From poverty to power - Oxfam-Québec

3 POVERTY AND WEALTH PRIVATE SECTOR, PUBLIC INTERESTand environmental impact of a company’s core business model(which is what really counts in determining its development impact).CSR is examined at greater length on pages 349–50.A number of factors are pushing TNCs in the direction of socialresponsibility. The increasing focus of many corporations on domesticmarkets in countries such as China and India should encourage themto take a more long-term view, since social and political stability andprosperity hold the key to their future profitability. The growingimportance of brand and reputation, both to customers and theirability to employ and retain the best recruits, means that corporateleaders are placing more attention on ‘non-financial risk’, includingpublic criticism of their social and environmental impacts. The concernsof their main shareholders, such as large pension funds, about thelong-term impact of corporate misbehaviour on share value and thewider economy are another motivating factor. In developing countries,an increasingly independent media, together with vocal citizens’groups, means that companies’‘licence to operate’ is no longer merelya question of bribing a few government officials.However, firms are not merely passive followers of external signals.Within any given industry, different firms can choose to follow differentstrategies, with dramatically different impacts on people living inpoverty. Following a financial crisis and devaluation in Indonesia in1998, Unilever reacted to higher import prices by switching to sourcinglocally, whereas other foreign companies in the same consumer goodssector closed down altogether. 157 As a result, Unilever’s business decisionincreased its local linkages, while exiting companies added to risingunemployment levels.Corporate leadership can be crucial at such ‘fork in the road’moments of decision,but important roles are also played by active citizensand local communities where TNCs operate. In Eastern Zambia, thearrival of the South African supermarket chain Shoprite spelled disasterfor local farmers. Not only did the supermarket take away many of theircustomers, it would not buy the farmers’ produce, preferring to importhigher-quality goods from South Africa. Unrest became widespread asrural incomes plummeted and local businesses saw Shoprite scoop up thebest premises in town. Even those employed by the company resented theway that all its senior managers were brought in from South Africa.177