As multinational companies expand around the globe, advocacy organizations have devised new strategies to hold them accountable to social and environmental standards. One group, Oxfam America, found a way to exert influence over large multinational corporations—by working with them. Raymond Offenheiser, Oxfam America’s president, explains the benefits of finding common ground with business and the need for global norms to protect rights and the environment across industries.
Oxfam is consistently praised for partnering with corporations in creative ways. How did that come about?
It used to be that foreign direct investment in many developing countries was dominated by foreign aid. Today, overseas development assistance in the developing world has diminished to about 8 percent of foreign direct investment. So 92 percent is foreign direct investment from private capital.
The opportunity arising for the future for an organization like mine, then, is not going to be set by the portion of the national budget that is coming from overseas development assistance, from USAID, or even the World Bank for that matter. It’s going to be what’s coming through private corporations like Unilever or Starbucks or Newmont Mining or pick your company. So the question then becomes, If that’s the case, what are we doing about it as organizations? Should we just say, “Well, it’s important, but it’s not our sphere”? Or is there a point of entry for us?
How did you figure out your point of entry?
A little bit of history here. We adopted a rights-based approach to our work back in the late 1990s, and we came to the conclusion that a lot of the historical work we had done, which was very much focused on grassroots institution-building and empowerment, was not getting the kind of transformative structural change that we were after. We realized that we had to begin to look upstream to governments and also to global actors and global processes that were inhibiting or constraining the ability of poor people to move out of their condition.
"We realized that the value chain and supply chains were actually a point of entry where we could find common language with the companies to talk about how profits were made."
We realized that we needed to be thinking about poverty not as the absence of public goods—which leads to a gap-filling path—but rather as social exclusion, which meant that we should be looking at the barriers that limit people’s access to those things they need, such as education, health, credit, jobs and housing, and that could be addressed through policy, practice changes and, perhaps, better institutional performance by either the state or the market. And then we began to think about development as requiring three basic ingredients: an effective state; active citizens holding that state accountable; and inclusive markets, with citizens also holding those markets accountable to some degree. So then we tried to figure out, Is there a way to do social innovation through a rights-based approach?
And how did you do that?
For us, the epiphany was finding a way to influence corporations through their core business operations rather than through some sort of very aggressive, negative critique that might get them to stop one project somewhere in some remote part of the world but wouldn’t necessarily affect the core business.
We realized that the value chain and supply chains were actually a point of entry where we could find common language with the companies to talk about how profits were made, how wide their margins were and what the difficulties were in the functioning of their business—and, at the same time, challenge them to be more effective in protecting human rights and doing no harm through the execution of those supply chains.
How did you challenge them?
We’ve organized a consumer-facing online campaign, Behind the Brands, around a scorecard in which we are ranking the 10 largest food and beverage companies in the world based on their expressed policies on seven issues: land investment policies, investments in water, carbon footprint and commitment to climate change issues, labor practices, investments in small farms, inclusion of women, and transparency of finances and other business practices.
For example, chocolate companies rely heavily on women in their supply chains, so we asked, “To what degree are the chocolate companies that are sourcing cocoa treating women fairly?” We focused on the three major companies—Mars, Nestlé and Mondelēz—and we went out to the public and said, “You should let them know that you care about how women are being treated in their supply chains and encourage them to improve their policies.” All three companies had received low scores in this area.
Within three weeks, their corporate social responsibility people—with whom we were in constant dialogue because we’d been working with them on the scoring—came to us and said, “What would we need to adjust in the policies in order to get to where you want us to go?” We would lay that out for them and then they came forward with proposals; there was an iterative process until we got the policies we thought met the gold standard. Meanwhile, other companies watched this and they started changing their policies at the same time, even though we weren’t focused on them.
What other types of approaches are you pursuing?
We’ve done some other partnerships where we’re taking a gender-focused approach and looking at emerging women entrepreneurs in Central America and trying to bring forward their entrepreneurial capability. What’s their problem? They have no access to credit. So a lot of this rights-based approach is about access. If you’re a woman entrepreneur, your ability to get access to credit to build your business out is pretty slim. We built a program where we’re setting up a loan guarantee fund and a mentoring program for women entrepreneurs and trying to bring investors into that fund to help that group realize their potential.
How can companies contribute to social progress in the future?
It starts with much more transparency about business practice. We’ve moved down the continuum from corporate responsibility to corporate accountability. What the emergence of corporate social responsibility was about was companies monitoring themselves. And that has led to somewhat of an improvement in behavior, what you could call “soft law.”
But I think the future might also require “hard law” in those contexts, where governments begin to encode these concepts and norms into their countries’ regulatory systems that then become hard law, and companies have to follow that hard law.
The other new frontier is bringing the investors in. In discussions with the food and beverage companies, for example, the investors are saying things like “As you go forward, you need to realize that more and more we’re basing our valuation of your company on what we would refer to as the ‘intangibles,’” by which they mean these new norms of social responsibility and corporate accountability for environmental and social issues and economic returns—and a do-no-harm, inclusive economic outcome, which leaves value with communities.
There is an awareness today that there’s no place to hide. A mining executive said to me, “We can dig a hole on the back side of the moon, and if there's one small thing wrong with that hole, someone will know about it 24 hours later.” So a lot of the future is about building global norms across all different kinds of industries within a rights envelope and thinking about what are the best practices going forward.
Raymond Offenheiser is president of Oxfam America, an international relief and development organization. Oxfam America is the U.S. affiliate of Oxfam International, a confederation that works in more than 90 countries. Previously, Offenheiser represented the Ford Foundation in Bangladesh and the Andean and Southern Cone regions of South America. Earlier, he directed programs for the Inter-American Foundation in Brazil and Colombia and worked for Save the Children Federation in Mexico. Offenheiser has served on the boards of the World Economic Forum, the Clinton Global Initiative, the Council on Foreign Relations and the Aspen Institute, among others.