Workers process cassava leaves at the Oxfam-supported enterprise Shekina in Rwanda's Rulindo district. Photo: Eleanor Farmer/Oxfam

A fairer way to do business?

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What if business could put people before profit? Oxfam’s Future of Business Initiative is promoting alternatives to the shareholder first model of business, as Alex Maitland explains.

Workers process cassava leaves at the Oxfam-supported enterprise Shekina in Rwanda's Rulindo district. Photo: Eleanor Farmer/Oxfam

Workers process cassava leaves at the Oxfam-supported enterprise Shekina in Rwanda’s Rulindo district. Photo: Eleanor Farmer/Oxfam

Oxfam has a long history of challenging the economic structures that keep people in poverty. Our Even It Up and Food and Climate  campaigns demonstrate that inequality, in-work poverty and climate change are being driven by a model of business and finance that puts a disproportionate emphasis on maximising shareholder value. But our role in setting up the fair trade coffee company Cafédirect, and supporting social enterprises globally, has shown us that a fairer way of doing business is possible.

Future of Business Initiative

That’s why last year we set up the Future of Business Initiative – to challenge the model that puts shareholders first, and instead promote alternatives that share prosperity with a wider group of stakeholders.

In April, we invited Paul Polman, CEO of Unilever, Sophi Tranchell, CEO of Divine Chocolate and Lisa Dacanay, President of the Institute for Social Entrepreneurship in Asia to speak at our Future of Business event in London. We posed the question – what kind of business models do we need to help beat poverty for good?

Unilever CEO’s message to business and finance

In 2015, 193 countries set themselves 17 goals to end poverty in a sustainable way by 2030. The Sustainable Development Goals are a rallying cry and Paul Polman’s key message to business and finance was that to achieve these goals we need to move beyond maximising financial value and begin to maximise social and environmental value as well.

He reflected on Unilever’s 19th Century roots, when the company developed an affordable soap; they were not under pressure to deliver short-term financial returns but to improve the well-being of their customers. He gave examples of how Unilever today is using its huge purchasing power to seek to lift workers in its operations and supply chain out of poverty.

Unilever is a leader in driving forward responsible business. Its Sustainable Living Plan pioneers progressive business initiatives – several of which Oxfam has partnered with, from human rights in its global supply chain to changing social norms on unpaid care work.

But here’s the rub, when making efforts to behave ethically or sustainably, shareholder-first companies are constrained by the straight-jacket of also having to deliver returns to investors or risk a hostile takeover – the Kraft-Heinz attempted takeover of Unilever was the elephant in the room.


Unilever CEO Paul Polman at Oxfam’s Future of Business event in London, April 2018.

Watch all videos from the Future of Business event

Alternative business models

In the subsequent panel discussion Sophi Tranchell, CEO of Divine Chocolate, described how as a company significantly owned by a Ghanaian co-operative, if an investor wanted to buy Divine and turn it into a profit-maximising business, this could only happen with the agreement of the farmers. This protection, Sophi pointed out, was one of the reasons Divine stays focused on its mission.

Operating within existing business structures will only get us so far. It’s these types of alternative business models that will help business play a key role in our shared vision of a world without poverty
Lisa Dacanay gave various examples of social enterprises that are succeeding in lifting people out of poverty in her role as President of the Institute for Social Entrepreneurship in Asia, and the progress made in transforming legislation in the Philippines to provide the enabling environment for this.

What these enterprises have in common is that their reason for existing is a social mission. They generate both environmental and social value, and much of the profits benefit the poor and marginalised.

Operating within existing business structures will only get us so far. It’s these types of alternative business models that will help business play a key role in our shared vision of a world without poverty.

Creating a new eco-system of alternative business

But there’s another rub. Corporations dominate the global economy – without leveraging their power and influence can alternatives ever become the mainstream? In April Oxfam published our Fair Value report which shares some of the many examples to be found in food supply chains of companies structured so that farmers and waged workers get a more equitable share of the value.

The report is also a call-to-action to multi-national companies. Put simply, we can’t change how many corporates are structured. For as long as they are listed on a stock market they are tied to putting shareholders first. But what corporations can do is use their huge purchasing power in favour of alternatives and help develop a new eco-system that supports alternative business models, especially in developing countries.

Oxfam’s Private Sector Policy Advisor Erinch Sahan in discussion with Lisa Dacanay, Sophie Tranchell and Paul Polman. Credit: Alex Yallop/Oxfam

Oxfam’s Private Sector Policy Advisor Erinch Sahan in
discussion with Lisa Dacanay, Sophie Tranchell and Paul Polman. Credit: Alex Yallop/Oxfam

Advocating for better finance and legislation

To explore how companies can transform their procurement approach we’re setting up the ‘Fair Value Club’ a platform for brands and retailers who are serious about promoting alternatives in their supply chain.

Unilever’s work to support independent palm oil farmers in North Sumatra and Kate Spade’s pilot of a social enterprise supplier model in Rwanda demonstrate a genuine interest from companies to support fairer forms of enterprise, and there are many more good examples to build on.

The Fair Value Club will only get us so far, the companies involved will still need to justify a financial return for any investments and it won’t address many of the wider global trade issues. But, if we can get a few large businesses to show serious interest in developing alternatives, then we can gain more support for the type of finance and legislation that would enable fairer businesses to flourish.

What next?

We have big plans for the next year. From piloting an innovative approach to making investment decisions through our Enterprise Development Programme to working with colleagues in Oxfam America to develop a metric that measures the ‘inequality footprint’ of individual companies. Oxfam and our partners around the world will be promoting alternatives to policies that put the shareholders first.


Listen to Erinch Sahan, Chief Executive of the World Fairtrade Organisation speak to Sophi Tranchell, CEO of Divine Chocolate and Lisa Dacanay, President of the Institute for Social Entrepreneurship in Asia.


Author
Alex Maitland

Alex Maitland

Alex is Policy Officer at Oxfam GB where he works in the Private Sector Team. He focuses on how corporate governance, company ownership and business models can be transformed to reduce poverty and inequality. He joined in January 2017 from the think-tank Tomorrow's Company where he worked on a range of corporate responsibility initiatives.