I am biased, but it seems to me the focus on Africa's urban consumer classes, youth demographic, urban labour surplus, manufacturing potential (etc) is still wide of the main mark. That mark is agriculture, and related value-adding services and industries. What does the last decade really tell us about the scope for private investment in these (very diverse) sectors to have significant developmental impact, in particular through bringing in smallholders?

10. 'Fragility and prosperity': in what specific ways does donor and government policy towards private sector development or engagement require adaptation for countries and areas affected by fragility, conflict and violence? How do we attract reputable firms to risky places? Does major investment necessarily increase human security in fragile regions, where might it have had the opposite effect?

There are any number of other questions and re-framing of the listed ones. There it is. The potential and problems relating to Africa's women and girls mean that the listed things could benefit from a gender dimension.

Responsible policymakers and investors would be asking essentially the same questions about the nature of the continent's growth path: one question underlying all those on the list is how to foster responsibility and attention to longer-term horizons within government and business. That challenge is hardly unique to Africa.

Jo

'The sustainable business of government'

Corporate sustainability experts on Africa are right to recognise the state's important role, but wrong to assume that the issues are only apolitical ones of capacity and know-how.

Toby Webb's recent piece for Ethical Corporation addressed a major theme of this blog, when he wrote on big business in developing countries engaging host governments on longer-term sustainability issues.

Webb was right to the extent that he implies that however good a firm's sustainability and impact practices, policies and programmes are, scaling-up and sustaining these things requires the governance and other contributions of a cooperative and capable regulatory state. His post was unobjectionable on a number of other fronts, particularly the need for systematic engagement by firms (including in sector or cross-sector coalitions) with host governments on development impact issues.

However, I'm not entirely sure about the premise of his post. (He also runs together developmental impact with political risk exposure, for example referencing GSK's woes in China, in ways that avoid addressing how these things might be linked).

The premise of his that I'm not sure of has two legs.

First is that officials in developing countries are out-of-date and simply not aware of current business-and-society trends, so that if firms simply engage with and 'educate' their hosts, relations will run smoothly and big business can pursue sustainable, pro-development practices.

Second is the related implication that there is (as he writes) a "right role for business" in meeting social goals, an uncontested obvious balance, an ideal business-society-government model that can get on with sustainable development if only the ignorance and incapacity of host government officials could be addressed.

This is naive stuff from someone with such experience in sustainability issues. At least in the African region I know best, questions around the role of business in society -- and its delivery or regulatory role relative to the state -- are deeply political (not technical), open and unresolved (not simply 'obvious-but-not-known-about-yet'), and hardly 'fixable' simply by educative engagement.

For example, Webb's suggestion that officials retreat into populist regulatory postures simply because they have not yet been exposed to the gospel of modern sustainability practices is both highly patronising and naive about the political uses that local officials and politicians will continue to make of big business and foreign investment.

Some of these issues are certainly amenable to moderation by greater dialogue, trust-building, role-allocation and so on between big firms and host governments. But Webb is wrong, at least in Africa, to suggest a 'right' business-government-society model sits out there, waiting for firms to enlighten their hosts about. Just as Tony Blair was wrong in 2012 to suggest Africa had reached the 'end of history' and was now awash in consensus on the 'right' models of governance (see this 2012 post critical of Blair).

The point is that vital issues around responsible and sustainable development, and the relative roles of business and government in relation to public goods, are not advanced by assuming that what we have is advanced, enlightened firms and backward, ignorant host regulators and officials. Nor is there one right way.

These false premises aside, then yes the sustainable development agenda certainly requires more systematic and strategic engagement between firms and host governments at various levels (subject to this recent post questioning the value of simply asserting the need to 'engage'!).

In the same way, regulatory incapacity is a real issue and there is a role for big business in building the capability of host governance institutions, as outlined in this post over two years ago.

Jo

NGOs and business: critics to capacity-builders

The promotion of responsible business practices in Africa will benefit from NGOs not just criticising firms but engaging with them along the value-chain.

