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Oct 26, 2015

Pushing, pulling and the power of people: new horizons for corporate responsibility?

Erinch Sahan

We all see that business shapes our lives. As consumers and workers, as farmers and communities, the behaviour of businesses has a deep impact on all of us. And we see that for a fair and sustainable world, we must shift and shape business decisions across the world. But how? It comes down to two ‘push’ and two ‘pull’ factors.

Who’s pushing for responsible business?

On the ‘push’ side, there is the power of workers, communities and farmers. When they have more negotiation power (e.g. through trade unions, or farmer cooperatives), they can shape business decisions in their favour (e.g. getting fair wages and prices). Also on the ‘push’ side is government, which can compel companies to pay higher wages, use water resources responsibly or pay fair prices to communities for the land they acquire.

Who’s pulling for responsible business?

On the ‘pull’ side, there are consumers and investors. Both can drive business decisions through their purchases or their investments. Companies are geared to listen-out for the demands of both groups - their commercial survival depends on it. Ignoring consumers can lead to loss of business, and ignoring investors can unseat board-members and push away financiers.

Since early 2013, Oxfam has been campaigning to change the way the world’s largest food companies buy their ingredients. And the campaign has been based on these very ‘pull’ factors.

Fixing the broken food system

We chose the food industry because the farmers who grow our food are among the poorest and hungriest people on the planet. And the agricultural practices on farms across the world, whether it’s how the water and soils are used, or whether women are empowered, or workers and farmers are paid fairly, are key to the lives of so many of us. The ‘captains’ of the food industry are the world’s ten largest food and beverage companies – and it is these very companies we looked to do more.

At the production end, the changes we need in the food system span seven key themes: land, water, climate change, smallholder farmers, workers, gender and transparency. Each theme itself entails a host of practices that a responsible company should be doing to promote sustainable and inclusive agriculture.

A campaign to raise the voice of the public

Oxfam scored these ten companies on the seven themes. The result was a race to the top on key social and environmental issues among the world’s largest food brands. Over the last 2.5 years, the campaign raised the voices of 700,000 consumers, alongside communities, farmers and responsible investors to challenge those companies with the most power in the food system to use that power for good. Social media was a great tool, and was accompanied by a range of awareness raising activities. The companies listened, and all ten companies improved their policies and practices across their supply chains. The companies are now voluntarily applying higher standards to their suppliers across a range of issues (ie; going beyond what the law requires).

Businesses listen to their consumers (and investors)

The lesson is encouraging: global brands do listen to their consumers, and their investors. Issues that weren’t on the agenda of companies can rise quickly, when the right voices join the public chorus. For instance, land rights was absent from the agenda of food companies until Oxfam and allies joined forces with ethical investors and consumers to raise the issue. Now the industry has accepted that land can only be acquired when communities give free, prior and informed consent over what happens to their land.

While campaigns can shift company behaviour, we need to go beyond incremental improvements. If we are to transform the business sector and achieve the Sustainable Development Goals (SDGs), the ‘pull’ factors cannot get us all the way – we also need to leverage the ‘push’ factors.

Government evening the playing field

There is a need to see governments even the playing field by taking the practices of the most progressive companies, and making them the industry norm. A host of policies can be used, from regulation to government investment. But companies who do the right thing, and often incur additional costs in doing so, shouldn’t be undercut by those who cut costs and behave irresponsibly. Companies should never be at a competitive disadvantage for doing the right thing, whether that’s paying living wages, paying sustainable prices for supplies or using natural resources sustainably. And it’s government action that can raise the floor and make responsible business the norm.

Power to the People

Critically, there is a need to build the power of workers, farmers and communities, so they aren’t beholden to the voluntary actions of a company. Ethical consumerism and ethical investing is a drop in the ocean of global trade and finance. So more often than not, businesses won’t feel the force of consumers and investors to do the right thing. And we need businesses and business models that put power in the hands of those who lack it. This is the next great challenge for corporate responsibility: giving power to the people. India’s business community can leapfrog to this new generation of corporate responsibility.

The India Responsible Business Forum (IRBF) Index 2015 is an initiative by Oxfam India in partnership with Corporate Responsibility Watch, Praxis and Partners in Change, non-profits which look at corporate accountability and business responsibility.

 

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