Triple bottom line? Promoting responsible business

Business is talking about the triple bottom line: management of performance and delivery of added value in economic, social and environmental terms. Yet the concept is being taken up only by image-conscious high-profile companies or alternative trade organisations. How can donors encourage more businesses to recognise their responsibilities to local communities, other companies in the value chain, consumers, wider society and the natural environment?

The guidelines of an international plimsoll line or common framework for concerned ‘stakeholder capitalism’, which involves producers, consumers and the international development community as well as business and investors, are set out in a report by the University of Greenwich’s Natural Resources Institute. It argues that even in the age of globalisation and the declining influence of national governments, donor governments have a vital role in nurturing responsible business. Business is eager to involve government in the responsible business debate because it brings legitimacy.

Companies also win kudos through interaction with NGOs and other non-commercial organisations. The report contains examples of joint initiatives where tripartite alliances of companies, NGOs and trade unions have worked together on ethical business initiatives.

Among the key findings which emerge are:

• Due to the power of the environmental lobby, it is in sectors engaged with renewable natural resources (forests, fisheries, agriculture) that responsible business concepts have taken deepest root.
• Many poor people and poor countries cannot engage in export trade and are thus excluded from emerging responsible business initiatives.
• Responsible business initiatives have (with a few exceptions) not addressed the reality that the biggest improvements for poor people come from increasing local value added (e.g. through in-country processing).
• It is easier to assess the potential rather than actual contribution that responsible business can make to sustainable livelihoods.
• Even in the most socially responsible enterprises recognition of responsibility to future generations is not yet explicit.
• Current approaches to responsible business do not always check that alienation of natural capital from the poor has been just. Have developing country countries used their powers to over-ride local interests?

Policy implications arising from the study are:

• Donors should not regard promotion of responsible business as a substitute for funding practical initiatives to establish the conditions for private sector growth.
• The need to globalise responsible business practices which are currently largely confined to businesses exporting to Europe and North America.
• The need to persuade more companies to integrate strategies for improving social and environmental performance.

Source(s):
‘Ethical Trade and Sustainable Rural Livelihoods’, Natural Resources Institute, by A. Malins, M.E. Blowfield, V. Nelson, B. Maynard, S. Gallet, 1999

Funded by: DFID Sustainable Rural Livelihoods Department

id21 Research Highlight: 9 September 2003

Further Information:
Natural Resources Institute
Medway University Campus
Central Avenue
Chatham Maritime
Kent ME4 4TB
UK

Tel: +44 (0)1634 880088
Fax: +44 (0)1634 880066
Contact the contributor: nri@greenwich.ac.uk

Contact the contributor: m_blowfield@earthlink.net

Natural Resources Institute, University of Greenwich, UK

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'Greening the bottom line: can accounting respond to environmental concerns?'

'Private good = public gain? Has ethical pressure squared the circle?' Insights #28

'Corporate social responsibility: a business contribution to sustainable development'

Triple bottom line investing Conference 2003

'Virtual Sustainability: Using the internet to implement the triple bottom line'