With some of the world’s biggest economies now companies, not states, the benefits for civil society of working more closely with business are clear.
Yet, perhaps less well understood, are the benefits for business of defending civic space – the freedom of citizens to organise, speak up and protest governance failings and corruption.
The good news is that in one area at least, businesses and civil society are increasingly seeing eye to eye.
When President Donald Trump announced that the United States was withdrawing from the Paris Climate Change agreement, some of the most vocal criticism came not from civil society but from business leaders.
Turning up the heat
The success that civil society has had working with businesses on climate change, shows that a better relationship between businesses and civil society is possible. The new challenge is to convince businesses that action on civil liberties is just as important as action on global climate change.
Climate activists, through shareholder action as well as boycott and disinvestment campaigns, have won commitments from institutions to pull $5 trillion from the fossil fuel industry globally.
Many in business continue to find common ground with civil society to seek climate-friendly solutions. Activist shareholders recently succeeded in making the world’s biggest oil and gas company, Exxon Mobil, commit to disclosing the impacts of climate change on its business.
In the area of human rights, however, progress has been much slower.
Too often ‘business as usual’ can result in human rights abuses, leading to land grabs affecting indigenous people, the killing of human rights defenders or attacks on peaceful demonstrations.
Moreover, massive global tax avoidance continues to lead to cuts in public spending and is driving global inequality. Indeed, the vast scale of global corporate tax avoidance is perpetuating economic inequality, causing essential social services to be cut and even, evidence suggests, ultimately impeding economic growth. Citizens for Tax Justice estimate that the top 500 US companies hold $2.4 trillion of profits permanently offshore, avoiding up to $695 billion in tax.
Additionally, $50 billion, far exceeding the inflow of Official Development Assistance, leaves Africa illegally each year, with business seen as playing a key role in enabling this.
Yet while it’s clear that improved commitments from businesses on civil liberties and human rights would bring obvious benefits to civil society, what’s less well known is that businesses could also benefit.
Indeed according to the World Economic Forum, fraying rule of law and declining civic freedoms is a major global risk in 2017.
UN Global Compact research suggests social risk can add 10% on average to business operating costs. The difference between operating in a low corruption climate versus one with higher levels of corruption can be 20% of profit. Bribery, which an empowered civil society offers a strong bulwark against, is estimated to account for around $1 trillion a year.
Attacks on civic freedoms can cost businesses too. Research puts the economic cost of internet shutdowns, as experienced in the Anglophone region of Cameroon this year, at $2.4 billion. This puts a clear price on the failure to defend civic space.
The rewards for supporting civic space are also clear. CIVICUS’ latest annual report identifies several areas of partnership for positive social change between business and civil society. It highlights the need for business to adopt a ‘first do no harm’ approach and then go beyond that by demonstrating an active commitment to upholding rights.
Nicolas Patrick of global law firm, DLA Piper, which is part of a business network on human rights defenders, insists that businesses can only succeed where there is strong rule of law. His company sees civil society as an indicator and facilitator of the rule of law. It supports civil society organisations by providing them with strategic advice in obtaining registration in high-risk jurisdictions and support in instances of arbitrary detention.
Bill Anderson of the Adidas Group points to his company’s long track record working with several civil society groups to guarantee workers’ rights and better occupational health and safety conditions as part of global supply chains. He believes that open and tolerant societies where civil society thrives are also pre-conditions for the long-term success of business.
These initiatives show how, at its best, the private sector can help tackle the biggest issues we face, from climate change to economic inequality, and the current crisis of democracy.
There are also fears of a race to the bottom. Ethical businesses will find it hard to sustain their position when they are undercut by unscrupulous companies combing the planet for the cheapest labour or lowest corporation tax, and when there are few or weak legal and regulatory obligations. An increasing likelihood in the global north given the uncertainty around Brexit.
But it’s not just business that must alter behaviour. For civil society, this implies building pathways to engage business to protect human rights and the environment.
With governments failing to honour commitments to citizens in many parts of the world, perhaps civil society and business can find some common ground to protect basic freedoms which offer the best bet for stable, corruption-free governance and the rule of law.
Original article published by the World Economic Forum here.