Post-2015: Why a focus on business responsibility and taxwould be a missed opportunity
In contrast to twelve years ago, when the Millennium Development Goals were first agreed, now – as the world starts to think about what will replace them in 2015 – business is very much on the agenda. Business Fights Poverty has co-hosted two events that looked at this (one on Tuesday and one in September), and is participating in this week's official stakeholder roundtables being organised in London by the Secretary General’s High Level Panel of Eminent Persons on the Post-2015 Development Agenda – co-chaired by the UK’s Prime Minister and a centre piece of the institutional architecture that will shape the new goals (click here for more information).
Importantly, the call for a greater recognition of the role of business has not been limited to business voices. Donor agencies – from the UK’s Department for International Development to the UNDP – have been vocal supporters. At Tuesday’s event, Michael Anderson, the Prime Minister’s Special Envoy on the Post-2015 Framework – commented that in developing the new goals we must stay focused on the fact that a vibrant private sector is the exit strategy from aid.
NGOs too are beefing up their private sector teams – both in terms of engagement with businesses to design and implement “inclusive” business models, as well as their more traditional emphasis on campaigning.
While I am heartened by the greater emphasis on the positive contribution that business can make and, as the primary wealth creators in any country, the growing consensus that they need to be part of the conversation this time, I am also concerned that two topics are starting to dominate the discussion – and will, I believe, risk us missing some big opportunities.
The first is business responsibility and the second is business taxation. These are two issues that have caught the imagination of the support bases of the NGOs, but I think they risk diverting us from the real story. Hear me out. Clearly, I am not against either. All progressive companies believe in behaving responsibly, and NGOs play a vital role in ensuring all companies do so. And taxation is obviously a key contribution that companies make to supporting the government financing of effective public services. A fair, efficient and predictable tax system underpins all successful economies.
Here are the problems. The responsible business lobby is out of step with how far the business and development discussion has come. We have moved beyond questions of “why” business should be involved, to “how”. The conversation has become much more granular around issues like how to scale inclusive value chains in agriculture (see for example, this recent study by Dalberg) or how best to measure the development impact of companies’ core business operations (the World Business Council for Sustainable Development and the Business Innovation Facility are among those driving thinking here – check out the audio from our recent event on the topic here). Meanwhile, a wave of entrepreneurs (and “intrapreneurs” within large companies) is bringing new energy to solving development challenges (just take a look at the many stories profiled on Business Fights Poverty). My sense is that these individuals have no patience for ideological debate – they are on the ground exploring new long-term, scalable solutions. The point is that the conversation has moved beyond “do no harm”, and even beyond companies “doing good”, to companies “doing good by doing good business”.
In short, the new development goals should look constructively at the positive opportunities that businesses bring to making the world a better place.
On tax, the NGO-promoted story line that is emerging is that the exit strategy for aid is the tackling of tax avoidance. Without getting in the high-emotion intricacies of the tax debate (which I have blogged about here), the central flaw with this argument is that it focuses once again on cash. The fact is that development happens because people have access to economic opportunities and ultimately greater choice. The true exit strategy from aid is a vibrant domestic and international private sector – one that will create the vast number of jobs and entrepreneurship opportunities needed (two things prioritised by poor people themselves).
The new development goals need to be underpinned by a clearer recognition of the role of the private sector in driving long-term development, and therefore the factors that are needed to help it grow: better business climates; progress towards a fairer international trading system; improved regional, national and rural infrastructure; a greater emphasis on agricultural development; support for women entrepreneurs; tackling the financing gap for small and growing businesses – to name a few.
Focusing on the tax payments of a few high-profile corporates, while I understand this plays well in a Northern-focused campaigning strategy, risks shifting attention from what really matters to those we are all trying to support – poor people around the world.
One final concern: the negative and combative tone of both the business responsibility and tax campaigns is completely out of step with what is an increasingly collaborative approach to engaging the private sector in issue-focused multi-stakeholder partnerships. Grow Africa and Scaling Up Nutrition are just two examples of this new, constructive approach to tackling big development challenges by combining the strengths of different parties. Graham Baxter, from the International Business Leaders Forum, made a very important point at Tuesday’s event. MDG 8 – which covers partnerships - was very weakly defined. One tangible goal to include next time round, he suggested, could be to set up national-level multi-stakeholder partnerships to help deliver on the social, economic and environmental outcomes prioritised in the new framework.
Getting business on the agenda is a huge success. But let’s make sure we have a more sophisticated and ambitious discussion about business than currently appears to be emerging.
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Just a quick thought. Since there seemed to bes one agreement the other evening that the post 2015 goals should, if possible, be short and punchy, the question we should be asking ourseLves is what poverty reducing GOALS can business uniquely contribute to?
Obvious ones would be high quality jobs and sufficient tax take to allow governments to adequately fund essential public services.
Structuring goals in this way then allows one to incorporate both “responsible business” aspects, but also private sector driven growth aspects. Clearly the devil would then be in the detail of how each company and country would try to support the achievement of such goals.
“The fact is that development happens because people have access to
economic opportunities and ultimately greater choice. The true exit strategy
from aid is a vibrant domestic and international private sector”…. hmm!
Aid is not only transferring funds, and development is not only economic. Nation building, development of structures and policies and implementation of social programmes based on this, are conditions for both social and economic development. Bilateral and multilateralcooperation (the UN, UNICEF, WHO etc.) pay a key role in social development. As one example, infant mortality had never declined the way it has would it not have been for this cooperation, (transfer and adaptation of knowledge). This does not happen automatically and it is a requirement also for economic development. Business can play an important role in development but can never replace aid or foreign cooperation. Poverty is not only economic,