Session 3.5 Innovative Alliances And Maxim Is Ing Impacts - Ja

BUILDING INNOVATIVE ALLIANCES TO MAXIMIZE PRO-POOR IMPACT Jane Nelson The Business and Poverty Leadership Programme

Cambridge, November 15th 2006

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WHY invest time, money

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WHAT type of alliances

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HOW can we build more

and effort in building alliances?

are emerging and what’s their potential? effective alliances to meet business and poverty alleviation goals

POVERTY  LACK

(Adapted from Shailaja Fennell)

of access to meet basic

needs  LACK of opportunity to build income and assets  LACK of voice to participate and influence decision-making  LACK of security to cope with crises  MARKET-based

solutions  WELFARE-based solutions

From the working poor to the destitute…

The business potential for pro-poor practices and alliances 1)

CORE BUSINESS ACTIVITES Workplace and operational processes Marketplace and products, services - Value chain linkages

2)

WIDER COMMUNITIES Strategic philanthropy, social investment, employee volunteering, community development and consultation

•

SYSTEM-LEVEL (industrywide, national or global) Public policy; advocacy; institution

WHY invest time, money and effort in building alliances?

Responding to governance gaps and failures

“The proper guardians of the public interest are governments …” The Economist, January 2005

GOVERNANCE GAPS  BAD  WEAK

governance

governance  INDIFFERENT governance  UNCOORDINATED governance

Overcoming market failures and information asymmetries

Building and sustaining TRUST and reputation with NGOs,

Scandal … and…Suspicion

Stakeholder activism … from anarchists to activists to active partners

Edelman TRUST BAROMOTER  2,000

opinion leaders in 11 countries over 7 years tracking data  NGOs MOST TRUSTED INSTITUTIONS  Trust

ratings over 50% in US (up from 36% in 2001)  Trust in NGOs increased significantly in last 12 months in Canada, Japan and China (from 36% to 60%)

NGOs dominate the big issues in terms of trust EDELMAN/Strategy One survey: June, 2004

Number of International NGOs 50,000

28,900

176 1909

1964

1993

2000

Strategies for NGO/Community Engagement  CONFRONTATION  COMMUNICATION  CONSULTATION  COOPERATION

Identifying and managing complex and fundamentally new risks, new expectations …and new opportunities that have an impact on both business and the

1. Fundamental

economic and demographic shifts

2. Fundamental technological change –

3. Fundamental ecosystem change

4. Fundamentally new global health challenges  Diseases

of

POVERTY  Diseases of AFFLUENCE  Diseases of INTERDEPENDENCE

WHY ENGAGE & PARTNER? n

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To increase trust, influence, ‘license to operate’ and Legitimacy To share risks/burdens and create a Level-playing field To drive Learning and innovation To mobilize joint resources and Leverage impact and effectiveness To shape the agenda and play

WHAT types of alliance are emerging and what’s their potential ?

Different pro-poor business strategies (Source: Nelson 1998, 2001)

Core purposes for alliances

1. DO NO HARM - Minimize negative impacts on the poor Control AND account for social, ethical and environmental impacts, risks, costs and liabilities 2. DO POSITIVE GOOD - Optimize the positive Create NEW value through CORE BUSINESS OPERATIONS or COMPETENCELED PHILANTHROPY 3. CONTRIBUTE TO SYSTEMIC CHANGE Advocacy, change the rules, shift

KEY MODALITIES FOR BUILDING ALLIANCES 1. Alliances at the individual company-level 2. Collective industrywide action 3. Collaborative multisector action

1. Alliances at the individual COMPANY LEVEL

 To

improve and account for company’s own performance – advice; research; assurance

 To

innovate and create new markets, business linkages, products, services and processes that meet socioeconomic and environmental needs

 To

leverage competence-led

2. Collective BUSINESS or INDUSTRY-WIDE alliances  To

create industry-wide, selfregulatory standards, guidelines and practices –Equator Principles; Wolfsberg Principles; Sustainable Agriculture Initiative; International Council of Mining & Metals

 To

increase scale and reach of projects at a national level –

South Africa’s Business Trust; Thailand Business Initiative for Rural Development; Chile Mining Cluster

 To

advocate for progressive change - Global Business Coalition on HIV/AIDS; Business Action for Africa

3. Collaborative MULTISECTOR alliances

co-create and spread more broadly accepted norms and frameworks and standards:

 To

Marine Stewardship Council; Partnership for Quality Medical Donations; Ethical Trading Initiative; Extractive Industries Transparency Initiative; UN Global Compact; National industry charters and covenants

 To

leverage public and private resources to deliver essential services or advocate: Global Alliance for Improved Nutrition Global Fund for HIV/AIDS ‘Red Campaign’ USAID’s GLOBAL DEVELOPMENT ALLIANCE

HOW

can we build more effective alliances to meet both business and social goals?

Partnership challenges Operational obstacles – Overcoming mutual mistrust – Bridging different approaches, languages, and ‘time horizons’ – Addressing power dynamics – Managing unrealistic expectations – Risks to reputation – Possible conflicts of interest – Lack of appropriate skills – Measuring impact and value-

Partnership challenges  Operational



obstacles

Strategic dilemmas

- Achieving scale - Issues of accountability and representation Alliances should not replace government

Critical Success Factors Invest time up-front to understand

 PURPOSE:

your goal. your partners



Know Know

 PROCESS:

 

partners’ capacities, constraints and goals Consult key stakeholders / beneficiaries Agree clear and common goals based on mutual benefit

Know your role and how  Clarify ‘ground rules’, roles to communicate /responsibilities  Role of intermediary leadership or broker  Communication - regular, Know how to transparent, accountable, structures evaluate, when to for decision-making and conflictcelebrate, adapt or resolution exit

 PROGRESS:

PEOPLE !

PARTNERSHIPS as a useful tool to harness necessary ‘resources’ and ‘stakeholder support’ to tackle complex business and sustainability challenges in a manner

that either protects existing value creates new value facilitates systemic

…a question of justice AND security? .a moral case AND an economic case?

Defining Partnership Partnerships are voluntary agreements in which participants agree to work to together to achieve a common purpose or undertake a specific task and to share risks, responsibilities, resources, and benefits. Nelson: Building Partnerships (2001)