CSR, MDGs and the bottom of the pyramid
Friday, September 1, 2006
To be blunt, governments and their international arms including the agencies grouped under the umbrella of the United Nations, have failed in their attempts to rid the planet of underdevelopment and poverty.
Excerpt: At the core of many of the MDGs is the fact that many problems we face are linked to poverty and a lack of access to resources, including education and healthcare. Poverty breeds poverty when people do not have rights to these sorts of resources and lack the empowerment to move outside economic and cultural settings that maintain disadvantage.
To be blunt, governments and their international arms including the agencies grouped under the umbrella of the United Nations, have failed in their attempts to rid the planet of underdevelopment and poverty. And whether they like it or not, corporations are involved in development and should be seen as agents of development. Large corporations, with their power and economic strength, have taken a dominant position in society and need now to recognise their obligations.
However, discussions at the World Economic Forum do show that addressing global poverty is now on the agenda of the world?s leading CEOs. Whilst the contribution of corporations to periodic crisis is clear, there is also now debate about how companies can eradicate poverty and promote the MDGs through their normal course of business. Top business leaders are now increasingly seeing the poorer regions of the world as places they can do business and thereby help local populations. A particular area of interest has been the idea that rather than being a cause for old-style philanthropy, serving the needs of the world?s poor is actually a vast untapped and profitable market for business.
Concepts such as the bottom of the pyramid (BoP) are now well rehearsed. This approach to development argues that there are opportunities for corporations to source from or sell to disadvantaged people in ways that generate wealth, improve their quality of life while being simultaneously profitable. The argument goes on to purport that there is an undeveloped and untapped market waiting at the bottom of the world?s economic pyramid ? a market of over three billion people who earn less than US$2 a day.
Transnational companies such as Unilever, Philips, HP, and Johnson & Johnson have all looked at new business models and strategies aimed at low income markets. This sort of strategy is, however, challenging and requires rethinking of some basic business models, including the approach to pricing.
But perhaps the biggest challenge in the private sector in getting engagement with development is the mentality of managers who do not see how and why they should engage in markets that are intangible and invisible to most large businesses. One of the most important changes in mindset required is to stop thinking of the poor as victims or as a burden and start seeing their potential as entrepreneurs and value-conscious consumers.
