Nathan Wyeth

Oxfam’s ’Poverty Footprint’ For Business: Know Thyself

In a recent weekly roundup I highlighted an Oxfam “Brief for Business” (pdf) on their Poverty Footprint Methodology. This methodology – a truly intelligent and comprehensive approach to “corporate social responsibility” is important for several reasons that I want to highlight, especially as more and more multinationals begin targeting the base of the pyramid segment with affordable products.

To me, the bottom line is that even as multinationals choose to seek out base of the pyramid customers with products to improve their lives, there is an equal responsibility (and opportunity for positive impact!) by ensuring that getting those products to poor people does not hurt or impoverish other people in the process.

As examples from the Oxfam report hightlight, in ensuring this businesses may improve their operations all around, and increase their ability to sell products to the base of the pyramid.

The footprint analogy, borrowed from the use of the term for carbon and climate change, is one that I think will have greater efficacy with the corporate decision-makers who must enable any evaluation of their company’s operations, then make changes.

In my view a key weakness of many CSR efforts is that, if they relate to a company’s core operations at all, they are cherry-picked according to pet interests or fads – or what a company would prefer to have the spotlight on to the exclusion of something else. It’s quite likely in fact that the business’s social impacts that are most difficult to deal with will be ignored – because they can be.

The footprint concept itself emphasizes that multinationals must be comprehensive and inclusive when looking at their operations. The Oxfam methodology looks at supply chains, of course, but also:

  • Value chains including product distribution
  • Macro-economic impact – how a company operates with society vis a vis its taxes, distribution of profits, employment, etc.
  • Institutions and policy – how a company’s interactions with government and civil society affect the poor
  • Social implications of environmental policies
  • How their product development and marketing affects a community’s culture, health, and ability to obtain essential goods and services.

These are all obvious hallmarks of good corporate citizenship. But when grouped together it becomes more clear how hollow it is to look at one area but not another.

But the footprint concept also gains increased power and currency because it can help a company understand the parts of its own operations into which it has poor visibility. Especially when companies are oriented around marketing to the base of the pyramid.

As the Oxfam report reveals, when Unilever piloted a footprint study in Indonesia, they discovered they were employing twice as many distributors as they realized, most of whom were working part time. This knowledge allowed them to hone and improve their distribution.

Meanwhile, a footprint analysis for Harian Kissan Bazaar forced the company to analyze its impacts and operations in terms of gender, whereupon they discovered that 70% of their customers and clients were women.

Understanding how purchasing practices impact base of the pyramid suppliers may lead to undersatnding of how to improve relationships, impact, and ultimately the supply chain itself. Similarly, understanding how company practices impact sub-contracted distributors might allow them to create happier, and more effective, distributors.

It hasn’t been until companies started looking at the base of the pyramid as potential customers that they realized they could design and sell new helpful products to them. It’s not until they look into all the aspects of their operations, including the ones they may not want to, that they’ll understand how to make their operations better for all involved.

And if they don’t… Oxfam’s campaigning arm will probably point it out before too long.