Oxfam launches the Future of Business Initiative today.
This post was co-authored by Erinch Sahan, Private Sector Policy Advisor for Oxfam Great Britain.
The 21st century brings us challenges at a scale we haven’t encountered before. Extreme inequality, political volatility, and intensifying impacts of climate change are causing a perfect storm that will wreak havoc on our economies and society if we don’t adapt fast.
Business will have to play a key role in this transition toward a more sustainable economy. A bold transformation is needed if business is to move from being a cause of these challenges, to being part of the solution. Superficial changes to businesses’ policies and practice will not suffice. We need to fundamentally reconfigure business so it moves beyond being wired exclusively to prioritize growing returns to its shareholders.
Today, Oxfam is announcing its contribution to this journey. The Future of Business Initiative advances a portfolio of projects supporting equitable business structures, through research, pilots, convening, and advocacy. We aim to join others to shape and support the ecosystem for business around the world, so we can both transform business and foster a new breed of equitable businesses.
At Oxfam, we see rising inequality as a key barrier to greater progress in humanity’s fight against poverty and social injustice. Inequality is ballooning to absurd levels as our economies channel their vast wealth to a tiny group of people. Since the turn of the century, the poorest half of the world’s population has received just 1 percent of the total increase in global wealth. Meanwhile, half the new wealth has gone to the richest 1 percent. Far from trickling down, income and wealth are being sucked upwards at an alarming rate. At present mainstream business is driving, rather than reversing, this disturbing trend.
Tackling inequality requires having business on our side. Yet too often, plans to improve wages of workers or incomes of farmers are straight-jacketed by the need to drive greater returns to shareholders. Solving the challenge of inequality requires businesses that have the ability to prioritize the interests of workers, farmers, communities and consumers alongside those of investors. This is not a utopian idea. The idea that firms are primarily (or solely) accountable to their shareholders is not inevitable; it’s actually a relatively recent phenomenon.
Moving beyond shareholder primacy does not have to remain a dream either. The diversification of business forms and structures can happen through a number of mechanisms including the governance, ownership, and business model of a company. What’s critical is that through these characteristics, businesses share risk, reward, and power more equitably. And examples of more equitably-structured businesses already exist. These include fair trade businesses partly owned and governed by farmers groups (e.g. Divine Chocolate), companies that are employee-owned (e.g. John Lewis) or share their profits with their workers (e.g. Huawei), companies with governance models that prioritize a social mission (e.g. Fairphone), social businesses focused on how they impact consumers (e.g. Grameen-Danone Foods) and companies owned and controlled entirely for the benefit of millions of farmers (e.g. Amul).
Global companies have a pivotal role to play in supporting businesses in their supply chains who use equitable practices. This can complement other efforts to address social and human rights issues, with the very structure of suppliers doing more of the heavy lifting of empowering workers, farmers, and communities. By incorporating more suppliers structured equitably, and by supporting suppliers to incorporate more structures that foster the prioritization of those affected by company operations, companies can help ensure their supply chains are more secure and sustainable over the long run.
Working toward fairer business is not new territory for Oxfam. Over the years, we have founded and supported a number of such businesses. This has included co-founding successful enterprises such as Cafe Direct and supporting dozens of community-level enterprises around the world through programs such as the Enterprise Development Program and Women in Small Enterprise program. Through our role in the Fair Trade movement and as a founder of the Fairtrade Foundation, we have always promoted models of enterprise that distribute risk, reward and power more evenly among all people impacted by business operations. It’s time to redouble these efforts, and build the ecosystem that will foster and spread these models far and wide.
Oxfam is joining forces with the Fourth Sector Development Initiative (FSDI) to do so. The FSDI is a newly-formed multi-stakeholder initiative that brings together public, private, and philanthropic institutions committed to making our shared vision a reality. Oxfam strongly believes that we can only achieve meaningful change if we work together with a range of organizations, including businesses. The pressing challenges we face today requires us all to be bold and jointly-shape the future of business. It must be an equitable one.