Last week the deadline passed for US-listed companies whose supply chains may involve so-called 'conflict minerals' to submit certain plans to the stock exchanges regulator. These plans explain how they intend to ensure that their products will not use minerals mined in conflict-affected areas marked by force-based labour methods and serious systematic human rights abuse. For an accessible overview, see this BBC report.

That these regulations exist at all (*) is largely the result of long-running, intensive campaigning by groups such as Global Witness. Often this has involved exposing firms who know of (or unreasonably undertake no due diligence in relation to) the problematic social context of their supply-chain inputs.

In an open, democratic society where much of the aggregate of social power is wielded by private individuals and entities (and where state regulatory capacity is stretched or distracted) there must always be a place for organisations committed to critical monitoring and advocacy around corporate responsibility for enviro, social and governance impacts.

So critical advocacy, shaming and boycotting have their place. However, they do not necessarily result in solving the underlying problem.

In particular, these are strategies that tend to assume nefarious motives or indifference on the part of firms. These strategies do not account for the possibility that corporate non-compliance with responsible business standards may be a result of lack of capacity and/or understanding, not a lack of will.

In the same way, an advanced society needs a capacity and will to punish certain criminal conduct, yet acknowledges that a more constructive, problem-solving, restorative approach is needed to change behaviours. Regulatory theory tells us that the best-adapted and appropriate systems are those that not only tell or incentivise regulatees to comply, but also devote time and resources to helping them understand what counts as 'compliance' and how to achieve it (or indeed to go beyond compliance, through continuous improvement).

Of course, NGOs have for years (and increasingly in the last decade) engaged more closely with business in pursuit of shared objectives. The Aspen Institute report on the future of non-profits' ties to business pointed out the merits and drivers of this trend over a decade ago. (For a recent overview of these trends, see here and see FSG's report 'Ahead of the Curve' on the international NGO of the future, including its need to engage business more readily in achieving civic aims).

What is different, and to be welcomed, is the greater recognition by NGOs and civil society coalitions that compliance with supply-chain integrity issues is often complex, and that many firms may need advice as much as criticism. This is true, as said, of regulation generally as an activity.

The greater the degree of engagement and cooperation by a non-profit, the greater the risk (from the non-profit's perspective) of 'capture' by corporate interests, or the loss of authority credibly to assess business compliance. Where engagement is intended to help overcome obstacles to compliance, these are manageable and acceptable risks considering the nature and scale of challenges at stake, and the convergence of corporate and civil society interests in addressing these.

One recent primer in this regard is Corporate Responsibility Coalitions, co-authored by Jane Nelson, on new forms of alliance for more sustainable capitalism.

Firms across sectors and up/down supply chains are seeking alignment of responsible and sustainable practices -- and often NGOs can help catalyse these inter-firm relationships; indeed, many firms learned from their tentative relationships with civil society partners how also to reach out to ostensible competitors or other firms on shared issues.

Firms can, strictly speaking, point out that it is for the governments of developing countries to regulate social (etc) impact issues, such that compliance failures ultimately reflect the state's failure. However, such a response is unlikely to satisfy critics -- or increasingly discerning consumers, financiers and insurers, at least in the West.

Yet as an Economist article noted last year, NGO-business partnerships and collaboration is good for society (and business), but these relationships are often messy, tricky, difficult, unsatisfying.

Jo

(*) Note, the US Supreme Court recently ruled on the application of the Dodd-Frank Act in relation to the regulation of conflict minerals in US-linked firms.

The Business of Development: rhetoric and reality

Development policy has gone from largely neglecting business as a stakeholder to seeing public-private partnerships, or indeed the private sector generally, as a development panacea.

This post comes from Brussels, around a meeting on the private sector's role in post-conflict recovery and peacebuilding. When I began researching that topic in the mid-2000s, it was very hard to imagine high-level policymaker interest in engaging business in peace and development initiatives. 

