September 14, 2005
Business Impacts on Millennium Development Goals: A Virtuous Cycle or a Coin Toss?
by William Baue
A new World Business Council for Sustainable Development report profiles corporate initiatives to
alleviate poverty, but focuses less attention on how business may confound such goals.
The notion that business plays an important role in alleviating poverty and other United Nations
(UN) Millennium Development Goals (MDGs), a main topic of discussion
today at the UN's 2005 World Summit,
has been well established by academics C. K. Prahalad and Stuart Hart. The World Business Council
for Sustainable Development (WBCSD), a global
coalition of 175 companies committed to sustainability, furthers the case with the release today of
a report on 14
member projects (of 66 in the works) making advances toward achieving the MDGs.
world leaders gather in New York to review progress on the Millennium Development Goals, it is
becoming increasingly apparent that we are falling far short in meeting these vital targets,"
states WBCSD's CÚcile Churet, lead author of the report entitled Business for Development.
"[S]trengthening the role of business--the prime engine of wealth creation--in development efforts
offers a tangible, sustainable opportunity to bolster our efforts to combat poverty."
profiles make a strong case that "inclusive business," or corporate initiatives geared toward the
three billion people living in poverty at the bottom of the pyramid (BOP--as opposed to the
privileged 75 to 100 million perched atop the economic pyramid), represents a win-win situation.
In addressing the unmet needs of this huge market, corporations profit not by large margins but by
volume. Furthermore, companies are developing "social impact" tools to measure the positive
effects of business on disadvantaged communities where they operate the world over.
report also documents increasing movement away from adversarial and toward collaborative
relationships between companies and nongovernmental organizations (NGOs)--13 of the 14 case studies
include such partnerships. For example, Proctor & Gamble (ticker: PG) collaborated with AmeriCares and the International Rescue Committee to provide enough of its PUR water
filters for more than 10 million liters of potable water to Sudanese refugees fleeing the genocidal
regime in Darfur to northern Chad.
The report candidly admits some of the critiques of the
case for inclusive business, including its environmental implications.
"If we succeed in
raising the standard of living of some three billion people, this will undoubtedly dramatically add
to the stress on our environment," Ms. Churet allows, then quickly explains positive "leapfrog"
benefits of solutions to this dilemma. "[T]here is a great opportunity to design, from the outset,
innovative solutions and technologies that will minimize the negative impact of increased
consumption on the environment."
Indeed, ensuring environmental sustainability is one of
the eight Millennium Development Goals, as is developing a global partnership for development.
Other MDGs include reducing child mortality, improving maternal health, promoting gender equality
and empowering women, combating HIV/AIDS, malaria, and other diseases, and achieving universal
However, the report is less candid about how business initiatives may
advance certain MDGs while simultaneously curtailing others. For example, the report details how
BP (BP) promotes
the development of small- and medium-sized enterprises (SMEs) along its supply chain through an
Enterprise Centre it opened in Baku, Azerbaijan in 2002.
"In 2004, BP's direct spend with
SMEs, local JVs [joint ventures] and state-owned firms reached $200m, and the company did business
with over 200 local SMEs," the profile states.
However, the profile underemphasizes the
primary reason BP is in Azerbaijan: to exploit the Baku-Tbilisi-Ceyhan (BTC) pipeline, and it
completely elides that fact that the project is the subject of persistent and ongoing critiques due
to its social and environmental impacts. The CEE BankWatch Network, an NGO with members from 10 Central and
Eastern Europe (CEE) countries, has compiled a laundry list
of reports finding fault with the pipeline, for example potential human rights abuses in Turkey and
environmental threats to sturgeon stocks in the Caspian Sea.
"The environmental and social
problems caused by this project may be in Azerbaijan, Georgia, and Turkey but these problems are a
result of decisions made by the British government and British companies," said Hannah Ellis, a
campaigner for Friends of the Earth UK, just yesterday. "It is now time for the British government
and BP to take responsibility for the environmental and social problems they have caused."
While BP may be creating benefits for SMEs in Azerbaijan, the report does not place them in the
context of the social and environmental problems created by the pipeline.
good for development and development is good for business," the report touts, depicting the two
propositions as complementary components in a virtuous cycle.
Or, put differently:
"Economic and social development at the bottom of the economic pyramid are the two sides of the
same coin," says Prof. C. K. Prahalad, author of seminal The Fortune at the Bottom of the
Pyramid, of the WBCSD report. "This study highlights both the opportunities and the
Prof. Prahalad is accurate in stating that the study looks at both
opportunities and obstacles, but he assumes that development at the BOP necessarily creates
positive social and environmental impacts. Perhaps a better way to visualize the proposition is
with the coin as a whole representing economic, social, and environmental development at the bottom
of the pyramid. However, one side represents positive advancement towards achievement of
Millennium Development Goals, and the other side represents social, environmental, and economic
negatives for the BOP.
Flipping the coin, there's an equal chance of landing on either
Put differently: the cycle is clearly powerful, but it is not necessarily