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Multinationals in the Neighbourhood: Driving Economic Development or Simply Crunching Numbers?

Multinationals in the Neighbourhood: Driving Economic Development or Simply Crunching Numbers?

Published 06-17-03

Submitted by BSR

SAN FRANCISCO, CA - “This will be the litmus test of how societies judge multinationals. Many corporations are weak on driving economic development impact on the poorest communities, but there are a handful of companies that have started grappling with today’s big dilemma in terms of how their economic footprint leads to social and environmental benefits for the disadvantaged, by asking themselves for example ‘how can we make our products and services accessible to the poor whilst remaining commercially viable?’” said Simon Zadek, Chief Executive of AccountAbility at the launch of the groundbreaking report “Business and Economic Development: The Impact of Corporate Responsibility Standards and Practices”.

“Leadership companies are taking a hard look at how their business can improve their contribution to economic development. Many are starting with pilot projects at a site level that will help them increase knowledge about their company’s overall impact. While there is still no fully established standard for measuring and managing economic impact issues, this research provides insight from business managers and stakeholders that will help others move forward”, added Mark Lee, Vice President, Business for Social Responsibility.

Two global corporate responsibility groups, London-based AccountAbility and San Francisco-based Business for Social Responsibility release this challenging and important report today, in association with Branford, CT-based consultancy Brody Weiser Burns. Funded by The Ford Foundation, “Business and Economic Development: The Impact of Corporate Responsibility Standards and Practices” examines the economic effects of core business activities such as where to site facilities or whom to employ in relation to low-income groups. It also addresses the public policy implications of corporate lobbying on key issues such as taxes and subsidies.

The study recognizes that this issue is increasingly scrutinized by investors and regulators. Mistrust of the real economic intentions of companies is also driving anti-globalization protests at events such as the World Economic Forum in Davos, Switzerland, which saw more riots earlier this year.

The report is based on insightful discussions with global corporations such as Ford Motor Company, Novo Nordisk A/S, SABMiller, Shell International, Sydney Water and other global corporations, as well as governments, investment organizations, international labor groups, and non-governmental organizations (NGOs). This is complemented by an analysis of leading corporate responsibility standards, and social and sustainability reports.

Welcoming the new initiative is David Berdish, Corporate Governance Manager at Ford Motor Company, the second largest manufacturer of cars and trucks in the world, who added:

    “At Ford, we recognize that infrastructure development and management has an economic impact on the communities where we operate. We look at this work in community investment assessments as an important part of our corporate citizenship.”

Also welcoming the initiative, David Dworkin, Vice President for Regional Management and Housing Partnerships at Fannie Mae, a leading source of affordable mortgage financing for low-income groups in the U.S.A. added:
    “Often there are unique factors that prevent transactions from happening in communities. Identifying these factors is critical to successful implementation with low-income individuals.”

The next phase of research, supported by the Ford Foundation and the US Agency for International Development, focuses on business and public policy strategies that could enhance the role of business in contributing to economic development. To increase the impact of this second phase of research, the work will be tailored to the needs of specific industry groups, including the agricultural, financial services, resource extraction and development, and pharmaceutical industries.
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BSR

Since 1992, Business for Social Responsibility (BSR) has been providing socially responsible business solutions to many of the world's leading corporations. Headquartered in San Francisco, with offices in Europe and China, BSR is a nonprofit business association that serves its 250 member companies and other Global 1000 enterprises. Through advisory services, convenings and research, BSR works with corporations and concerned stakeholders of all types to create a more just and sustainable global economy. For more information, visit www.bsr.org.

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