Some big businesses accountable for world poverty

SCIAF helps develop communities in third world countries. Picture: Contributed

Something is not right with the economy. While huge companies enjoy ever-growing power, influence and profits, the world’s poorest people are being excluded.

Progress has been defined simply as economic growth, and many have come to believe the market is the solution to the world’s challenges. But if business is going to be a force for good for everyone, including the poorest among us, important changes are needed.

Through our work with communities in developing countries, SCIAF understands the powerful role business can play in reducing poverty.

In South Sudan we’re helping people living with disabilities to start their own shops and in the Great Lakes region of Africa we support survivors of sexual violence to establish small businesses.

These local, sustainable businesses have helped many people to work their own way out of poverty. Jobs have been created, markets stimulated and local economies helped to grow.

But we also know that the activities of some companies are having a very different impact on the lives of poor women and men. All over the world, big business has been implicated, either directly or indirectly, in human rights abuse, poor labour standards, tax-dodging and environmental degradation.

In Colombia, for instance, we work with poor Afro-Colombian and indigenous people, where communities already devastated by a 50-year civil war are now facing a new threat to their land and livelihoods – the economic interests of big business.

Foreign mining companies are being awarded huge swathes of Colombian land to exploit. This often happens without any consultation with the communities who have lived on the land for generations.

So while business can play a positive part in reducing poverty, we must prevent the negative impacts where companies are not properly regulated and where safeguards are not put in place.

We should also avoid simplistic solutions which suggest private investment and economic growth are the miracle solutions to extreme poverty and injustice.

When it comes to thinking about big business and economic growth, the social teaching of the Catholic Church offers us a fresh perspective. After the economic crisis in 2008, Pope Benedict reminded us that the core purpose of economic life is not for the good of itself but for the good of human beings. The economy is there to serve the needs of people and not the other way around.

Pope Francis more recently warned us: “We can no longer trust in the unseen forces and the invisible hand of the market. Growth in justice requires more than economic growth.”

We believe a shift is needed at the heart of our current economic model and that a successful economy is one which contributes to the well-being of everyone.

As part of this shift, governments must move beyond the usual ‘light-touch’ approach to business and ensure that companies are open about their activities and held accountable for their impact on people and the planet.

Some welcome changes are already taking place. New EU rules mean that from 2016, large European firms will be required to report on their impact on society, human rights and the environment, and not just on their financial operations.

But much more is needed. In our recent report, Taking Care of Business, we call on the UK and Scottish governments to ensure that corporate reporting requirements are backed up by clear guidance for companies and robust monitoring of their impacts are in place. At the same time, both governments should ensure that the UN’s Guiding Principles on Business and Human Rights – which set out the responsibilities for states and businesses in protecting and respecting human rights – are properly implemented.

Thinking carefully about public sector spending is another important way for governments to encourage good business practice.

Scotland currently spends around £9 billion a year on all types of goods and services for the public sector. Forthcoming guidance to accompany the new Procurement Reform Act must reflect international standards like the UN’s Guiding Principles and enable and encourage public bodies to award contracts to companies that behave ethically and responsibly, both at home and abroad.

SCIAF does not believe that all companies behave irresponsibly or that all business is somehow bad. We live in a world, however, where the number of billionaires is increasing while one in eight people remain hungry. Our current economic model is working for some – but it is not working for the world’s poorest people. If everyone is to enjoy the benefits that business can bring, we need to curb the negative impacts it can have, and not be blinded by the positives.

• Jo O’Neill is SCIAF’s policy officer and author of Taking Care of Business. Visit www.sciaf.org.uk for more information.