Are companies the NGOs of the future?

Summary

What will companies look like in the XXIst century? At a time when traditional boundaries between Governments, NGOs and the private sector are becoming blurred, large companies are moving into areas bordering on humanitarian aid. How far will they go?

25Sept.
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In the crisis-ridden societies of the future, companies, the last organisations left standing, will prosper, and grow to the size of global trusts and inter-galactic firms. In Wall-E, Buy n Large, which was the monopoly supplier of consumer goods before planet Earth was buried under rubbish, controls the fate of the last human community, on board a cruise ship. Multinational companies’ hold over the world, an issue explored again and again in science fiction, is a reflection of questions about the role of large companies in our society.

Multinationals have never had such a far-reaching influence on society.

As the main wealth producers and consumption drivers, they are viewed as responsible for the environmental crisis and for exploiting human beings and resources. At a time when “welfare states” are crumbling and there is a lack of world governance, companies find themselves (over)involved in new tasks: combating poverty and environmental damage, and contributing to the wellbeing of society. How far can this shift go?

Corporate philanthropy

From the XIXth century onwards, paternalistic companies have provided a good standard of living for their employees by creating private social welfare systems. Corporate philanthropy is not new, but the goalposts have changed: the Bill & Melinda Gates Foundation’s annual donations are now greater than the WHO’s budget. In the poorest countries, where Governments struggle to provide public services, companies are vaccinating people by the dozen, building facilities, and providing food aid, etc. They are restoring natural landscapes, in order to offset their environmental impact, and prescribing behavioural standards in areas where public regulation is inadequate. Take the Marine Stewardship Council (MSC) for example, which was founded by the WWF and Unilever in 1997 to combat overfishing. NGOs are switching from protest to cooperation, and are supporting companies in initiatives such as Lafarge-WWF, Coca-Cola-Oxfam, or Total and Pro-Natura in Nigeria. Although some NGOs are still holding out, a number of them are now advocating partnerships and exchanges in order to shake things up.

Companies are also providing emergency aid when natural disasters occur. In Haiti, Sodexo donated €100,000 to the United Nations World Food Programme, which was providing food supplies to the victims, while Aquassistance, the GDF Suez employees’ humanitarian aid organisation, was involved in supplying drinking water on the ground alongside Action contre la Faim (War against Hunger). Multinational companies, which are structured and efficient, have the resources and technical expertise to combat poverty that governments and NGOs sometimes lack.

At the bottom of the pyramid, there are still 1.3 billion people who live on US$1.25 a day. Meanwhile, over 50% of the world’s population manages on less than US$2.50 a day, according to the World Bank.

In fact, it is the inadequacy of anti-poverty systems, which are traditionally designed by local and national public authorities, international agencies and humanitarian associations, that is prompting companies to think up new ways to intervene.

A two-faced Janus

The nature of a corporate NGO, striving for social welfare, is ambivalent. As highlighted by the authors of an article [1] “The company appears like the God Janus, whose serene face displays the smiling features of “gentle trade” that contributes towards development, i.e. the solution to world poverty, in a word, while his other, smirking, face displays the features of exploitation, unbounded power and the commoditisation of the world”. There is a clash between these two “faces” in the debate over the social role played by companies. On the one hand, EAR constructs a rational myth of the responsible company, which is both profitable and mindful of the general interest, while on the other, the company is presented as a pathological menace, as in The Corporation, the documentary film, for example. The truth, somewhere between these two imaginary visions, is complicated.

A company is not a legal structure that is incapable of forming a moral judgement. It is managed by individuals who are capable of behaving like good citizens when conducting their business.

However, a company is also subject to market forces, and its primary goals are profitability and sustainability (i.e. the ability to safeguard its profits and provide a return on capital).

Nonetheless, new risks are emerging, including environmental and economic crises, the depletion of resources, and reputational risk, as consumers put pressure on companies, etc. Nowadays, in order to safeguard its long-term profitability, a company must manage the social and environmental risks that are making it change its practices. Taking the common good into account is not a calling, but a strategic issue.

Globalisation is shifting

The analogy between a company and an NGO is illusory, but we can (seriously) imagine what form multinational companies’ contribution to development might take.

By 2030, growth prospects will have shifted from the saturated markets in the Northern Hemisphere to markets in the Southern Hemisphere. Companies will be playing in the same field as NGOs, and developing basic products (equipment, foodstuffs, etc.) intended for the poorest population groups, who are traditionally dependent on humanitarian aid.

By designing very low cost product ranges and setting up distribution networks that are able to reach a large number of customers, companies will seek to combine making a profit with combating poverty. In an environment where resources are becoming scarcer, the most successful companies will be those that are able to adapt to specific cultural factors and to local resources. Strategic tools like the “poverty footprint”, which were still emerging in the 2000s, will have become widespread.

The “poverty footprint” performs a social, economic and environmental assessment along the entire value chain. As the footprint becomes increasingly negative, developing the product becomes increasingly inappropriate from an economic, social and environmental standpoint. The most important criteria for the footprint are autonomy and skills. How will the product provide future users with the skills that are essential to their wellbeing? Will it make consumers dependent on foreign resources? How many jobs will it create, and what will the quality of those jobs be? What will its long-term consequences be for the region and its inhabitants’ resources and autonomy? The “poverty footprint” manipulates these variables until either a positive footprint is achieved or the product is overruled.

This strategy results in a geographical shift in innovation and production.

The global holiday is over. Multinational companies that want to survive are “shifting geographically”, in order to adapt to each area and to create competitive clusters that can manage demand and resources as locally as possible.

Under the influence of first movers, globalisation is beginning to evolve towards an economic system that is both local and interconnected, and that promotes the exchange of capital and skills at new levels, for the benefit of communities. This is not a humanitarian initiative, but a sustainable development strategy.

[1] Structurer le débat “entreprises et pauvretés” [Structuring the “companies and poverty” debate], Frédéric Dalsace and David Ménascé, in Revue française de gestion, N° 208-209, 2010

Photo from: Shutterstock.com/Ammentorp Photography