- SDGs provide a comprehensive framework for addressing poverty in all its dimensions
- Private sector has a significant role to play in poverty reduction through CSR initiatives, sustainable business practices
Poverty is one of the significant issues of the world. There are several causes of poverty. Numerous countries of the world adopt sustainable policies for its reduction. There are also direct and indirect responsibilities of the corporate sector to play a vital role in its reduction. The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. The 17 SDGs are integrated — they recognise that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability.
Countries have committed to prioritise progress for those who’re furthest behind. The SDGs are designed to end poverty, hunger, AIDS, and discrimination against women and girls. The creativity, knowhow, technology and financial resources from all of society is necessary to achieve the SDGs in every context.
Eradicating poverty in all its forms remains one of the greatest challenges facing humanity. While the number of people living in extreme poverty dropped by more than half between 1990 and 2015, too many are still struggling for the most basic human needs. As of 2015, about 736 million people still lived on less than US$1.90 a day; many lack food, clean drinking water and sanitation. Rapid growth in countries such as China and India has lifted millions out of poverty, but progress has been uneven. Women are more likely to be poor than men because they have less paid work, education, and own less property. Progress has also been limited in other regions, such as South Asia and sub-Saharan Africa, which account for 80 per cent of those living in extreme poverty. New threats brought on by climate change, conflict and food insecurity, mean even more work is needed to bring people out of poverty.
The SDGs are a bold commitment to finish what we started, and end poverty in all forms and dimensions by 2030. This involves targeting the most vulnerable, increasing basic resources and services, and supporting communities affected by conflict and climate-related disasters.
Poverty remains one of this millennium’s main problems, which why the first objective of sustainable development is poverty reduction. Multiple actors are working on this issue: states, multilateral organisms, civil societies, and — perhaps less boldly — the private sector, through social responsibility programmes.
Poverty reduction is a global concern. Furthermore, it is a desirable goal for the purposes of successful economic development and it is also “an essential requirement” for sustainable development. Notably, the Covid-19 pandemic has rendered the situation of the poor more acute. In addition, the sanitary crisis has subsequently raised concerns as to whether the first objective of the UN 2030 Sustainable Development agenda could be attainable; in other words, whether poverty elimination by 2030 is even possible.
Governmental, multilateral, and bilateral development agencies, as well as the private sector, are currently developing socially-oriented projects in order to reduce poverty. The companies are interacting with communities in several different ways, as consumers, workers, suppliers, or distributors. Therefore, companies could positively impact poor communities through their value chain or competitive context, which would thus contribute to obtaining a shared value, i.e., both an economic and social benefit at the same time.
Impact of CSR
Corporate Social Responsibility (CSR) programmes with a pro-poor focus, enact a positive impact upon their beneficiaries, particularly through employment generation, an increase in the family income, an improvement in working abilities, social infrastructure improvement (such as schools and hospitals), and the promotion of human rights. However, other studies on the impact of CSR programmes in respect to poverty reduction are not conclusive. There are studies that have concluded that pro-poor programs can even have negative effects, such as nepotism, bribes, fraud, an increase in poverty, and the loss of natural resources.
Big global corporations have defined markets influencing the behaviour of a large number of consumers in the last five decades. There has been massive transformation on the role of the government and the business over the years. The distinction between them has blurred. Many of the corporations yield more power than many governments. Public Private Partnerships is yet another area where both are together. Governments have entered into the commercial domain on one hand and business sector through their CSR activities are doing many welfare and development schemes. CSR is a complex aspect of the relationship between business and society. This has resulted in stakeholder orientation for business from the shareholder management. Shareholders of course are also Stakeholders. Business of business is thus no longer business alone and has to take social responsibilities being part of the society.
Importance of economic growth
We must understand poverty as the denial of various choices and opportunities basic to human development. Poverty had increased with industrialisation. Development thus should not be equated with economic growth, as measured by GDP. Business and enterprises plays a crucial role in the social and economic development of a nation. They are providing livelihoods for the majority of the world’s people and can provide the resources and technologies for eradicating poverty.