That blindspot is now narrowing and ambivalence towards the private sector is lifting in the UN system and other relevant agencies. Business is increasingly accepted as a development stakeholder (at least in high-level summitry, if not yet among all development agency programming staff). This shift is documented [cue here a shameless plug ... ] in my forthcoming book Regulating Business for Peace (CUP).

Yet it is hard to escape the feeling that policymakers may now be over-compensating. The increasing rhetoric tends to conceive of engagement with business (public-private dialogue, cooperation and partnership) as having far more developmental significance than is merited given the difficulty of workable partnerships and alignments, and on the evidence to date of productive engagements to this effect. This includes evidence about the limited inclination and interest of business (beyond some Western corporate leaders) to become more explicitly involved in the development agenda.

Now, for the record there is no doubt that greater engagement with the private sector by African governments, donors and NGOs holds considerable promise for finding common interests and alignment of objectives. The promise is of cross-sector cooperation that enables scaling-up the developmental impact of core business activities, while simultaneously addressing the bottlenecks and deficits that business leaders see as inhibiting more sustainable, inclusive growth.

Many previous posts have touched on aspects of this potential. Indeed TPI's recent 'roadmap' on systematically engaging business so as to unleash (and harness) its developmental impact took this convergence of interests as implicit, such that it instead focused on what to do about implementing the new-found appetite for engagement.

This post, as a reflection on this heightened interest in a public role for the private sector, groups some earlier posts expressing caution in approaching the new-found enthusiasm for seeing the private sector as a development panacea: see a previous post arguing that not everything can be solved by partnering; one noting that the state and its capacity problems still matter in ways that cannot be ignored by pointing to partnerships' potential (since partnership implies state capacity) (here), a related post here; a further caution to avoid seeing the private sector as a magic wand in Africa's development (here); and misplaced enthusiasm for public-private partnerships as likely or capable of carrying the expectations placed on them (here).

The focus by African policymakers on scaling-up the development impact of business risks obscuring an enduring fact. The greatest development contribution that business can make is still to expand, employ, pay tax (etc), in sustainable and inclusive ways, as for-profit entities. While 'development policy' naturally and rightly looks to directing business growth in pro-social ways, Africa's poverty-reduction priority in relation to the private sector is still to foster flourishing sustainable enterprise. We should be looking for alignments, but not at the expense of attention to policies to support successful businesses capable of supporting the expectations currently placed on them to help transform the continent's development outlook.

Jo

Proving improvement, evaluating value in Africa

As it matures, the 'responsible business' agenda requires (and exhibits) realism alongside idealism. Indeed, it is often by getting real that ideals are realised.

Disciples of the African investing story, positive version, in my experience use a discernible mix of head and heart: citing hard numbers (yield / return), but typically often overlaying it with something of an emotive appeal to be part of something bigger, the rise of a continent and its sustainable development. In extreme cases, this appeal smacks of a guilt-trip.

Yes, many objectively appealing investments in Africa are obscured by enduring unfair misconceptions. And talk of responsible investment in Africa goes over the heads of those whose approach (whatever nice noises they make about being part of Africa Rising) resembles that of the couple in Paul Simon's song: "Soon, our fortunes will be made, my darling / And we will leave this loathsome little town..."

But for the rest (beyond a limited set of mainly mandate-based institutional investors: pension funds, endowments, and the like), heart-based appeals to invest at all in Africa, and then to invest responsibly, will not get us far ... evidence of results will.

Is it too harsh to wish for a day when advocates of investing in Africa by reference to sustainability principles feel confident enough to pitch 'do so just because it works, not also or only because you (we) think it is right'?

The realism-idealism point is that the 'field' of responsible investment / business activity both needs and is increasingly marked by greater discipline and rigour: quantifying qualitative gains, proving improvement, measuring success, evaluating value.

