The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Oxfam America explores Coca-Cola/SABMiller value chain’s impact on poverty reduction

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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 […]

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.

For that reason, Oxfam America came to agreement up front with The Coca-Cola Company and SABMiller that the research would be “people-centered,” the process would be participatory, the report would be released publicly, and the release would be followed by stakeholder events and dialogue in each country. By working with the companies, we were guaranteed greater access, more nuanced understanding of things like power dynamics in the supply chain, and more opportunity to promote engagement on the ground. It’s not a roadmap drawn up by Oxfam America, but by local engagement, bolstered by increased awareness and transparency, that should ultimately drive any eventual reforms.

Despite the challenges involved, The Coca-Cola Company and SABMiller have each made ambitious and laudable commitments to labor rights, human rights, water, gender, and sustainability. However, there is little accountability to such commitments without the informed engagement of affected groups. By looking across all relevant issues (no cherry-picking) with an organization like Oxfam America and reporting out to stakeholders, these companies have opened themselves to heightened public scrutiny and hopefully increased accountability.

We chose to work openly with The Coca-Cola Company and SABMiller for an additional reason. The Oxfam International Poverty Footprint Methodology, piloted initially by Oxfam Great Britain and Oxfam Novib with Unilever in Indonesia, was developed to affect business practices across the board. We aren’t just out to reform individual companies – our long term hope is to change public expectations on corporate transparency and accountability and to bolster incentives and opportunities for pro-poor business models generally. We need leverage in this push. With The Coca-Cola Company and SABMiller, we have two major corporations (and the largest brand in the world) backing the principle that companies need to understand and account for poverty impacts up and down their value chains.

If there is much potential upside to this footprint study, some caution is also in order. Drafting a report across three very independent institutions is a challenging affair and the result is far from perfect. The path from report to reform is also experimental and speculative. Information and transparency are essential to engagement and accountability, and engagement and accountability are essential to lasting change; but none of it is inevitable. With the footprint study, we’ve tried to bake some of the engagement and accountability in – but a single report, no matter how robust, can only be one piece of a broader process for reforms. Whether the report, in fact, finds its place in such a process remains to be seen. But by putting it out there – by risking this challenging collaboration – Oxfam America, The Coca-Cola Company, and SABMiller have at least opened a door and offered a platform for those seeking change.

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    This is exciting work and a deepened commitment on the part of the Oxfams to collaborate with these large MNCs rather than only lobby and challenge. I am curious about the internal conversation about how this different style of engagement shifts your theory of change and your perspective on the relationship between MNCs and poor people.

  2.'Theodore L. Zawistowski

    It seems a risk worth taking if it leads to greater accountability and responsibility on the part of major corporations around the world. An example of how things can be in reality can help create an ethic to shape the actions of many later. It may lead to a standard that all actors will be expected to live up to. However, caution must be taken to preserve indepence. Getting drawn into the working issues may lead to the making of little compromises. Many little compromises can create big compromises that cost one’s freedom of action.

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