Doing business, doing good — or both?

NGOs want to see the private sector “go beyond where there is a business case” in their development partnerships.

Corporations may not be convinced — yet their motivations to engage in development are often more complex than purely financial, suggesting there is potential to explore these new forms of partnership.

“At the intersection of business and development, it’s very attractive to look at places where business is going to make more money,” Erinch Sahan, private sector policy adviser at Oxfam UK, said at a Devex Impact meeting of government, business and NGO representatives in London on Monday. “But business can do that on its own — it doesn’t need development actors to show them where they can make more money.”

The real challenge, he argued, is to enter what might be “uncomfortable” territory.

The rationale for development partnerships tends to focus on the win-win. The U.S. Agency for International Development, for instance, works with the private sector “not only to make our work more effective, but also to deliver better results for those companies,” said Ricardo Michel from the agency’s Office for Innovation and Development Alliances.

Business vs. moral imperative

For some companies, the gains of tapping into emerging markets are obvious.

Visa’s work on international remittances on major corridors such as U.S.-Mexico or UAE-India is “core Visa business,” according to Robert Meloche, director of corporate responsibility. “That didn’t come out of our corporate responsibility group.”

In other cases, benefits may be more subtle.

Oxfam sits on Marks & Spencer’s sustainability advisory board — an input highly valued by Louise Nicholls, the British retailer’s head of responsible sourcing, who likened it to that of “a critical friend.” The company’s partnerships, she said, are part of a long-term corporate strategy: Marks & Spencer aims to become “the world’s most sustainable retailer.”

KPMG, on the other hand, couches some of its development work in purely moral terms. The professional services firm supports a Millennium Village on the tiny island of Pemba, Tanzania, with millions of dollars from partnerships, said Lord Michael Hastings, the firm’s global head of citizenship, who added: “We have no business on the island, and seek no financial return.” The motivation, he stressed, is simply a sense of responsibility.

What to expect

Expectations for morally-driven business engagement on a large-scale, however, may be unrealistic.

While Visa is prepared to invest in pilot projects in small markets like Rwanda, the company is not about to offer preferential treatment to developing country clients, whom it prefers to see as just that: clients. The broad strategy should be to get the cost structure right, argued Meloche — affordable yet profitable. Cutting out payments from the poor, though aid workers would like to see that, would not only be unsustainable but also “paternalistic.”

That unresolved conflict further reinforces the need to be clear on motives, something on which all sides, at least, seem, to agree. Being clear, said Michel, also informs what partners measure for — and allows USAID “to walk away” from a relationship where targets are not being met. This is not a bad thing. “What we’ve found is it actually strengthens our mutual trust for each other in that we won’t just pursue things out of passion or altruism but based on what the ultimate goal was,” he explained.

Sometimes, collaborating on uncomfortable issues brings results. Last year, Oxfam — which both campaigns on the negative impact of business and partners with the private sector — successfully convinced Coca-Cola,  the world’s largest sugar buyer, to address a number of land rights issues in its supply chain, including zero tolerance for land grabs.

But major aspects of development partnerships remain unresolved, among them defining their real impact. That includes taking account of possible negative effects, like job losses, and evaluating indirect impacts, for example the savings made by a farmer that are invested in his daughter’s education rather than in his farm.

Finally, though major donors including USAID have agreed to publish all aid information to a common standard by 2015, it is unclear if business could commit to the level of transparency expected by campaigners such as Publish What You Fund. That’s partly due to the difficulty of standardizing measurement across very different sectors, but also, said Nicholls, about defining “good transparency”: is it about sharing the details of the positive and negative aspects of all their programs, or is it publishing a factory list?

“It’s still something we’re very much grappling with internally,” she admitted.

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