SEATTLE — Recently in the Economist magazine, President Obama reprimanded big business, saying companies should focus more on social responsibility. Most businesses, though, are logically concerned about making a profit.
Business also has the capacity to help the world’s poor, and while larger companies are gaining profits, many of those in poverty are excluded from this success.
Larger companies have a reputation for human rights abuses, poor working conditions, skirting the tax system and destroying the environment.
For example, in Colombia, foreign mining companies take land from communities of Afro-Colombians and indigenous people.
The abuses of business are also seen in popular brand names like Starbucks and Coca Cola, as well.
Starbucks and the country of Ethiopia were embroiled in a conflict in the mid-2000s over Ethiopia’s desire to trademark their regional coffees. Some of the brands sold in coffee shops for over $24 per pound, while coffee farmers received $0.60 to $1.10 per pound.
Around 15 million Ethiopians are coffee farmers, and coffee is integral to Ethiopia’s economy.
The National Coffee Association and Starbucks both blocked attempts to trademark regional names, but Ethiopia eventually gained the rights to license its product. This was in part due to the attention Ethiopia gained through the conflict.
Ethiopia is expected to reach as much as four times the revenue from coffee exports as it did before its efforts.
One industry that is doing more than just blocking profits is the infant formula business. Free samples of formula given away inside or outside hospitals gets infants and mothers hooked on the product.
Breastfeeding is the healthier option, and using formula commonly leads to underfeeding, malnutrition and a weakened immune system. Mothers who use formula early often lose the desire to return to the healthier option, and sometimes they cannot if they want to because their milk production has stopped.
Marketing in developing countries tells mothers that formula is better, creating a consumer where there is no need for one.
Companies fight hard for these new parents because 93 percent of infants will remain on the same brand of formula that they start with. The industry makes $4 billion per year.
In some regions of the world, it is not even formula that is causing under-nutrition.
The marketing of Coca Cola brand’s Fanta has led to health problems in West Africa. Doctors have found that some parents have replaced milk or formula with the soft drink, causing malnutrition and dehydration in infants.
Coca Cola has been involved in other conflicts, as well.
In India and Latin America, Coca Cola bottling plants are causing water shortages. One Indian region reported that local farmers did not have enough water to irrigate their crops after Coca Cola established plants.
It takes 2.7 liters of water to produce 1 liter of product.
Coca Cola is attempting to make a difference, though. The company expressed a desire to make water attainable. By 2020, the company will invest $17 billion in Africa’s water supply.
Business does have the ability to empower impoverished people beyond investments in infrastructure, as well. Small local businesses can provide people jobs and livable incomes, and they can boost local economies.
There are also untapped markets among the world’s poor for big business. Businesses can enter these new markets, providing both profits for them and better living conditions for their consumers.
There is an ethical debate over making money off of those in poverty, but it does have the ability to help them if done well. The key is listening to customer needs and creating a business model around serving those needs.
The social welfare of consumers is an often-neglected part of the business community, but it is an important one. Beginning in 2016, large European businesses will be required to track their impact on society, human rights, and the environment, as well as their basic financial operations. The goal is to encourage business to make a difference in people’s lives.
Socially responsible business could help raise many more people out of poverty.
– Monica Roth
Sources: The Fiscal Times, The Guardian, World Intellectual Property Organization, New Internationalist, UNREASONABLE.is, The Scotsman, Spiegel Online International, Star Tribune
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