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May 15, 2006
Are NGOs Returning to Activist Roots, or are they Maturing? How does Business Respond?
I attended a fascinating dinner on Wednesday in New York City, hosted by Pfizer (an Edelman client), the Kennedy School of Government at Harvard and the Prince of Wales International Business Leaders Forum. During the cocktail period, I met George Kell, who runs the UN Global Compact, businesses (such as Edelman) that have signed onto operating principles including sustainability and human rights. Kell believes that the recent period of cooperation between non-governmental organizations and corporations is coming to an end. He suggests that NGOs are recognizing a diminishing return from their focus on the Bush Administration, limping into lame duck status. The impending Summer Olympics in China is also a golden opportunity to press business, vitally interested in that country, into agreeing to global standards of behavior.
Why does this matter? The Edelman Trust Barometer indicates that NGOs are the most trusted institution (over business, government and media) in 10 of the 11 markets surveyed in 2006. As trusted brands, the World Wildlife Fund and Greenpeace rank as highly as Microsoft, Samsung or Sony in countries as diverse as China, the UK and Brazil (It is interesting to note that only in the US and Japan are these NGO brands not so highly ranked).
His former colleague, John Ruggie, UN Special Representative on the issue of human rights and transnational corporations and also Harvard Faculty Chair for the Harvard Kennedy School CSR, suggested that NGOs are now holding companies to responsible actions through:
1) Extended liability--beyond the core business, all the way from sourcing to retail. This is a long-standing expectation in consumer facing business, originally for the textile and shoe companies (GAP, Nike), now in coffee and chocolate.
2) Extended complicity--if there is an opportunity to help to solve a problem and the company fails to take advantage, then the company is targeted. An example would be Coca Cola which declined a request from an HIV AIDS group about using its refrigerating capacity in trucks, at wholesale and retail to keep drugs in a fresh state, then was lampooned outside of the an HIV AIDS meeting in Barcelona, Spain with a giant condom saying Boycott Coke.
3) Protecting Your Markets--An example would be Heineken in certain African markets, which donates money to community based treatment centers for HIV, preserving the health of its target consumers 24-45.
4) Ensuring Health of Your Work Force--Examples would include Standard Chartered Bank which loses up to 10% of working days in some African markets from HIV related illness, attending funerals etc. Or DeBeers (disclosure: client) which does HIV screening and offers free treatment to its workers and their families.
While there continues to be "name and shame" campaigning organizations, the NGO sector is also maturing. There are an increasing number of NGOs who bring technical/regional expertise and are "doing business" with MNCs - Conservation International helping Bunge (a client) train farmers in Brazil on sustainable agriculture techniques; Oxfam partnering with Unilever to do an economic impact study on the contribution that a MNC has on a less-developed market where it does business (in this case Indonesia).
The way forward is what MNCs are doing to serve CK Prahalad's bottom-of-the-pyramid markets - not as charity cases, but as customers - be it for single-serve health & hygiene products, micro-finance products, and wireless ITC. In Edelman/Harvard/IBLF survey of Fortune 500 companies, global NGOs, global media and institutional investors, all agreed that MNC should view less-developed markets as an opportunity to grow market and increase shareholder value.
There are a few issues for business to consider in this environment:
1) Is a company ready to make a long-term commitment? There is no easy exit strategy once you are committed.
2) Can the company outline a plan to self sufficiency for the social actors? For example, Rajiv Gupta of McKinsey eloquently described a plan to increase the supply of health workers in India, which began with a think tank on public health to affect public policy, creating institutes for public health and making health a respected and desireable profession.
3) Can the company identify its areas of core competence (logistics, marketing, management) and how it can work along side NGOs who do the actual service delivery (note that companies are not credible actors in public interaction and are too vulnerable to political pressures).
Posted by Edelman at May 15, 2006 12:52 PM |
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Comments
Your 5/15 blog entry, which focuses on business involvement with NGOs in development issues, also resonates with the work we are doing to involve major companies in responding to disasters -- thorugh the Business Roundtable and the program we manage Partnership for Disaster Relief. However, in this area I'm not so sure NGOs (in this case relief agencies) have matured that much. Businesses are eager to become involved and have a seat at the table in disaster planning as well as response -- galvanized by the Katrina experience because it affected their operations and employees directly. And we have developed guides for companies' local country managers and general employees in working with NGOs and making effective contributions. The NGOs have been hard pressed, however, to figure out how to work with business -- aside from fundraising. This is an area we are pursuing and welcome your thoughts.
Posted by: Maria Schneider at May 23, 2006 9:24 AM