*{From the relief of poverty to the creation of sustainable livelihoods - The business contribution [http://www.iccwbo.org/home/environment_and_energy/sustainable_livelihoods.asp]

Speech given by Lord Holme of Cheltenham, Chair of the ICC Commission on Environment, to the Rockefeller Foundation, 23 September 1999}

The "poverty" agenda, as it is conventionally articulated, has very little resonance for business, and may even discourage companies from believing that they have any particular contribution to make to social cohesion, beyond the very necessary but intrinsic capability to create wealth, employment and tax resources. The relief of poverty sounds too much like the language of politicians and "do gooders".

The notion of creating sustainable livelihoods, by contrast, is music to managers' ears. It instantly conjures up practical and achievable goals, to which the skills and objectives of the commercial world are well-matched and to the achievement of which the business manager can imagine himself making a particular contribution.Schumacher drew a much-quoted distinction between giving a hungry man a fish and teaching him how to fish. That may now have become such conventional wisdom that sensible policies for the relief of poverty and those for the creation of sustainable livelihoods are identical. Even if this were the case, the question of which is the means and which is the end is thought-provoking.

However it is also possible that the different language reveals two somewhat contrasting approaches to development, and that the approach of a responsible business is not only closer to livelihood creation but has some features which are not only distinct from those of governments and aid agencies but which may also have some lessons to teach about the sort of successful development that goes more with the grain.

There are some critics, campaigning NGOs, particularly a vociferous minority with an outright anti-capitalist thrust, who see all foreign direct investment, and, by extension, the companies which make it, as malign in its consequences and possibly in its intentions too. Although this agenda, opposed to free trade, to free capital markets and seeing profit-making as evil per se, represents an extreme and atypical set of attitudes which can be largely discounted, it would be idle to pretend that all companies at all times and everywhere behave in a responsible and far-sighted way and that there are no grounds for criticism. Adverse social and environmental impacts can be created, and sometimes are, and companies are not always good neighbours. The question, for the more constructive critic, is whether such companies could do better, both in mitigating adverse impacts and in making a positive social contribution . 

And this is by no means an academic question since five-sixths of the investment in the developing world is now private. The burden of this paper therefore is to identify good business practice in respect of socio-economic development, to consider how it might be generalised, and to identify whether it evinces particular strengths which could illuminate the development agenda as a whole.

A growing number of multi-national companies now take these issues seriously. Their motives are various and mixed and often co-exist within the same company. Some have been driven by criticism and fear of loss of reputation in a febrile world of global media. Some identify that their 'licence to operate' relies implicitly on the support and consent of their neighbours around the world. Some believe that the creation of long-term shareholder value depends on also helping to create a harmonious social context. Some want to recognise multiple 'stakeholders' explicitly alongside their shareholders. Yet others recognise that the new generation of managers seek a closer alignment of corporate values with personal and social values.

Terms such as corporate citizenship, triple bottom line and corporate social responsibility are increasingly part of the vocabulary of boardrooms in the first world, and, in some cases, statements of values, policies and practices have been incorporated in corporate codes of conduct. One example of this is 'The Way We Work' Rio Tinto's Statement of Business Practice, which covers not only corporate governance and environmental issues but access to land, community relations and human rights.

There have also been efforts at a supra company level to "raise the business game" in terms of corporate social responsibility. Various initiatives by the World Bank*{(1)} have been complemented by the International Chamber of Commerce's Environmental Charter, the World Business Council on Sustainable Development's Report*{(2)} on Corporate Social Responsibility, of which I have the honour to be the co-author, the Prince of Wales' Business Leaders Forum and the new Sullivan Principles,  drawn up by the Reverend Leon Sullivan in consultation with a group of leading multi-nationals, all of which encourage a pro-active approach by companies to society at large and their local communities in particular.

Now, in an initiative flagged at Davos early in 1999, UN Secretary-General Kofi Annan is seeking a new Global Compact with business to set standards of conduct and encourage a positive business contribution to the world's pressing problems. He walks the tightrope deftly between a critical minority who see business as a prime cause of the problems and those who, more realistically in my opinion, recognise that the magnitude of the problems is such that the capacity of business to make a positive difference can only represent a welcome contribution.

And, make no mistake, every business has choices. Often it may make the wrong choice by mistake or by a lack of care or even recklessness. Being a good neighbour takes consideration and forethought.

Let me briefly contrast poor practice, which makes no contribution to sustainable development, and may even retard it, with good practice which can and does make a positive contribution.

The first company, let us call them Bad Neighbour Inc. BN for short, really doesn't want to engage. They use expats in all skilled positions, with no local transfer of know-how, they give only the minimal training necessary for menial functions, they pay local labour minimum rates, they import materials without looking for local sources, they do not contract-out to local suppliers, they evade local taxation as far as they are able, they prepare necessary infrastructure with no local consultation on synergies and they rely on national agreements for their licence to operate, with no regional or local community engagement. If bribes are part of the way of getting bureaucratic action or decisions, they pay them. They comply with environmental and other legal obligations but would resist any notion of imaginative 'compliance plus'. It is quite literally a policy of 'separate development', socio-economic apartheid.

So if BN is an island, how does the other company Good Guys Ltd [GG] engage with the mainstream of its host society to create capacity and foster development?

