Below is a blog posting that originally appeared on FSG’s Corporations and Society blog. It is an important perspective from Greg Hills, Managing Director at FSG Social Impact Consultants on Oxfam America’s Poverty Footprint work with The Coca-Cola Company and SABMiller in the context of a broader discussion on creating shared value. The piece raises some important questions about what companies actually know about how their practices affect social issues and why it seems they say they’ll be responsible, but then act differently.

Lifting the Veil…to See Your Own Face

Why do companies say they are responsible, but then act differently? Is it lip service, green washing, and double-speak? Or does this happen for a different reason?

The answer is that most companies are less sinister than skeptics might think, but often they don’t know what they don’t know. Good managers with strong values make bad decisions because they don’t see opportunities to make a difference on social issues. From the outside, they appear to be acting irresponsibly, but often it’s simply a reflection of in-line managers being uninformed about the intersection of their business with society.

I want to share a glimpse into the future of how companies will seek to understand and address social issues. Last week I jumped on a train from Boston to New York City to attend a launch event for the results of a “poverty footprint” study conducted by Oxfam America. This new study looks at the operations of Coca-Cola and its local bottler SABMiller in El Salvador and Zambia and the effects of those businesses on low income communities. The event was a lively and candid panel discussion of representatives from Oxfam America, Coca-Cola, SABMiller, and the UN Global Compact to share the two-year journey of conducting the research and developing the report.

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As the anti-globalization movement gained traction 10 years ago, it was widely reported that of the top 100 global economies, 51 were multinational corporations. For developing countries, the size of these companies was something to be feared, and activists scored a number of victories campaigning around labor, human rights, and environmental scandals. Today, in almost a parallel universe, much of the discussion in the global South is about corporate citizenship, opportunities at the “base of the pyramid,” and public-private partnerships. From either angle, it is clear that multinational companies exercise increasing influence over the lives of poor people. But what does it all amount to for those living in poverty?

Some corporate impacts are easily perceived – jobs created, technology transferred, water consumed, products offered – but some of the broadest impacts will occur far out along the supply or distribution chains, or may result from less easily assessed activities like marketing or lobbying. One of the critical challenges facing the development movement is the opacity of corporate poverty impacts. How do we target our interventions without a clear understanding of a company’s overall scope? And how do we create the right incentives when so much of a company’s impacts are unknown? In order for the consumer to take notice, for stakeholders to engage, for the public to demand change, and for managers to be rewarded – poverty impacts must be brought to light in an easily digestible and standardized fashion.

Today, Oxfam America is releasing a Poverty Footprint Study with The Coca-Cola Company and its local bottler SABMiller aimed at bringing these issues to the fore. The report offers a balanced snapshot of how the Coca-Cola/SABMiller system – bottler, suppliers, and distributors – affects poverty in two developing countries – El Salvador and Zambia. The report’s scope is ambitious: we looked across the full value chain – farmer to consumer – at all significant issues – water, labor, livelihoods, gender, lobbying, revenues, and marketing. That breadth comes at the expense of depth. The report won’t provide the final word on any particular issue, but it identifies the critical areas of impact and provides recommendations by way of follow up.

The Coca-Cola Company and SABMiller have each been subject to high profile corporate advocacy and Oxfam America takes a risk in co-branding a study like this. We do that with eyes wide open. It is much easier to try to affect change with companies from behind closed doors and many organizations take that approach, often with good results. Our approach is based on the belief that top-down, voluntary reforms are not sustainable. They can be driven by vision and good faith initially, but to last there has to be a business case, backed up by commercial opportunities, stronger laws, and sustained engagement by a variety of actors.

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