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Civil society and the private sector

The engagement of civil society with the private sector can be an important lever for positive social change, writes John Samuel.

The engagement of civil society organisations with private sector business enterprises, based on shared values, can be an important lever for positive social change, by promoting sustainable environment, inclusive economic growth, human development, and peace. While the primary motive for private sector enterprise is creating profits and wealth, for civil society organisations it is encouraging non-profit initiatives for the larger common good. Despite this fundamental difference, there are a number of areas where the private sector and civil society organisations can engage to make a lasting impact on society.

Civil society signifies the voluntary collective actions of people around shared values, a common purpose and larger collective or public interests distinct from those of family, state or profit-seeking institutions. Civil society exemplifies ‘civic action’ in formal or informal ‘associational forms’ aimed at promoting the core civil values of human rights, diversity, voluntary collective action, public interest and the larger common good.

The private sector, on the other hand, includes organisations and institutions that operate in the economic arena of the market to provide goods and services for profit. Broadly speaking, civil society represents the socio-cultural and political spheres of human action, while the private sector represents economic exchange and activity. Both encompass a wide range of civil society and private sector organisations based on the context, size and nature of business.

In spite of distinct sets of interests and normative frameworks, there is growing awareness today that achieving sustainable human development calls for stronger and new forms of engagement, collaboration and partnerships between civil society organisations and private sector institutions, around explicit shared values. Identifying these shared values and mutual accountability mechanisms to ensure that the contribution of both sets of actors advances rather than undermines shared values is the foundation for building trust between citizens and private sector enterprises. And for starting up a new dialogue between civil society and the private sector.

Civil society has become an arena of praxis, where theory is continually being negotiated and re-negotiated based on evolving practice in multiple social, economic and cultural contexts. This dynamism, pluralism and diversity, to a large extent, shapes the emerging civil society discourse across the world.

The civil society discourse in the 21st century is qualitatively different from that of the 20th century or that of post-cold war politics. Civil society is becoming a coalescence of local and global, real and virtual, south and north. There is a new sense of global solidarity for justice, though such an interconnected process is dispersed, poly-centric and multi-locational. The new civil society discourse has been facilitated by radical shifts in information and communication technology, social networks, and the emergence of the new media (the Internet, global e-lists, social networking sites, YouTube and digital mobilisation across the world would have been unimaginable 20 years ago). Today, information and campaign processes reach out to millions of people at the single click of a mouse. The capacity of civil society organisations to communicate and organise across countries and continents has dramatically increased within the past ten years, with significant influence in shaping global public perception as well as public policy priorities.

The on-going revolution in communications technology and effectiveness of knowledge-based economies has created a new model for business and corporate governance. Growing awareness about the need for ecological sustainability and the ‘new economy’ framework, with the emphasis on communication and image merchandising, has paved the way for a generation of business leaders concerned about responses from the community and environmental sustainability.

It is in this context that we need to understand the new ‘shared value’ framework that goes beyond traditional corporate philanthropy and corporate social responsibility. There is today far greater emphasis on ethical business practice and good corporate governance.

Civil society and the private sector

Civil society signifies the voluntary collective actions of people around shared values, a common purpose and larger collective or public interests distinct from those of family, state or profit-seeking institutions. Civil society may include formal and informal organisations, associations and networks based on a set of shared values and interests. While associational aspects of civil society are important characteristics of civil society organisations, the defining character of civil society includes the ‘civil’ values of human rights, diversity, pluralism, and freedom of association and expression. In this sense, civil society is an also arena for collective action towards government accountability, the larger common good, particularly in relation to human development, and environmental sustainability. Therefore, also a space for civic engagement, democratisation of society and sustainable human development.

The nature and character of civil society depends on the political and social history of a society or country, also the character of the nation state in which a range of civil society initiatives operate.

The private sector may range from small and medium business enterprises to powerful global conglomerates with more revenue and assets than the Gross Domestic Product of some countries. Thus the nature, character, size and political economy of the private sector vary significantly around the world, a fact that must be considered in the context of the engagement between civil society organisations and private sector companies.

There is a long history of engagement between civil society and the private sector. In the 19th century, business entrepreneurs like Robert Owen sought to combine promotion of the private sector and civil society organisations and movements for change. The 20th century saw a number of leaders of private sector enterprises working for the strengthening of civil society initiatives and organisations. Many top private sector entrepreneurial leaders like Rockefeller, Henry Ford, Jamshedji Tata and others contributed a large part of their wealth towards strengthening and supporting civil society initiatives and organisations across the world. Today too, a substantial amount of financial resources aimed at supporting civil society comes from institutions and foundations established by private sector entrepreneurs like George Soros, Bill Gates and Warren Buffet, to name a few.