This professionalisation of the wider environmental, social and governance (ESG) industry / discourse is both inevitable (if it is itself to be 'sustainable'), and a good thing. One does not have to be subverted to market considerations to accommodate them, and indeed to harness or leverage them in pursuit of sustainable development.

Hence the focus on aligning ESG considerations with 'core' business or investment ones (see here), on learning and speaking the language of positive value-creation (or at least no value impairment), the focus on positive value not just risk management or compliance or reputation-building or goodness, the focus on framing as need-to-do not nice-to-do, and so on.

However, there is still a need to go beyond saying these things work, to showing they do. Too much still involves treating it as obvious that ESG is value-adding, or pleas to disregard that 'it might not be but is still probably a good thing'.

The notion of 'responsible' investment is that it will do no harm, and of 'impact' investing is that it will go further and do some good. Explicit in at least the latter is proof of impact, but investment generally seeks proof of value, and the challenge is to get conceptions of 'value' to include ESG impact as a matter of course.

Socio-enviro responsibility will hopefully move beyond speaking about the falsity of people-planet-profit trade-offs. It must not just show the approach works and is right. It must aspire to show that ESG-based approaches work because they are right and just (not despite it, as an add-on).

Governments across Africa may regulate for greater ESG emphasis, but this is both unlikely and partly beside the point of responsible investment, which is about going beyond mere compliance, and increasingly (one hopes) about seeing ESG due diligence / impact as simply part of 'investment', without the 'r' word prefix.

Discussions had lately have involved whether there something particular about social and sustainability factors relating to Africa, and a particular way of doing business there in terms of ESG factors, development impact or context. Previous posts on 'Africapitalism' have asked this. There is the dynamism, optimism, leapfrog, frontier feel / phenomenon ... but there are also some pretty entrenched structural features of political economy, and Africa Rising is now over a decade old. (There is also the generic challenge of data reliability / availability in the region).

Arguably, if 'Africa Rising' debate is to mature further, it can certainly still seek to inspire new pro-social, sustainable ways of doing business and investment, but must strive to move beyond appeals. It must construct a case that shows how ESG-based approaches add or protect commercial value (at least in the long-term). This means not appealing by saying 'seek more than yield, make a difference' or on the faith that intuitively ESG-based approaches reduce political and other risk exposure. It means maturing beyond the insinuation that if you do not invest in Africa (at all / sustainably) you're neither with it nor a very nice person, and that if you divest you are hurting its children's future. (Much capital flows out each week to secure the future of someone, somewhere else).

In this sense, there is nothing new, nothing uniquely 'African' about all this. Along with an undeniable gloss of subjective, almost sentimental factors (that is, a degree of herd instinct behaviour), capital looks impassively for value propositions.

The challenge for those interested in inclusive, sustainable long-term growth in Africa that does not mortgage its environment and ecosystems is to move, swiftly now, beyond the binary of 'yield' or 'tree-hugging' and show why it works to filter one's investments and run one's business on an ESG basis. Hard proof, the empiricism to match (and sustain) the optimism.

"Faith..." as Paul Simon's song continues "... is an island in the setting sun / but proof, yes, proof is the bottom line for everyone..."

Jo

'Partnering' business for development

In the new fashion for cross-sector cooperation, are we tending to distort the term 'partnership', applying it to things that are either just dialogue, or normal cooperation with regulatory requirements?

And alongside all the promise that lies in the convergence of public and private sector focus on shared development constraints, are there not some concerns?

Convergence and blurring are related ideas, but one has a positive sense and the other a pejorative one.

So policymakers have 'discovered' the private sector as an 'actor' with impacts and interests relevant to development. Duh. But we now risk too rapid a transition in which proper parameters and principles have not yet been worked through.

Scaling-up the private sector's developmental impact was a key theme of last week's inaugural high-level meeting on global partnerships for effective cooperation for development ('GPEDC'), held in Mexico.

