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What Matters Most Is What We Do

Climate change affects every living soul. Given that the air we breathe as well as sunlight are all free, their use was meant for the benefit of everyone irrespective of social class, nationalities, religion and geographical location.  However, the actions of a few are now harming the health of the current living generations and the future of many generations.

In various parts of the world, economic development has mainly been accompanied by traffic congestion, noise and air pollution. Our cities have become mega cities as economic prosperity have attracted a continuous flow of new residents. The existing infrastructure such as housing, sanitation and public health services are inadequate to cater for the increase in demand.

The public resources of most developed countries have been completely stretched. There seems to be no sustainable solution unless a long-term strategy is adopted in regards to the mobility of people. Increasing mobility of people has also led to diseases being transmitted more easily. Ebola in the Democratic Republic of Congo is an example of how any disease can become a serious threat to its neighbours. Illegal immigration, terrorism and diseases are the modern plagues of today’s world.

When globalisation took place, not all countries were at the same stage of economic development. A few, mainly the advanced industrial countries, had well developed markets with goods to export and resources to protect their local economies in hard times such as unemployment insurance and welfare programs. Their industries grew in times when protectionist barriers were in place. In other words, the developed markets were, therefore, in a strong position to fully benefit from free trade, contrary to their counterparts in the developing world.

It is true to say that the responsibility of getting as much value as possible from its resources resides with a nation – the principles of sovereignty. However, most developing nations had nothing to sell abroad in the early decades of globalisation due to the complexity of their challenges. Most developing countries have a weak national identity making them vulnerable to civil wars, dictatorships and coups d’état. Historically, they were never prepared to be called a nation.

The African continent, for example, were essentially populated by tribes of various ethnic groups prior to colonialism. Tribes who used to live together were separated due to the emergence of man made national borders, drawn by former colonial powers. The Bambara people, for instance, are native to West Africa and have since then been now split into different countries: Southern Mali, Senegal, Burkina Faso and Guinea.

The “new” citizens of those ex colonies had to learn to live differently from what they have been used to for decades.  Their learning curve was arduous. Unfortunately, the economic and financial assistance they received was, most of the time, inappropriate. Each country differs in its history, culture and circumstances so that it is difficult to apply the same principles of development to obtain the expected result of economic growth.

In addition, the international institutions whose role is to help those nations in difficulties had their own internal challenges. For a long time, IMF’s recommendations were, most of the time, met with scepticism as the institution did not have the required public credibility.  Governance issues and lack of transparency were also part of the challenges faced by IMF. Though IMF consists of 189 member countries, its Managing Director is appointed by the EU with the support of the US. The decision making at the IMF is meant to reflect the relative positions of its members states on the global economy. For many years, it was not the case.

It is unfortunate that little weight is given to the voices and concerns of the developing countries though their natural and human resources have been and are still essential for the economic development of the advanced industrial countries.

Our global environmental and social issues are not going to be resolved easily if there is not a serious political commitment from our part. We all hear lectures about the urgent need for a strong governance, for preserving our living space, for promoting social cohesion but a number of us are inspired by what our governments or international institutions are actually doing…..

Political commitment does drive desired changes. The Kimberly Process Certification Scheme is the result of a United Nations resolution about eradicating the trade in conflict or blood diamonds.  With continued commitment of a number of countries, trade in blood diamonds have now been reduced to a certain extent. The most important outcome of the UN resolution has been worldwide public awareness that certain economic activities are sometimes meant for funding unethical activities or are operated using illegal means such as child labour.

This UN initiative as well as others such as the FLEGT by the EU have also reinforced the belief that civil society can influence economic development. In encouraging people to make ethical and conscious choices as to their way of living, we can contribute to bring about desired changes. NGO’s and social enterprises are increasingly becoming a means for civil society to take a more proactive role. Some of them are well known success stories such as Barefoot solar engineers, Grameen Bank and Beauval Nature

Positive transformational changes have been made possible by involving the communities in decision making. It is a means to empower them to take responsibility for their future and that of future generations. According to World Bank studies, community based projects leads to a higher likelihood of success. What makes them successful is that they come out of the communities they service and address the needs of the people in those communities.