However, there is also a history of confrontation between civil society and big multinational corporations arising when private corporations violate human rights or environmental safeguards, or displace local communities.

The private sector and civil society represent two important sides of the social and economic development of a society. The former helps create employment opportunities and promote growth in the economy, while the latter plays an important role in ensuring the larger common good of society and the environment besides providing the space for people to seek accountability from the state as well as the market. Apart from this, civil society organisations play a major role in the adoption of innovative approaches and creative options to various governance and social issues. 

While the primary motive for private sector enterprise is the creation of profit and wealth, the primary motivation for civil society organisations remains the larger common good. In spite of these core differences, however, there are a number of areas where private sector and civil society organisations can engage to effect lasting change in society.

Traditional corporate philosophy dictates three broad areas in which private companies can discharge their social responsibilities. They are:

  • Traditional corporate philanthropy.
  • Corporate social responsibility with a focus on sustainable development and attending to stakeholder priorities.
  • Ethical business.

Traditional corporate philanthropy, which dates back to the 19th century, emerged from a variety of factors:

  • Concern for the welfare of immediate members of the corporate body: staff and employees, their families.
  • Innovative contributions by visionary business leaders who built up philanthropic institutions from their individual shares in the quest for personal satisfaction.
  • In part as a result of the desire to establish a strategic relationship with the state or with society, some corporate bodies invest in the establishment of institutions that fulfil specific requirements of the community.
  • Through the establishment of trusts and foundations that support socially beneficial activities, to avail of tax benefits.

Corporate social responsibility (CSR) is a qualitative metamorphosis of the traditional concept of corporate philanthropy. It acknowledges the debt that corporations owe to communities within which they operate, as stakeholders in corporate activity. It also defines the business corporation’s partnership with social action groups in providing financial and other resources to support development plans, especially among disadvantaged communities. In the traditional paradigm, most corporate bodies have come to view the concept of CSR as an extension of financial input towards a humanitarian cause.

Ethical business is a more fundamental emerging trend. It focuses on three specific aspects of business:

  • How a business is conceptualised.
  • How a business is operated.
  • The notion of fair profit.

In an ethical business, the essential thrust is on social values; business is conducted in consonance with broader social values and the long-term interests of stakeholders. Apart from this, there is a new perspective that is shaping the principles and practices of corporate social responsibility. This is a rights-based perspective on corporate governance which stresses the fact that consumers, employees, affected communities and shareholders have the right to know about corporations and their business practices. Corporations are private initiatives, true, but increasingly they are becoming public institutions whose survival depends on consumers who buy their products and shareholders who invest in their stocks. This perspective stresses accountability, transparency and social and environmental investment as key aspects of corporate social responsibility.

Corporate social responsibility is a two-way street: it stimulates innovative business and technological initiatives by opening up new avenues and markets for company operations; and affords companies a cleaner reputation and identity, involving both them and their employees in community development through participation in promoting peace, equity and social development.

The success of engagement between civil society and the private sector is determined by a shared sense of values and commitment towards promoting the larger common good beyond immediate business interests. International business now accepts the triple-bottom-line concept:

  • The stakeholders in a business are not just the company’s shareholders.
  • Sustainable development and economic sustainability.
  • Corporate profits are analysed in conjunction with social prosperity.

Companies that excel today are those that restructure themselves to be adaptive, resilient, creative and sustainable; living companies with a capacity to learn and change.

Shared value framework for engagement

There is a link between sustainable economy, sustainable human development and sustainable business. Sustainability as a principle requires long-term commitment to the environment, peace and inclusive human and economic development. Economic sustainability within a country or a society is, to a large extent, influenced by human and technological capacity, human development and enabling infrastructure, and people’s purchasing capacity. Development of the private sector and the market is influenced by the broader purchasing capacity of people, which requires inclusive economic growth. There is evidence to show that increasing inequality, lack of democratic governance and social-economic insecurities bring about conflict and violence. In a society prone to violence and conflict, building sustainable business enterprises remains a challenge. It is therefore important to promote sustainability, inclusiveness, accountability, transparency and respect for human rights as core normative values for strengthening engagement between the private sector and civil society.

