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July 14, 2004
How HIV/AIDS Impacts Corporations, and How Corporations Can Impact HIV/AIDS
    by William Baue

The World Economic Forum and the International Labor Organization report on the impact of HIV/AIDS on business, but will companies respond by addressing HIV/AIDS?

Ronald Reagan, the recently deceased former US president, famously refused to mention HIV/AIDS until 1985, three years after the US Centers for Disease Control pronounced it an epidemic. The corporate community has similarly been slow to acknowledge the potential impact of HIV/AIDS on business, but this chilly reception has begun to thaw.

Earlier this year, the Global Health Initiative (GHI) of the World Economic Forum (WEF) released findings of an executive opinion survey that reveal the global level of corporate response to HIV/AIDS. And just this week, coinciding with the convening of the 15th International AIDS Conference in Bangkok, the International Labor Organization (ILO) issued a study analyzing the impact of HIV/AIDS on the global workforce.

"These two reports are some of the best research out there in terms of the impact of HIV on the private sector," said Dan Rosan, director of the public health program at the Interfaith Center on Corporate Responsibility (ICCR), a faith-based shareowner advocacy group. ICCR filed shareowner resolutions asking Coca-Cola (ticker: KO), PepsiCo (PEP), and the big four pharmaceutical companies--Abbott Laboratories (ABT), Merck (MRK), Bristol-Myers Squibb (BMY), and Pfizer (PFE)--to report on the economic impact of HIV/AIDS. "There's a real gap in the research, and there's still a gap--the ILO and WEF studies begin to fill it, but there's a need for companies, investors, and others to put resources into research."

The ILO study reports that of the 35.7 million people between ages 15 and 49 estimated by UNAIDS to be infected with HIV, 26 million are workers.

"The time of the highest risk of HIV transmission coincides with the peak years of productive life in adult men and women," said Juan Somavia, director-general of the ILO.

Including all working-age people, including those up to age 64 and others, raises the estimated number of HIV-infected workers to 36.5 million.

HIV/AIDS robs the global labor force of workers and saps productivity and profitability not only by causing death and illness, but also by diverting healthy workers' time to care for HIV-infected relatives, according to the report. By next year, the global labor force will have lost an estimated 28 million workers to AIDS since the start of the epidemic, with an estimated 20 million more lost by 2010, according to the report.

"One of the great things about the ILO report is that it starts to quantify how HIV is a clear material risk to longterm corporate prospects--the way the labor market works has a huge impact on corporate growth," Mr. Rosan told "The ILO report is a view from 30,000 feet, which is great because we didn't have that before, but we also need to get the view from the country level and the firm level."

The WEF report starts to do so. The report, entitled Business and HIV/AIDS: Who Me?, is based on a survey of 7,789 business leaders from 103 countries. While almost half (47 percent) of respondents feel HIV/AIDS is having (or will have) some impact on their business, fewer than 6 percent have formally-approved written HIV policies, according to the report.

In Africa, home to more than half of the estimated 34 to 46 million cases of HIV, the greater urgency of the problem registers higher in the corporate consciousness, as 89 percent of respondents are concerned about the business impacts of HIV/AIDS. However, only 12 percent of companies have written HIV policies, revealing significant disparity between perception and action.

The survey also reveals other disjunctions.

"Interestingly, business leaders systematically believe that a smaller portion of their workers are HIV positive than national prevalence rates would predict," the report states. "This difference is more, not less, pronounced for businesses that base their estimates on a quantitative survey."

Mr. Rosan suggests that a version of the Heisenberg Uncertainty Principle, whereby the act of observing and measuring changes what is being observed and measured, may be at work here.

"The act of doing the survey and asking questions encourages people to ask internal questions to try to get the answers," said Mr. Rosan. "For the vast majority of companies, observing the impact of HIV on the firm creates a case for action."

"For its part, the World Economic Forum is trying to wake people up," he added.

Why is the corporate world asleep on this issue?

"A large part of it has to do with the role of Africa in the global economy--Africa is very important for diamonds and for the extractive industries such as oil, but it's no secret that economic development in Africa is poor at best, and insofar as people mistakenly see HIV as Africa's problem, they intuitively or emotionally decide that it's not going to impact their company," Mr. Rosan explained.

"It's also connected to the corporate view of HIV/AIDS as a philanthropy or charity issue, when in fact it's an issue that affects corporate operations," he concluded.

GHI agrees: "HIV/AIDS should be a core business issue for every company, particularly those with interests in heavily affected countries," the WEF report states.


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