By John Humphrey
A few weeks ago Oxfam America published a poverty footprint analysis on the Coca-Cola/SABMiller value chain in El Salvador and Zambia. I’ve just got round to reading the report, and have been mulling over what it tells us about assessing private sector impacts on communities. Here are my top five:
1. Big business cares about its impact on communities around the world – businesses are waking up to the need to understand the impact of their activities on poor people. They’re recognising the benefits of transparency and accountability – not simply of corporate social responsibility. I think we’re going to see many more reports like this in the future, coming out of partnerships between the private sector, NGOs and academics.
2. We need to better understand evaluation methodology – the team that produced the report consisted of company representatives, staff of global consulting companies, NGO staff and local researchers. These different groups used a broad range of tools, including interviews, focus groups, surveys and direct observations. Here at IDS we’re working to develop methodologies for research on the impact of the private sector that are rigorous, easy to adapt to changing contexts, and that give us results we can turn into action.
3. The major impact of companies is not in direct employment – the results show that staff employed directly by SABMiller were only a small fraction of the total number of people who worked in the chain. Many more people were employed in supplying inputs, particularly sugar, to the processing plants and in the distribution networks. This pattern was also seen in Oxfam UK’s study of Unilever in Indonesia.
4. Time will tell whether the recommendations are put into practice – the report makes a whole series of recommendations for Coca-Cola/SABMiller, including the need to monitor whether existing labour standards are met, and establish business training for women in the value chain. Implementing these will require time and resources, and in some cases, a rethinking of their approach.
5. What is businesses and development about? – the report documents quite carefully how the operations in El Salvador and Zambia generate incomes and employment. But all businesses do this. The point of business and development is to enhance growth and poverty reduction outcomes by doing business differently. The report does show that there have been explicit efforts to address some environmental issues, particularly with respect to water. Addressing some of the social issues in the value chain, particularly with respect to gender and informal employment, will be more difficult. The Unilever Indonesia report shows that quite a lot can be done. A repeat of the assessment exercise in one or two years' time will be valuable and revealing.