A shared value framework comprises three sets of values: ethical values, environmental values and economic values. Four key questions may be asked here:

  • How does engagement between civil society and the private sector add ‘value’ to each sector in terms of capacity and sustainability?
  • How does a new partnership between civil society and the private sector promote innovations (social, economic, corporate and technological)?
  • How does engagement and partnership between civil society and the private sector promote inclusive economic growth and a sustainable environment?
  • How can civil society and the private sector contribute to each sector’s sustainability as well as sustainable human development?

Many countries have no enabling legal and policy framework to promote partnerships between civil society organisations and the private sector. There is also the challenge of increasing economic and social inequality that creates new social and political discontent, hampering conditions for sustainable business and peace. In significant parts of the world, the nexus between economic and political elites hampers fair opportunity and the transparent and accountable governance necessary for the growth of an active civil society and vibrant private sector. Mutual scepticism between civil society organisations and the private sector, particularly where there is a nexus between political elites and big business, often leads to direct confrontation between civil society organisations and the private sector. It is therefore important to identify specific challenges in order to explore creative solutions to them, and identify specific areas for engagement and partnership between the private sector and civil society.

The terms of engagement between civil society and the private sector must be driven by a set of core principles. The United Nations Global Compact clearly articulates ten key principles that ensure responsible private sector enterprise. This is a voluntary initiative that seeks to advance universal principles on human rights, labour, the environment and corruption through active engagement of the corporate community, in cooperation with civil society and representatives from organised labour. With over 10,000 corporate participants and stakeholders from over 130 countries, it is the largest voluntary corporate responsibility initiative in the world.

The United Nations Global Compact’s principles in the areas of human rights, labour, the environment and corruption enjoy universal consensus and are derived from:

  • The Universal Declaration of Human Rights
  • The International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work
  • The Rio Declaration on Environment and Development
  • The United Nations Convention Against Corruption

The Compact asks companies to embrace, support and enact within their sphere of influence a set of core values in the areas of human rights, labour standards, the environment and corruption.

Human Rights

  • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights.
  • Principle 2: Ensure that they are not complicit in human rights abuses. 

Labour

  • Principle 3: Uphold freedom of association and effective recognition of the right to collective bargaining.
  • Principle 4: Ensure the elimination of all forms of forced and compulsory labour.
  • Principle 5: Effective abolition of child labour.
  • Principle 6: Elimination of discrimination with respect to employment and occupation. 

Environment

  • Principle 7: Businesses should support a precautionary approach to environmental challenges.
  • Principle 8: Undertake initiatives to promote greater environmental responsibility.
  • Principle 9: Encourage the development and diffusion of environmentally-friendly technologies.  

Corruption

  • Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Options for engagement

Below are some specific areas for strengthening engagement between the private sector and civil society towards promoting peace and sustainable human development:

1 Promoting the principles of the UN Compact

Private sector enterprises can build partnerships and alliances with civil society organisations for joint advocacy initiatives aimed at promoting the key principles of the UN Compact. This not only helps companies adopt the principles of the UN Compact, it enables civil society organisations to positively influence the agenda for responsible corporate behaviour and positive interventions by private sector companies.

2 Sustainable management of natural resources and a sustainable environment

Sustainable management of natural resources such as water, forests, land and air calls for changes in corporate behaviour and consumption patterns. Civil society plays an important role in policy advocacy as well as influencing societal attitudes towards ensuring sustainable and clean energy and protection of forests, water and clean air. The private sector too can play a role in promoting energy efficiency, employing green-business practices and maintaining a sustainable environment.

3 Promoting inclusive economic growth

While countries have encountered unprecedented economic growth in the last 20 years, there is concern about the uneven pace of growth and exclusion of a large number of people from the benefits of this growth. In many countries, particularly emerging and developing countries, economic growth has been urban-centric, benefitting only a small minority of educated, skilled people. This has resulted in increased social and economic inequalities, and, subsequently, social and political discontent. Civil society and the private sector together can play a role in pressing respective governments to pursue social and economic policies and promote sustainable business practices to ensure inclusive economic growth.

4 Sustainable human development programmes 

Civil society organisations and private sector enterprises can work together as partners on joint social development projects to promote health, education, water, sanitation or other social development initiatives in a given area or community. However it is important that such partnerships are based on core principles of the UN Compact to ensure mutual accountability and public transparency. Because private sector funding for NGO projects in the community where a private company operates is often seen as being a form of ‘corruption’, silencing NGOs and CSOs as companies go about displacing poor communities, or destroying the environment.