This blog is very 'pro' looking for ways to unleash-yet-harness the energies (etc.) of business in support of sustainable development aspirations and imperatives. Yet one overwhelming theme at and message from the GPEDC agenda / outcomes was not really about partnering for development (in the sense of systematically looking for areas and issues where business strategy / self-interest and government policy / duty overlap).

Instead, a major focus was about shifting from external financing of development (donors) to 'domestic resource mobilisation'. That is, taxation of business activity and constraining licit and illicit capital outflows, retaining more value within regions such as sub-Saharan Africa. (See para [4], [20-[24] of the outcomes document). This is a very sound idea (see a previous post on taxing for development in Africa). Especially for heavily indebted donors, and some developing country governments which might become more democratic if they become more reliant on and responsive to local taxpayers.

But a focus on taxation is not 'partnering' with business for development, nor is it public-private development cooperation.

It is a basic function of the state to tax and spend, and a basic obligation of a firm to pay, and to complain or leave if it does not wish to. When regulatees share the regulators' vision and cooperate, this improves compliance and eases regulatory burdens. But tax compliance is not cooperation, it is an obligation. Cooperation comes where business and government enter dialogue about what the taxation envelope might consist of. Even then, this is not a relationship of equals, for a number of reasons on both sides.

It is a basic ideal of development policy to eventually wean a country off external funds to enable it to finance its own development. To do so, one wants to think less about particular partnerships with business here and there (helpful as these can be), and more about creating an environment where business can flourish, so that appropriate social shares can be taken and distributed, building a better and more sustainable, inclusive society in which (in turn) business can flourish more. Virtuous cycles, and so on.

Sure, there is scope for greater cooperation, expertise-sharing, dialogue, etc between the public and private sectors. But these are not necessarily 'partnerships'.

Cooperating to find ways to help developing countries to tax more fairly, consistently and to spend the proceeds on developmental purposes is something to be explored. In previous posts I've repeatedly noted the initially counter-intuitive idea that a major investor might help its host government improve its tax and regulatory capacity. This way business can know what its fiscal exposure is, but also know that its taxes will in fact lead to better infrastructure, a healthier and better educated population (workforce / customers), and so on. Cooperation like that is to be welcomed, and specific partnerships may help deliver it.

But 'partnering for development' should not now mean everything that vaguely relates to business. Some of those things are just 'development'. Hence the 'duh' above: why is it such a revelation to donors that business can make general and specific contributions to development goals, and may in fact be interested in more peaceful, prosperous societies?

The social responsibility of any one corporation is not open-ended. One needs only pause for a minute to know why this is a good thing: business is not accountable in ways that policymakers (in theory) are. Hence the previous post, making the point that business and government may 'partner' but are not true 'partners': governments must lead, serve, respond, take responsibility.

Excitement about 'partnering' should not obscure the state's duties, and the state's capacity shortfalls without which it cannot partner effectively.

Blurring these lines is not in the interests of business, or in the public interest.

Where government functions as it should in Africa (or anywhere), there would perhaps be nothing shocking and anti-progressive about reiterating (with caveats) Milton Friedman's adage that the social responsibility of business is to grow, employ, obey laws, pay tax ... the social responsibility of governments is to finance development by planning, supporting, taxing, spending. There is convergence, there are shared interests and vulnerabilities, but there are separate spheres, and there is value in that. Friedman had some objectionable ideas, but it is too often overlooked that he cherished freedom. Do we want the public and private spheres to blur?

This blog says that the private sector inhabits a public world, and with it various responsibilities. But that does not mean business can or should do it all, or that government can absolve itself of its duties by producing a soup of partners.

In academia, 'multi-disciplinary' scholarship is useful for cross-cutting problems, but by definition relies on people who first have a strong grounding in their individual discipline, and only secondarily have an openness to other forms of knowledge. So it is with development: each sector needs to succeed in its own sphere, while looking out for judicious combinations and efficiencies. Societies need to resolve where those spheres lie, what is private and what is public.