First, psychologically, GG recognises that it is a guest, taking care to understand its host and to be sensitive to its culture and way of doing things. This does not involve compromising universal standards, for instance on product quality, safety or a refusal to offer or accept bribery. Then in a very practical way, GG identifies what can be done to help locally, without being commercially imprudent. For instance, by enhancing local skills and capacity inside and outside the company or by building the local infrastructure, for example roads or power supplies, in such a way that it has local spin-off benefits or by sub-contracting supplies or maintenance to local small businesses. And to the extent that it decides to invest directly in the well-being of the local community, say in improving education, doing this in a post-paternalist way by setting up working partnerships with mutually agreed objectives.

This notion of partnership is particularly important to the way GG operates because most businessmen have a fairly realistic view of their own limitations. Not only can they not solve all the problems of the world - or the local community - on their own but sometimes the problems created by investment itself need wider partnerships for their successful resolution.

Let me take two examples from the mining industry; the problems of an investment in an LDC creating a honey pot effect, attracting villagers in their thousands from miles around with inadequate physical and social structures to deal with them, and the problems of closure, particularly apparent in mining but a general event for all industrial products and processes eventually. In both these instances even the largest companies are hard-pressed to cope on their own. They need a context, a regional development plan for instance, and they need partners, central and local government, IGOs and NGOs, universities and local communities to create a critical mass for problem-solving. That is why the new initiative of the World Bank, Business Partners for Development is so much to be welcomed, bringing together such partners and trying to identify the factors that 
make for successful solutions to both these problems.

The third characteristic of GG, our benign investor, is a commitment to manageable change. Some Western environmental campaigners fall for the Garden of Eden myth in which the private commercial investor plays the role of serpent, destroying primal landscapes and corrupting ancestral innocence. They want no change. The truth of course is that the whole world is in a ferment of change, with hardly a kampong without satellite dishes, jeans and pick-up trucks. Yet to acknowledge the myth for what it is should not lead to the opposite error of assuming that all change can be readily assimilated. It is difficult for business to accept the theory of 'Limited Good' described by George Foster, in which it is conceived that the increase in well-being of one can only be achieved at the expense of another, since that runs counter to the creative experience of businessmen making two blades of grass grow where only one grew before. However it must be acknowledged that change can be disruptive. In its revolutionary extreme, change engenders great suffering and socio-economic slippage on the grand scale. A keen eye for the rate at which change can be coped with without tearing the host community apart is a highly desirable quality in a knowledgeable inward investor.

Not all companies are GG all the time. But when they make the effort to invest with care, mitigating adverse effects and doing their best to multiply positive effects in some of the ways I have described, what strengths do they bring to the development process?

I believe there are several. The first, and most obvious, is that they are on the spot, committed to the location, living and working there, not flying in with pre-packaged nostrums but coming to terms with day-to-day reality. "Being There", to recall Chauncey Gardener, is a great strength to anyone who wants to tend and grow. Some businesses may be global in their reach but it is only locally that anything happens, that people are employed and that widgets are made and shipped.

Then there is the fact that business is very accustomed to the idea of the development of human capital, not starting with sociological categorisation but with an assessment of what skills can be developed and aptitudes fostered, and always ready to improvise with what is available. The developmental model which comes most naturally to any businessman is the Parable of the Talents, and, given that capacity is the greatest single need of the developing world, it is highly relevant to what is most required.

The time horizons of business are relatively long compared to democratic governments, seeking a renewal of their mandate every few years, or even to perennially insecure autocrats looking over their shoulders. Investment returns are measured in decades not months and years. Long horizons make for better development and forward planning. The notion of inter-generational transmission of skills and self-reliance may fit better with the commercial perspective than with the political.

The problem with any distant definition of "the poor" is that it creates an anonymous collectivity. That is not a trap into which any locally-based business is likely to fall. Its potential employees, its neighbours, its suppliers and consumers are far more likely to be seen as the individuals they are. Business, for this reason, is a potentially valuable ally in the quest for human rights, alarmed by arbitrary power, valuing the role of law and seeing people as individuals rather than collectivities.

Finally, in attempting to analyse some of the strengths which business can bring to the task of development, there is the sharp realism of self-interest. This paper argues for a long term and therefore enlightened basis for that self-interest but it does not seek to deny or suppress it as do some of those in international development circles. There is a robustness about economic development based on self-interest, whether it takes the form of woman market-trader, empowered by micro-credit, or a marketing co-operative for a fishing fleet. This corresponds to the thrust of all business and commerce. Such shared realism can produce practical results.

Thus it can be seen that I believe responsible international business can contribute significantly to the creation of sustainable livelihoods in the developing world. To actualise this potential two things must happen. More business must come up to the responsible standards of the best, accepting that collective action and acknowledgement of responsibility by all the major businesses in a particular sector or area, vastly increases this leverage and credibility*{(3)}, and governments and IGOs in turn must recognise that they have a powerful partner to be encouraged rather than a problem to be solved. Fortunately there are promising developments on both these scores. They need to be fostered, both within the business community, and between business and the world political and voluntary communities. The opportunity is there.

*{1. James D. Wolfesohn "A Proposal For a Comprehensive Development Framework" 1999

2. WBCSD Corporate Social Responsibility 1999

3. Marcur C Olson "The Logic of Collective Action 1965

Lord Holme is Co-Chair of the World Business Council for Sustainable Development's Working Party on Corporate Social Responsibility, Chairman of the Environment Commission of the ICC and Advisor to the Chairman of Rio Tinto.}