No country can ever achieve development in without economic growth. Wealth creation is the key to poverty alleviation. Economic growth and wealth generation are the foundations of business’s capacity to contribute effectively for improved environmental and social conditions and are instrumental in bringing about sustainable development. Business can play important role by providing resources and technologies towards eradicating poverty. The business sector is the most important agents of development and change as they provide 90% of jobs, goods and services and contribute maximum tax revenues for the governments. Business is a core human activity that balances the economic, social and environmental issues over the short and longer term. Business must have clear goals and practical targets to be in its best.
CSR is an increasingly important part of the business environment and a crucial bridge between organizations and society that create awareness amongst Corporates, NGOs, civic bodies and government of the value and importance of social responsibility. It has evolved from Corporate Philanthropy to Stakeholder management and Sustainable development over the years to bridge the gap between the privileged and the disadvantaged of society. CSR is an extension of efforts to foster strong corporate governance. CSR is a commitment to a set of values that recognize the role of business in building a better society. CSR is as a commitment to a set of values that recognize the role of business in building a better society. The concept of CSR has led to the emergence of a variety of practices due to the range of contrasting definitions.
Business and society nexus
Corporations are an integral part of society and influence all aspects of public and private life making them important and powerful players in today’s world. They have a clear stake in ensuring people are treated properly, receive fair and equitable wages, and operate under safe working conditions. Due to increasing influence and power of corporations, CSR is propelled into the limelight in recent years. CSR includes environmental, social, and governance issues and extends beyond the interests of shareholders to the interests and needs of diverse stakeholders. CSR thus links the organisations and society to understand the value and importance of social responsibility among all the stakeholders. They can reduce the gap between the privileged and the disadvantaged of society. Business and society are interdependent.
Business need to take full account of the societal expectations. It is the masses, more than classes that really nurture business. CSR matters as the enterprises can impact their employees, communities and other stakeholders through them. It mirrors the core values of the society when it is developed voluntarily that goes beyond legally- required actions. CSR thus involves increased efforts for aligning corporate goals with those of society. CSR widen understanding of the potential risks and opportunities for the business while offering wider social or environmental gains as it encourages companies to look at a wider range of stakeholder interests. Firms can become more competitive in terms of product quality when they have closer links with consumers understand their needs better. For meeting goals of poverty reduction partnership between business, governments and civil society groups is essential.
CSR offers real opportunities for the governments of developing countries by developing capacity within public policy and regulatory institutions to free up existing resources, and make additional resources through partnership. Public participation is recognized as the face of sustainable development. Public sector actors can mandate public participation in defined circumstances relating to private sector investment as Governments are large-scale consumers themselves. We have now public business coexisting with private entrepreneurship. Public companies were started to avoid monopoly and exploitation. Five roles for public sector engagement with CSR identified by IIED for the World Bank Group are:
- Regulation
- Facilitation
- Partnership
- Endorsement
- Demonstration
Though these roles are distinctive, in practice more than one of these government roles, can be seen in the policy instruments of the governments for promoting CSR In the era of globalization, Corporations and business can no longer confine to the traditional boundaries of the nation-state due to the spread of the market and the change to highly decentralized mode of production. Earlier businesses were more or less localized and periodic acts of charity constituted CSR. With the current global business environment, business must have deliberate policy and strategy to capture the entire environment systematically on sustainable basis. Principles of Sustainable Development is closely linked with CSR and argue that enterprises should be obliged to make decisions based not only on financial/economic factors but also on both the immediate and the long-term social, environmental and other consequences of their activities Contemporary academic literature that analyses or examines the characteristics of efficient CSR strategies in terms of their development impact are not many.
Business sector and entrepreneurship can play a key role in generating wealth, economic opportunity and widespread societal benefits. Prosperous companies are the best guarantee of economic development and job creation. Companies can contribute effectively to the improvement of social conditions by creating jobs and economic growth only when they are profitable and successful. CSR can widen understanding of the potential risks and opportunities for the business while offering wider social or environmental gains when they look at a wider range of stakeholder interests. The drivers pushing business towards CSR as:
- The shrinking role of government
- Demands for greater disclosure
- Increased customer interest
- Growing investor pressure
- Competitive labour markets
- Supplier relations
The development impact of the CSR strategies is complex as it demands for increased transparency, accountability and responsibility. NGO can complement existing state regulatory systems as watchdogs in CSR by monitoring with increased transparency, improved technical capacities, and new mechanisms of accountability for workers and consumers.