NGO’s and social enterprises – the Third World sector as they are known, have proved that values based economic activities are resilient and can thrive despite the odds.  Many of them have evolved into professionalised entities with their own board and management team. The road has not always been smooth for some of them, having to resolve governance and funding issues. Fortunately, their future seems brighter as they have learnt from their past mistakes. They may become a source of inspiration for a comprehensive approach to economic development. Time will tell

US versus THEM OR US = US AND THEM

Globalisation is meant to be the closer integration of the countries of the world. Any country would be free to sell its products to the rest of the world and use the monies received to better the lives of its people. Globalisation was meant to create a world where everyone benefits without any risk and where markets operate efficiently – without a glitch. Unfortunately, this is a myth.

With the advent of globalisation, a number of businesses have grown in size to become what we call multinationals. They have brought jobs and economic growth to certain developing economies. In addition, they were able to introduce cheap goods of excellent quality to the developed markets, giving them more value for every penny they spent.

At the same time, those same multinationals have also created havoc. In some parts of the world, they have driven out small businesses which is part of the backbone of the local communities. Local SME’s are the essential component of the economic and social life of a local community. They are more incentivised to do “the right thing” such as keeping jobs during periods of economic recession.

In contrast, there have been many instances where multinationals have left behind long lasting collateral damage to the natural environment and to the local communities. The most well-known example is the disaster in Bhopal in 1984. It caused the death of more than 3,000 people and injured over 550,000. However, it took 5 years for the victims to receive compensation from Union Carbide after several legal battles.

Though the Bhopal incident has had catastrophic repercussions for Union Carbide, it has not stopped corporate greed in its track.  A more recent form of corporate irresponsibility is bio piracy. Developing countries have a reservoir of knowledge in their rainforests and in their traditional medicine such as Aryuveda.  One of the most notorious cases of bio piracy, according to Joseph Stiglitz, was the attempt to patent turmeric for healing purposes. Turmeric is used as a colouring and flavouring agent in many Asian cuisines. It is also used in Aryuvedic medicine. The United States issued a patent for the medical use of turmeric in December 1993. The patent was eventually overthrown but not without incurring expensive legal costs.

These two examples demonstrate the current challenges involved in holding multinationals and their management teams accountable in foreign countries.

It also goes without saying that developing countries spend a huge amount of resources to maintain their bio diversity and it is only fair that they are given incentives to maintain their forests which is of enormous environmental and medical benefit to all. However, intellectual property rights are essentially meant for corporates or individuals. None has, ever, been drafted for the commercialisation of a country’s cultural heritage or bio diversity by a third party. Without full political commitment from the developed world, intellectual property rights would remain solely in favour of the inventors.

Fortunately, all is not lost. Novartis, a Swiss drug company has developed, in the past, an effective drug against malaria, using components of the Chinese tree Qinghao. Malaria is a life threatening disease. In 2017, it has affected 219 million lives and have caused the death of 435,000 persons, according to the World Health Organisation. 92% of the malaria cases are recorded on the African continent. Being socially responsible, Novartis has made it possible for developing countries to buy those drugs at cost or for free. For the past fifteen years, the company has continued its fight against Malaria and has developed the program: Novartis Malaria Initiative

Civil society has also taken a more active role in monitoring the behaviour of multinationals. Over the past few years, with the advent of social media, the wrongdoings of the multinationals are brought to the attention of the whole world.  Bad publicity can bring expensive lawsuits and destroys the image of the company which can account for more than 50% of its value.  The famous pasta brand, Barilla, has suffered huge decline in its sales and financial performance following the statement made by its chairman during an interview in 2013 about his negative views on homosexuality. Shortly after the interview, the public, with the help of social media, chose to boycott all Barilla products. It took the company more than 5 years to turnaround and become a gay friendly consumer product.

With the increasing social and political activism of the public at large, business concepts such as corporate social responsibility, responsible investing and impact investing have taken shape to encourage more responsible corporate citizens.  Though these movements have not yet been fully embraced by the mainstream investment and business community, they have become the main objective of a few influential institutional investors. Norway has recently decided to sell off most of its investments operating in oil and gas exploration sector and to invest more in renewable energy companies. The country has a sovereign wealth fund of approximately US$1 trillion. Similarly, a number of US foundations such as KL Felicitas Foundation aim at promoting impact investment by creating a strong impact investing ecosystem.

It is true that most of us tend to live locally – in our own communities, towns and countries. Globalisation, actually requires that we all start to view ourselves as global citizens -breathing the same air, living on the same planet and promoting a better approach to doing business worldwide. The ongoing motto is “ We have only one planet for everybody. There is no planet B.”