What must be done if we really mean business

This year of 2008 marks the half-way point in the global effort to achieve the Millennium Development Goals (MDGs).

The United Nations, the World Bank, the World Economic Forum (WEF) and others have all noted that despite a sustained period of global economic growth, which has contributed to some progress on the goals, an enormous surge of effort is now required if the world is to meet its targets. As the global economic outlook starts to look less positive, and in the face of high food and energy prices and the impacts of climate change, that surge is even more necessary.

The ‘development emergency’ declared at Davos in 2008 echoed an earlier finding from WEF’s Global Governance Initiative that the world is making ‘less than half the effort’ required to meet the MDGs. The IMF and World Bank’s 2008 Monitoring Report also concluded that ‘most countries are off-track to meet most of the goals, with those in fragile situations falling behind most seriously’.

Significant progress towards the goals remains possible but a massive injection of political will and government leadership is required to make this happen. It has also become increasingly clear that the MDGs cannot be achieved in the absence of a diversified and productive private sector.

The economic growth and wealth creation that is essential for their achievement will come primarily from private enterprise, whether driven by large multinational corporations, national companies, small and medium firms or social enterprises.

Such enterprise will also be the source of most of the innovations in new technologies, products, processes and financing mechanisms necessary for tackling environmental challenges. It is private enterprise that will build what UNDP describes as ‘inclusive business models’, which explicitly include the poor as consumers, employees, entrepreneurs, suppliers, distributors, retailers or sources of innovation in economically viable ways.

Governments in both developed and developing countries clearly have a crucial role to play in creating the appropriate enabling framework for such enterprises and for ensuring accountable and responsible management of public revenues and services. Yet they cannot meet their commitments to the MDGs without effectively enabling, regulating and partnering with the private sector.

This is not to suggest that companies and markets are a panacea. Far from it. In situations of bad or weak governance, private enterprise can rarely make a sustained positive impact and in some cases can seriously undermine the MDGs.

In a growing number of cases, however, business offers a variety of solutions ranging from the job creation and income generation impacts of successful enterprise, to the targeted adaptation of individual business products, processes and value chains to collective action by groups of companies and multi-stakeholder alliances.

The business role

The specific business contribution will depend not only on factors such as the industry sector and the company’s business model, ownership structure and size, but also on the MDG in question and type of development intervention needed, such as increasing access to jobs, education, health, energy, water, technology and markets or improving accountability and public capacity.

Regardless of the differences, most companies have the potential to make a contribution to the MDGs through one or more of the following three areas:

1. Core business operations and value chains (see Bruce Jenks’ article on page 13 for case studies of companies with profitable business models that act as drivers of MDGs)

2. Social investment and philanthropy (on page 5 Paul Skinner explains how Rio Tinto invests in the communities in which they operate)

3. Public advocacy, policy dialogue and institution strengthening (David Wheeler and Sahba Sobhani provide a study of how business can engage in advocacy and dialogue on page 9).

Large firms are now acknowledging that combating poverty is not only important for contributing to a stable operating environment and managing risk, but can also represent a major opportunity. They are implementing new business practices, often in partnership with public and civil society bodies, in order to develop these opportunities.

Political leaders and governments are, in turn, publicly supporting company activities that contribute to the MDGs. For example, UNDP’s Growing Inclusive Markets initiative is a strategic effort bringing together business leadership coalitions, donors, universities and foundations to study and promote more inclusive corporate value chains and effective public-private partnerships. UNDP’s Growing Sustainable Business programme is now operating in over 12 countries and many other UN agencies and bilateral donors are developing dedicated private sector units and partnership building programmes.

Another example is the MDG Call to Action, an international effort begun by the UK government and currently supported by 48 Heads of State and over 60 CEOs. Within this broader initiative is the Business Call to Action, aimed at engaging the core competencies and value chains of business to accelerate progress toward growth and the MDGs.

The Clinton Global Initiative is another nongovernmental organisation launched within the past five years which engages business, philanthropic and community leaders to work on practical projects in such areas as education, energy and climate change, global health and poverty alleviation. In addition, the World Business Council for Sustainable Development (WBCSD)-SNV Alliance is helping to create inclusive business opportunities by linking local communities with big business.

At a local level, social entrepreneurs and small and medium enterprises (SMEs) continue to make a major contribution to the MDGs. Most of the world’s private sector activity takes place at this level, rather than within and between large firms.

Contact between large firms and the SME sector takes place through company supply chains. As such, enterprise development and business linkage initiatives and other projects to transfer skills, technology and finance to small companies and social enterprises is one of the most important contributions that large national companies and multinational corporations can make to the MDGs.

The business response

Articles in this special report exemplify the growing evidence that many companies are making a serious effort to align their core business functions with the needs of the societies in which they are operating. Even though business solutions often require complex collaboration with non-traditional partners as well as a significant re-think of conventional business models, there are a growing number of companies that have profitably navigated these challenges, and the development benefits appear to have been significant. However, despite these signs of progress, such projects must be urgently replicated and scaled up if the MDGs are to be met.

More work is needed on evaluating what works and what doesn’t Ñ both in terms of new business models and partnerships, as well as public policy innovations.

There is a need to build greater awareness and capacity within business and government on the issues at stake, the business case for engagement and the tools for engagement. Above all, there is a need to engage thousands more companies, ranging from established multinationals to the emerging corporate leaders of Asia, Latin America, the Middle East and Africa.

While the private sector is playing an increasingly important role, much more could be achieved with greater vision and leadership on the part of business leaders themselves and with better policy frameworks and incentives from government.

The Global Business Coalition on HIV/AIDS, TB and Malaria notes, for example, that companies are currently doing ‘a fraction’ of what they could be doing in order to address these diseases. Market incentives and competition between companies may provide further impetus. Governments, multilateral groups and large NGOs in turn can all show leadership by recognising and encouraging the business contribution, as well as collaborating on solutions.

Progress charts from the UN Millennium Development Goals 2007 report prompt a set of questions: what proportional contributions have private sector efforts made to the MDGs, versus public and civil society efforts? Which initiatives have been most successful, and what were the success factors? What can be learned from unsuccessful initiatives?

At the moment it is hard to answer these questions. This in turn raises a further point: meeting the MDGs is, to a large degree, a hugely complex information management challenge. The best information management skills in the world lie in the biggest and most successful companies. Harnessing such skills in the context of the MDGs may be a crucial success factor in achieving the goals.

Dave Prescott is a freelance writer specialising in social issues at the interface

between large firms and international development. Jane Nelson is a senior fellow at Harvard’s Kennedy School and directoro of business leadership and strategy at the IBLF.

This article is adapted from the authors’ work Business and the MDGs: A framework for action. 2nd Edition. IBLF and UNDP 2008.