MHC International Limited – News Item
I noted that in confusing times our way of life was threatened by terror that strikes out of the blue. Martin Wolf of the Financial Times put this neatly when he asked:
“Why do they hate us so much? Along with the shock, anger and grief comes this question. What makes men plan and execute an atrocity on the scale of September 11? To these questions, many offer two answers: their poverty and our policies. Poverty fuels desperation; our policies stoke humiliation. Desperation and humiliation breed terrorism. The answer is to end the poverty and change the policies”
Supply and demand response
CSR and poverty
Can CSR have a positive effect on reducing poverty? CSR is a good thing in itself since it leads to better treatment of stakeholders from improved codes of ethics, better conditions for employees, concerns of local communities being considered and less damage to the environment etc. It also leads to increased allocations to philanthropic causes. However, the direct impact of corporations on alleviating poverty, and remember I am talking about large TNCs and not the ëprivate sectorí, is likely to be marginal on the supply side. This is because:
- Poor people don’t work for TNCs
- TNCs do not create many jobs – even the largest corporations only employ about 100,000 to 200,000 compared to a world labour force of 2 to 3 billion
- Suppliers to TNCs tend to be high tech. and do not employ poor people in general
On the demand side there is more that TNCs can do such as:
- Making sure that products and production processes are safe
- Ensuring a pricing policy that poor people can afford (AIDS drugs are an obvious example)
- Respecting the environment
- Having a philanthropic policy that focuses upon sustainable anti-poverty measures (but see the weakness of philanthropy )
In conclusion, there are a number of steps that corporations can take that will impact on reducing poverty. But, these steps are unlikely to lead to major reductions in the numbers in poverty especially as the main focus of business is business which is where their experience lies – few within the walls of TNCs know anything about poverty alleviation programmes and, unfortunately, the rationale for TNCs to have such persons is not overwhelming. Neither do the above lists suggest that there is a lot of mileage in focusing upon anti-poverty measures with the exception of the last item above. Thus the case for a corporation to have a corporate poverty department is not strong since an emphasis on poverty alleviation is unlikely to help a corporation make profits. They may wish to do this for PR or philanthropic purposes but the direct business benefit is not high.
On the other hand, the case for TNCs to have a CSR department is much stronger. There are strong benefits across the board for each stakeholder who, in general, will not be those in poverty. Consequently, even though it is certainly morally and ethically acceptable for corporations to be involved in poverty alleviation the argument plays less well in the boardrooms in Dallas, Tokyo, Hong Kong and Jakarta simply because the impact on profits is marginal. Nonetheless, the atrocities being committed around the world are of obvious direct concern to corporations. Consequently corporations will be asking themselves what more they can do that they are not already doing – CSR provides a framework for analyzing these issues.