Using the Power of Business to Eradicate Poverty
December 06, 2019 by Rebecca Gillingham
October 17th marks the International Day for the Eradication of Poverty and should be seen as a global call for action to intensify our shared efforts to fight poverty. Declared by the United Nations General Assembly in 1992, it presents an opportunity to not only acknowledge the struggle of millions of people living in poverty but also to reflect on the leading role businesses and NGOs can and should play in the global efforts to eradicate poverty through ESG or CSR commitments..
This year marks the 30th anniversary of the adoption of the Convention on the Rights of the Child in November 1989. In particular due to its recognition of the adverse effects poverty has on a child’s development the anniversary of this landmark human rights treaty serves as the theme for this year’s International Day for the Eradication of Poverty.
While we should acknowledge the progress that has been made in reducing poverty over the past decades, the fight is far from over. According to recent estimates published by the World Bank more than 730 million people live in extreme poverty worldwide.
And although poverty is a global issue, experts have come to identify certain hotspots of extreme poverty. In fact, with more than 413 million affected, more than half of the extreme poor live in Sub- Saharan Africa.
In light of these staggering numbers the UN’s decision to incorporate the fight against poverty as the first of its seventeen Sustainable Development Goals comes as no surprise and underlines the urgent need for action by setting the goal to eradicate extreme poverty by 2030. In this context the potential power of business to fight poverty should be highlighted.
The knock-on effects of fighting poverty
Increasingly, companies have expanded their focus on social responsibility by embracing women’s rights, championing environmental issues, and tackling poverty through their respective business strategy. For companies, these crucial elements make up the added value of emphasizing their Corporate Social Responsibility:
1. Poverty can be overcome by progress. Most often extreme poverty is linked to the inaccessibility to essential human requirements such as basic health care, nutrition, security and education. A number of these issues can be solved through economic and social development. Thus, companies who are engaging and investing in poverty-struck regions can not only support the economic development and decrease poverty significantly but can also help facilitate the creation of new economic impetus in the respective region.
2. Stand out from your Competition. Companies can further benefit from their engagement in the fight against poverty and the subsequent positive socio economic impact by standing out from the competition and bolstering their public image. Over the past decades consumer awareness has progressively improved and more and more businesses have discovered the added value a socially engaging community can have on their operations. Taking action against poverty by for example tackling financial barriers can help raise the inclusiveness of the financial sector.
3. Attract the best of the best. In line with increased customer loyalty for socially responsible and active businesses, strategies aimed at looking at the bigger picture and engagement with global challenges such as poverty and climate change also attracts top-tier employees who seek social commitment beyond—76 percent consider a company's social and environmental commitments when deciding where to work.
4. Added leverage with risk management. Sustainable corporate engagement in the fight against poverty goes beyond just creating economic impetus and generating direct jobs. What’s equally important is the knock-on effect on due diligence and risk monitoring across supply chains and distribution networks, which employ others along the way. This ‘multiplier effect’ of the fight against poverty might not always be apparent, but it stems from the progress made as a consequence of eradicating poverty. In regions prone to extreme poverty, the legal and political framework for diligent supply chain assessments is also subject to elevated risk. Thus, raising people out poverty, can mitigate supply chain risks in the long term and should be an objective from both a social and a business perspective.
Reducing poverty, one business at a time
In essence, companies increasingly see poverty as a risk both for their undertakings and for society at large. This becomes even more evident if you have a look at the vast amount of initiatives corporate organizations have introduced within their Corporate Social Responsibility strategy to successfully reduce and prevent poverty.
From enabling poverty-struck communities the access to micro financing, giving them the possibility to economic independence, to following growing consumer demands by adopting fair and adequate wages for farmers and factory workers throughout their supply chain, international companies have already set some examples of how they can impact the fight against poverty on a global and local level.
Still, adequately addressing poverty in a sustainable fashion has a long and difficult road ahead. Now more than ever, companies, in cooperation with civil society and governmental actors, need to step up their efforts and collaborate to reduce and effectively eradicate extreme poverty by 2030. International Day for the Eradication of Poverty serves as a powerful reminder of our joined duty.
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