These are big questions of ideology and social-political preference. The current 'business and development' debate can obscure that this is so. Does business want more social responsibility? Do we want business to have more social influence?

These things need discussion, not what I call the NDL: the New Disapproving Look. One gets it these days if one suggests that not everything that matters can be solved by some or other public-private dialogue and, of course, a partnership. 'Only connect!' and all will be well? I do not think so.

On a practical level, firms and departments may not be very good at partnering, or sure about it. The NDL and the new high-level rhetoric on engaging companies and investors in development can obscure the extent of ambivalence that still exists, within both bureaucracies and corporate structures, about expanding explicit links.

As with all high-level meetings: they matter, they steer, but they are generally aspirational, not declarative. Greater cooperation is a goal and a process, but it is hardly happening all around us. Policymakers need to show both the public and potential business 'partners' why partnering is more efficient and effective. Intuitively it seems so, and these linkages hold enormous promise for dealing with development bottlenecks and business frustrations. But more proof is needed, that partnering works. 

And in Africa and beyond we must keep an eye out that 'partnering' is not a cover under which the state (realising how few expectations it can deliver on) tries to abdicate its role or responsibility, or a cover under which business (fearing the effects of unmet expectations) tries to partner so as to say 'we tried to partner'.

Jo

Regulating business for peace

Failure by business to implement socially responsible practices also represents a failure of public policy.

Where business falls short, blame is swift but such failures are ultimately regulatory failures, the failure of public policy to reach in to business and open it to the influence of public values, as Parker argued in her excellent Open Corporation (2002).

The pace of business engagement on social and infrastructural development bottlenecks in Africa is welcome. Given business impatience with public sector planning and delivery, and firms' long-term risk exposures and opportunity costs if development imperatives are not met, this enhanced engagement is also somewhat inevitable. Often business is ahead of policymaking in assessing and seeking development gains that align with business interests.

Yet the state still matters in Africa, perhaps more than ever, and excitement about the role of business in development can obscure this.

It is short-sighted to believe that business sustainability efforts can be sustained without relying, ultimately, on the powers of the regulatory state.

A previous post made this case, pointing to recent research by Rory Sullivan and others (here). A related post noted that implicit in the (much-hyped) concept of public-private partnership is a capable state, one not only fit for partnering but able ultimately to steer the development agenda from a basis of duty.

We talk of business 'responsibility' for human rights and other issues, but for governments these are questions of 'duty', a concept of a somewhat higher order.

In this sense, PPPs are not truly equal partnerships. The state must lead, and must bear the ultimate responsibility. Business should not want it any other way, however impatient it might be.

The fact that many of these practices are not subject to mandatory regulation can obscure this fact. Despite all the rhetoric on partnerships and public-private convergence on development issues, governments and business have both legitimacy-features and obligations of a fundamentally different level and kind. Again, despite welcoming the new pragmatism and engagement on public-private cooperation for development, business leaders would not, in the long term, want it any other way, and nor would a democratic society.

I write this because this week I speak on a panel on the social and governmental factors of long-term investment in Africa. The audience wishes to focus on what business can or should do more or less of to find local or national development synergies. All good and well, and the topic of next week's high-level meeting on global partnerships for effective development cooperation (see recent posts). Yet such conversations sometimes tend to gloss over the state, which is inconsistent with the idea of 'long term' thinking. A previous post made this point.

So business-led initiatives on a range of issues from peace to sustainable development are to be welcomed. Many of their issues lie beyond what is likely, possible or desirable for public regulation, or are necessary because regulatory impact is weak. But the state's role cannot be side-stepped.

Consider the various 'business for peace' initiatives. The UN Global Compact launched its one recently, and this week (for example) an international conference takes place in Belgium on 'Business for Peace'. Business-led schemes are, as said, both welcome and somewhat inevitable (if not always satisfying or universally subscribed too). Yet the proliferation of guidelines now available to business on conflict-sensitive practices should not be seen as a substitute for a regulatory or pre-regulatory strategy on the part of policymaking. Public policy can (and often should) promote self-regulation by business on such issues, but this is conditional or supervised, the regulation of self-regulation.