Contributions
The impact of CSR and its contribution to development received little attention in the current development economics discourse. The economic and social perspective has a greater potential to treat the interests of all in the society, while the management perspective is oriented in the profitmaking objectives of the corporations. Hence the economic and social perspectives on CSR and its contribution to development need to be considered. Organizations as members, draw resources from society. And must return to society the value of those resources as required by the society. We should kept in mind that:
- Social responsibility stems from social power enjoyed by the firm.
- The firm should disclose to the public its activities through social audit.
- For decision making, the social costs and benefits of social responsibility activities and services should be calculated.
- The Price must include the social costs.
- By improving education, the firms should solve societal problems.
Globally, CSR has emerged as an important area of action for large corporations. These Corporations must find solutions to global problems. Governments, NGOs and the media must make them accountable for the social consequences of their activities. The essence of CSR by his famous pyramid that implies four dimensions from which business strategy should be built.
- The foundation of a responsible company is not to be profitable alone
- Society demands the company to obey the law also
- Expects it to be ethical toward all stakeholders and
- Be a good corporate citizen in the communities it lives and operates.
For Visionary companies CSR is an opportunity knowing that responsible practices are good for society as well as for business. Business leaders have slowly seeing the connection between sustainability and sustaining the business enterprise. Both calls for balancing acts among influential stakeholders between long and short term. Successful economic regeneration is vital for reversing the deep rooted problems of the most deprived areas and require real business involvement to build strong and healthy communities of these deprived neighbourhoods.
Corporations may be influenced to adopt CSR practices by several drivers
- Ethical consumerism
- Globalisation and market forces
- Social awareness and education
- Ethics training
- Laws and regulation good governance, good domestic policies and partnerships with a wide range of stakeholders are vital for development success.
How to measure the impact of CSR Strategy on Poverty Reduction?
Define your objectives: The first step to measure the impact of CSR strategy on poverty reduction is to define the objectives clearly and realistically. What are the specific outcomes that we wanted to achieve through your CSR activities? How do they align with the core business values and vision? How do they relate to the needs and expectations of the stakeholders, especially the poor and marginalized groups? The frameworks such as the SMART (Specific, Measurable, Achievable, Relevant and Time-bound) criteria or the Theory of Change to help set the objectives and identify the assumptions, risks and indicators that will guide measurement process.
Choose your methods: The next step is to choose the methods that will use to measure the impact of CSR strategy on poverty reduction. There are different types of methods, such as quantitative, qualitative or mixed, that can provide different kinds of data and insights. Some of the common methods that are used for measuring CSR impact include surveys, interviews, focus groups, case studies, observations, experiments, cost-benefit analysis, social return on investment, and impact evaluation.
Collect and analyse data: The third step is to collect and analyze the data that will help you measure the impact of your CSR strategy on poverty reduction. One should plan and implement your data collection process carefully, ensuring that the follow ethical and quality standards. Moreover, the involvement of the stakeholders, especially the beneficiaries, in the design and execution is very important. Appropriate tools and techniques to analyze your data, such as descriptive statistics, inferential statistics, content analysis, thematic analysis, or meta-analysis would be required. The aim should be to draw valid and reliable conclusions from the data and to identify the strengths and weaknesses of the CSR strategy.
Report and communicate results: The fourth step is to report and communicate the results of measurement process to the stakeholders, both internally and externally. Clear and concise reports should be prepared that summarize the findings, highlight achievements and challenges, and provide recommendations for improvement. Various channels and formats to communicate the results, such as websites, newsletters, social media, podcasts, videos, or info graphics.
Learn and improve: The final step is to learn from this measurement process and use the results to improve your CSR strategy and performance. It should reflect on what worked well and what did not, and what the factors that influenced this impact are. Feedback should be solicited from the stakeholders, especially the beneficiaries, and listen to their opinions and suggestions. Definitely the feedback to adjust the objectives, methods, activities, and resources, and to enhance the impact on poverty reduction.
The author, Nazir Ahmed Shaikh, is a freelance writer, columnist, blogger and motivational speaker. He writes articles on diversified topics. He can be contacted at nazir_shaikh86@hotmail.com.