Corporate Citizenship: an NGO perspective

August 01, 2008

Corporate Citizenship: an NGO perspective

Penny Fowler charts the history of Oxfam’s involvement in CSR and outlines goals for the future

In 1991, the year the first Corporate Citizenship Briefing was published, Oxfam directed relatively little attention to how business impacted on poverty. Yet Oxfam was, and remains, involved with business in a variety of ways in support of its mission to overcome poverty and suffering. Oxfam’s experience of business engagement was partly shaped by – and has partly shaped – the evolution of the corporate citizenship agenda. Looking ahead, the future corporate responsibility agenda will be shaped by the global challenges we now face – climate change, rising food prices, energy and water insecurity, the credit crunch, deep and persistent inequalities. These present both constraints and opportunities that will demand fresh approaches to ways of working and doing business.

Looking back, engagement with business became more critical to Oxfam’s work from the early 1990s when Oxfam started to develop petty trade and commerce, largely through fair-trade production and merchandising, to generate income for poor producers and their families. In 1991, Oxfam helped to establish the fair-trade company, Cafedirect, which is now the UK’s sixth-largest coffee brand.

As the Corporate Social Responsibility (CSR) agenda developed throughout the 1990s, Oxfam responded to the increasing awareness of the impacts of transnational companies’ operations on communities in developing countries – fulfilling a watchdog role with others that was facilitated by the rapid development of advanced global communications. Oxfam’s advocacy and campaigns initially focused on the human rights impacts of extractive companies’ operations in Latin America, and the need for UK retailers to take responsibility for labour standards throughout their overseas supply chains. In each case, Oxfam’s strategy was to expose negative impacts of business operations and to build pressure to change company behaviour by demonstrating public concern.

In 2002, Oxfam launched its ‘Make Trade Fair’ campaign, which aimed to change international trade rules and practices that prevent people from working their way out of poverty. Companies in different sectors were targeted through clear and simple campaign messages that their operations were part of the problem, whether by limiting access to affordable medicines in poor countries, paying low prices to producers of primary commodities such as coffee, or perpetuating exploitative labour standards in their supply chains by demanding fast turn-around times, cheaper unit costs and greater flexibility.

Through these campaigns, Oxfam developed new ways of working on business, including direct engagement, for example with the pharmaceutical and retail sectors. This contributed to the development of a deeper mutual understanding and more sophisticated analysis of the issues and possible solutions on both sides, for example, through involvement in the Ethical Trading Initiative. The campaigns also led to the formation of new alliances, for example, with the socially-responsible investment community, with their interest in analysing the market risks of failing to consider the human development impacts of policies, in recognition of the need to build a business case and incentives for change.

Today, Oxfam recognises the central role that business can, and must, play in contributing to poverty reduction and sustainable development – and seeks to integrate an understanding of the role of business, alongside government and civil society, in all its work. Business can bring many assets to sustainable development in the form of skills, innovation and resources, and their ability to make things happen is especially valuable given the urgency of many global challenges.

Going forward, three areas that Oxfam would be particularly interested for businesses to explore are: how to integrate small-scale agricultural producers into company supply chains on mutually beneficial terms; how to fill the gap in financial services offered to small-scale farmers and rural enterprises in the face of high risks (e.g. of crop failure) and low returns; and how to secure investment in low-carbon development, such as renewable energy, on terms that benefit communities and generate income for social and economic development.

It can be hard to understand and measure the overall impact of business operations on sustainable development. To this end, Oxfam collaborated with Unilever in 2004-5 on a study of the poverty impacts of Unilever’s operations in Indonesia – both positive and negative – its ‘poverty footprint’. The study captured a number of impacts such as the large number of people involved in Unilever’s value chain, particularly at the furthest ends of the chain (suppliers and distributors). The proportion of value-added captured by players along the chain fell markedly the further away from the company people operated in the chain.

Oxfam is now seeking to build on the experience of the Unilever study and develop stronger methods and tools – to share with others – that are better able to capture development impacts, including those that are important but hard to quantify. Oxfam believes that prevailing social and economic inequalities can often determine people’s ability to benefit from participation in markets. On this basis, it will be important to agree what indicators of social inequality it is appropriate and feasible to assess.

There have been significant advances in the understanding and practice of corporate citizenship over the past 17 years, although some of the key issues for responsible companies to consider remain the same including:
* the need to conduct core business operations responsibly and build trust by doing so consistently;
* the imperative to fight inequalities, rather than exacerbate them;
* the need better to understand and demonstrate how business impacts positively on development in generating social as well as economic value;
* the importance of anticipating and avoiding adverse consequences that decisions and activities may have on poor or vulnerable communities.

Oxfam will continue to employ a variety of approaches in engaging business in support of poverty reduction; collaborating or challenging depending on what we judge will have most impact. The gross injustice of persistent poverty and inequality remains one of the greatest challenges the world faces, and we all need to work creatively to identify effective and long-lasting solutions.

[This article draws on the work of Sumi Dhanarajan and other members of Oxfam’s Private Sector Team.]

Penny Fowler works for Oxfam as a Senior Policy Adviser on the Private Sector and leads Oxfam’s Private Sector Advocacy Team. This team is part of a wider Private Sector Team responsible for Oxfam’s Private Sector Strategy, which aims to maximise the contribution of business to overcoming poverty. After completing a Masters Degree in Economics for Development at St Antony’s College, Oxford, she then worked for two years as Senior Economist in the Ministry of Trade and Commerce in Fiji, where she was posted as an Overseas Development Institute (ODI) Fellow. Since 1995, Penny has undertaken research and policy work in the NGO sector, including an assessment of how European trade and agricultural policies affect development, NGO-Business relations, and the role of business in poverty reduction and sustainable development.