Recently, Anette Hoffmann made the point that whether business is able to adopt and implement conflict-sensitive business practices will depend on much more than the business alone. There is low risk that business 'captures' this regulatory space, retarding more effective public regulation; there is perhaps a greater risk that policymakers see these issues as running themselves, without the need to 'reach in' and stimulate, support, or require these behaviours of private sector actors.

For this reason, my forthcoming book is called 'Regulating Business for Peace' (CUP). The private sector shares with policymaking many of the latter's interests in peace and prosperity. But the process must be influenced, steered, shaped (ie, 'regulated'), even if sometimes only lightly, by the public sector. Africa's development is too hard, too important, and too strongly underpinned by profound duty to be considered a true partnership.

All who are partners are not equal: some partners hold a higher duty than others, and the private sector will be the first to agree that the public sector must lead.

Jo

For a previous post distinguishing 'duty' and 'responsibility' see here.

Where responsibility meets risk management

The trend towards bringing non-financial issues 'to the table' in boardrooms, alongside 'core' business strategy, has received much attention in recent years.

This week UK-listed Tullow Oil (a leader in recent successful exploration for new hydrocarbons assets in Africa) announces its intention to disclose project-by-project payments made to partner governments. This is in anticipation of EU disclosure rules, but includes voluntary disclosures that go beyond pending regulatory requirements.

Whatever the firm's strategy, the news underlines the tension sometimes identified between 'first-mover' advantage (when a firm moves ahead of the apparent regulatory trend, reaping the reputational, adaptation and other benefits) and the risks of assuming pre-regulatory obligations not required of one's competitors in a sector where no level playing-field exists.

This post extends the last one's discussion of 'core business' issues, where the operative word in the para above is 'strategy': unless championed by a proactive board, those working on sustainability / enviro, social and governance / responsibility issues have typically found it necessary to devise internal strategies to make their issues considered as part of wider firm strategy.

While vocabulary matters for basic cognitive shifts (such as seeing 'risk' as 'unlocking value'), this endeavour of getting sustainability (etc) issues 'to the table' goes beyond imaginative manipulations of vocabulary, or ensuring these issues are integrated into annual reporting. There is a pressure to express 'non-financial' risk issues in terms of core business value creation, beyond loss mitigation.

For example, those inside firms with global supply chains tend to advance the idea of using 'sustainability' as a lens for 'innovation'. The latter gets the attention of 'core'-minded boards more directly. It is an effort to frame sustainability as core business strategy at least in relation to supply chain systems. The new vocabulary of 'circular economies' is partly a reflection of this (and partly a reflection of common business sense, at least in the long term).

Although not everything that counts can be counted, this pressure to demonstrate value and return on investment is understandable, inevitable, and if anything promises to bring new discipline and rigour to the field of responsible business practices.

There is much talk of business and development practices in Africa 'leapfrogging' stages and bottlenecks, and turning adversity and novelty into innovation, advantage, value. There is much work to be done assessing how the continent's rise might also be a crucible for altered views of what comprises the 'core' of business strategy.

Jo

There are analogies to be drawn for in-house sustainability / ESG practitioners from a recent Accenture report on efforts in the banking and finance sector to get 'dull' risk compliance issues a 'seat at the table' ("hard to earn, hard to retain").

Plenty of guidance exists on how to go about doing this, at least in theory (there's a more heavy-going literature but here's one accessible and recent primer, there's the Harvard project on getting these issues into boardrooms, and here's another from BSR). The challenge in converting ideas into practice (or from the periphery to the core) is not necessarily different from other fields, as noted in this FT piece on the hunger for sustainability subjects in business education.

See also this recent post on this blog on corporate communications.