Thursday, 9 August 2012

Our uncertain relations with commercial interests....at the Olympics and in international development

By Spencer Henson

One of the common complaints about the 2012 London Olympics, at least if you believe the media, is the ‘stranglehold’ commercial sponsors have over what you see, what you can eat and even what you can wear whilst at the Olympic Park. The underlying discourse is that some very large and powerful businesses have monopolised the Olympic experience. Certainly if you witnessed the torch relay, one of the most conspicuous (and unfortunately most memorable) parts was the large and very loud vehicles promoting the products of sponsors....Samsung, Coca Cola, Lloyds Bank and the like. These are all brands that we see (and buy and use) on a daily basis.  But evidently we sometimes feel that commercial sponsorship goes too far.

The IOC has long-established relations with ‘big business’, including the likes of Coca Cola and McDonalds. Further, in the case of the London Olympics a decision was made locally to court commercial sponsorship, at least in part to cut the cost to the public purse. We can question whether this is a sound (or even right) thing to do. However, once commercial money was taken, what did we expect?  Businesses might be willing to hand over some of their cash in order to be charitable and to ‘look good’, but they mainly engage with the Olympics because it furthers their broader commercial interests. This means getting their brands exposed to consumers, selling more of their products, and making a profit. We might have got a bigger and better Olympics as a result (although some may question this), but at the inevitable cost of greater commercialism.

There are interesting parallels with the role of business in international development. Increasingly, donors, NGOs and the like recognise business as critical to development.  Their expertise, commercial might and resources are seen as vehicles to economic growth and lifting the masses out of poverty. For example, both CARE International and Oxfam, well-respected development NGOs, now work quite closely with business, including some major multinationals. Some question whether this is a sound (or even right) thing to do, in principle (seeing it wrong to make a profit on the ‘backs of the poor’) or reflecting a belief that commercial pressure will inevitably drive down wages, bring about unsustainable practices, etc.

Even the proponents, however, must be realistic about what to expect if we ‘get in bed’ with business. Beyond their corporate social responsibility (CSR) agendas, businesses will engage because it means they sell more, cut costs and make a profit. The hope is that we will get quicker and ‘more’ development as a result. The job for those of us in development is to make ‘doing development’ profitable.

Once you accept that it is okay to work with business in principle, there are perhaps even trickier questions over which businesses it is okay to work with. In the case of the Olympics, there are concerns that businesses that produce soft drinks and fast food are incompatible with an event that is supposed to promote sport, and by implication fitness and health. Parallel debates in international development relate to businesses engaged in arms, mining, tobacco and agribusiness. One approach to this conundrum is to deem ‘off limits’ all businesses in particular sectors; maybe soft drinks in the case of the Olympics and tobacco in the case of development? This is the way many ‘ethical’ investment funds work. However, whilst such an approach is quick and easy, presumably all businesses potentially have some positive development impacts to the extent that they buy things from local businesses, employ people, pay taxes, etc. At the same time, businesses operating in sectors that are deemed acceptable may at time do things we don’t like, such as paying low wages or polluting the environment.

An alternative approach is to look at business on a firm-by-firm basis and to assess whether it meets certain minimum standards, on respect for local laws and customs, labour practices, protection of the environment and the like, that are in line with sustainable development. But what minimum standards should be required, and who should determine whether a particular firms meets them or not? The history of global governance in this context is not great.  It is difficult to get autonomous nation states (with differing interests) to agree on what practices should and should not be allowed, and even more so to then do something about the practices deemed ‘off limits’.

Inevitably, therefore, we have become reliant on private modes of business governance whereby firms regulate themselves and/or one another.  This is where we come back to commercial interests. Private governance only works when there is a solid business case for firms to comply, by selling more, cutting costs and making a profit. Again, the job for those of us in development is to make ‘doing development’ profitable.

This begs the question, how do we make ‘doing development’ profitable for business? There are various ways in which those who work in development can contribute here. Just a few are noted ‘for starters’:
  1. Help make businesses aware of their impacts on development, both positive and negative.  This requires the use of rigorous approaches to impact assessment and communication of the results in a manner that will attract the attention of business decision-makers. 
  2. Create demands for actions by businesses that are ‘good’ for development amongst consumers, investment institutions, public procurement agencies and trade unions.  Again there is a major role for development communication here.  
  3. Help businesses work in developing countries, both in general and in a manner that is ‘inclusive’ of the poor.  Those who work in development have a wealth of knowledge regarding the situation on the ground and on what works and what doesn’t.  The challenge is creating the willingness and incentives for development practitioners and researchers to share this knowledge with businesses who wish to make investments.

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