5 Advocacy for accountable, transparent and responsive governance

Private sector companies succeed when governments are responsive, transparent and accountable. One of the key roles of civil society organisations is to promote accountability, transparency, inclusiveness and responsiveness in government and the public policy process. Stronger engagement in promoting advocacy initiatives for accountable, transparent and responsive government is therefore a ‘win-win’ situation in terms of civil society-private sector engagement.

6 Promoting a shared-value approach to corporate social responsibility

Though there are more rhetorical than concrete investments in promoting corporate social responsibility, some leaders in the private sector do have a greater eco-social perspective on corporate social responsibility. They recognise the fact that social and environmental stability and sustainability are important prerequisites for long-term market sustainability. They also recognise the fact that increasing poverty could lead to social and political unrest which is detrimental for business. Seen from this perspective, corporate social responsibility is both a value and a strategy to ensure business sustainability. A value because it stresses the fact that business and markets are essentially aimed at the wellbeing of society; a strategy because it helps reduce social tensions, thereby facilitating markets. For the new generation of corporate leaders, optimisation of profits, rather than maximisation of profits, is key. Hence the shift from accountability towards shareholders to accountability towards stakeholders (including employees, consumers and affected communities).

Civil society organisations and actors can play an important role in building the capacity and networks of private sector actors thereby promoting genuine corporate social responsibility.

7 Partnerships for capacity development

Civil society organisations in general, and the non-profit sector in particular, provide employment to millions of people around the world. However, many small and medium civil society organisations often lack adequate capacity to manage programmes, fund projects and mobilise resources. It is here that the private sector can provide capacity development opportunities to civil society organisations through staff exchanges or specific programmes designed for civil society organisations and the non-profit sector.

Then too, many for-profit private organisations and enterprises lack the capacity to communicate to communities and engage in social and environmental initiatives. Some private sector organisations lack an understanding and appreciation of the principles of human rights, women’s rights, environmental safeguards and social policies. Here, civil society organisations can play an important role in building the capacity of the private sector to enhance its understanding of human rights and sustainable human development.

8 Promoting women’s rights and human rights

In most countries and societies, women are marginalised and often paid less than men for doing the same job. Many also face sexual harassment in the workplace. Civil society organisations and private sector companies can undertake joint initiatives to promote women’s rights within society and in the workplace. In many countries, marginalised/minority communities (ethnic, racial, caste, religious, linguistic) are discriminated against both in society as well as in terms of unequal job opportunities. Civil society organisations and the private sector can work together to promote greater human rights and ensure equal opportunities for women and marginalised communities.

9 Promoting youth empowerment and leadership

The number of young people has increased exponentially, particularly in Asia, Africa and the Arab world. Greater levels of unemployment, global migration and the insecurities that emerge from economic, social and political inequality foster discontent among young people across the world. According to an Amnesty International report, in the last two years there have been protests in over 90 countries, most of them led by young people. In many countries, political and social unrest has adversely affected the private sector. From a long-term perspective therefore, it is strategic for private sector companies to invest in a generation of leaders who are committed to peace, justice, human rights and democratic principles. Civil society organisations can play a very important role in providing opportunities for the promotion of socially responsible young business entrepreneurs and a new generation of competent, ethical leaders within civil society and the political process of a country.

10 Innovative technologies for sustainable human development

The private sector plays an important role in the area of innovative technology and the search for solutions to the longstanding problems of poverty and disease. Innovations in technology by private sector actors have helped provide clean drinking water to poor communities, promote digital literacy in order to bridge the digital divide, and develop affordable generic drugs to fight communicable diseases. The private sector has also pioneered innovative technologies that ensure transparency and accountability through e-governance.

But while private sector organisations may have the technology, civil society organisations often have wider networks within a given society and knowledge of how to translate a given technology in a given community or society to ensure maximum impact. Civil society–private sector engagement in using innovative technologies for sustainable human development could therefore bring about lasting, long-term change within society.

Civil society organisations have a responsibility to engage with private sector companies to make them more sensitive to issues of human dignity, human rights and sustainable development. The private sector on the other hand is capable of enhancing the capacities and resources of civil society organisations, allowing them to play a strategic leadership role in promoting a peaceful and sustainable world.

Infochange News & Features, February 2015