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Published on: March 29, 2022, 8:48 p.m.
Do corporates care about poverty?
  • According to the United Nations, 364 million, or 28 per cent of the Indian population lived in extreme poverty in 2019

By Sudhir Sinha. The author is Professor, Institute of Rural Management, Anand

The global extreme poverty rate went up in 2021 after decades of progress, which was halted or reverted as hundreds of millions of people were pushed back into extreme poverty and chronic hunger due to the pandemic. As a result, the absolute number of poor in India also rose. According to the United Nations, 364 million, or 28 per cent of the Indian population lived in extreme poverty in 2019. The World Bank report (2020) says that this number will rise further by another 88-115 million. So, overall, millions of Indians have either become poorer or poor or are on the edge of becoming poor. 

Therefore, achieving SDGs, in particular – Target 1.1 and 1.2 of the 2030 Agenda, which focus explicitly on addressing poverty in all its dimensions, seems challenging for the government alone. However, unlike Millennium Development Goals (MDGs), the Sustainable Development Goals (SDGs) result from a process that has been more inclusive than ever, with governments involving business, civil society, and citizens from the beginning. This time, development stakeholders – governments, businesses, civil society, and academia – agree on where the world needs to go. Consequently, corporations in India also have resolved to play a critical role in the process.

Corporations have addressed the SDGs as part of their CSR obligations. Firms link CSR activities, post facto, to different SDGs with assumptions that these activities help achieve the relevant goals. Although firms have made efforts, fulfilling those ambitions remains far from reality. While many companies report how they directly or indirectly contribute to other goals, SDG-1 for No Poverty is most common in CSR reports. Almost all CSR reports and corporate presentations claim to have made a positive impact on poverty alleviation. 

On the contrary, the population living below the poverty line in India has risen since 2018, after making remarkable achievements in poverty reduction between 2006 and 2016. Therefore, companies’ claims on poverty reduction remain contradictory. Moreover, these reports are not evidence-based, measured objectively and quantitatively against the suggested 14 critical indicators of seven targets under SDG-1. Arguably, while such indirect claims may not be ignored, the shallowness of corporate obligations to SDGs cannot be denied either. 

Further, a qualitative investigation of CSR policies and reports of the Top 20 Indian CSR spenders on the National CSR Portal of the Ministry of Corporate Affairs presents a wide-ranging gap in understanding poverty, approaches, and strategies for addressing SDGs particularly Goal#1 for No Poverty. Also, the analyses provide the account of many ways to suggest corporations improve their commitments to eradicate poverty and help the country achieve targets 1.1 &1.2 of SDG#1. Finally, the analyses reflect on the following findings and suggest companies to convert words into action to help India come out of poverty by 2030. 

Poverty – misunderstood as an economic challenge: Poverty is a perception invariably linked to people’s economic deprivation, which economists consider an essential determining component for securing human welfare. However, welfare has been perceived differently, and there are many ways to describe and measure poverty. For example, while the UN focuses on poverty measured by monetised consumption and income, academicians and social scientists describe it as basic needs, capabilities, and human rights. These alternative subjective notions are interrelated and indirectly linked to the multidimensional poverty index, including various deprivations, such as poor health, lack of education, and inadequate living standards. 

  • Companies should invest in NGOs to promote, support, and partner with them to focus on specific SDG areas that directly or indirectly address poverty reductions

However, the methodology used to measure poverty is the World Bank’s income and the consumption-based international poverty line, revised to $1.90 per person/day in 2015. Therefore, companies must understand and include the comprehensive dimensions of poverty while planning, implementing, measuring, and communicating them under CSR. Poverty cannot be abolished by continuing with a charity-driven fractured and unidimensional approach to philanthropy.

Commitment deficit: Poverty reduction suffers low commitment from corporations. The analyses show that the term ‘poverty reduction’ is missing in CSR policies. In fact, claims for CSR activities achieving SDGs come as by chance because SDGs have not been made integral to companies’ business/CSR policies hitherto. Firms have failed to acknowledge how even their internal actions can positively impact poverty reduction as part of their obligations to SDGs.

For example, companies can, and should, reduce the income gap among employees to reduce income inequality. Also, they can influence and support their suppliers (MSMEs)/contractors to pay living wages to workers to ensure no reversal of low-to-middle income population to poverty, as was witnessed during the early phases of lockdown due to the pandemic.

Filling the gaps to make anti-poverty programmes work better: There are plenty of government-sponsored anti-poverty programmes and schemes, most of which are not appropriately implemented due to a shortage of funds and/or the incapability of the last-mile service providers. It has always been a big operational gap. Therefore, corporations can play a significant role in improving the efficiency and effectiveness of those schemes by just filling this gap instead of spending precious resources on executing CSR programmes, which are transactional and short-lived.

Partner with local NGOs: Companies should invest in NGOs to promote, support, and partner with them to focus on specific SDG areas that directly or indirectly address poverty reductions. In addition, companies with influential power can lobby for action-oriented SDGs aligned public policies that give social protection to communities. Social protection measures to protect people’s health, jobs, and incomes are critical to avoiding and reducing poverty. Although new social protection measures were introduced in 2020 and 2021 by governments, they remain temporary and need to be made permanent in the long term.

  • Social protection measures to protect people’s health, jobs, and incomes are critical to avoiding and reducing poverty

Finally, whether businesses care about global commitment to end poverty by 2030 has mixed responses. Corporations must be credited for proactively understanding and agreeing to assume their role in forwarding the Global Agenda 2030. A PwC study (2018) confirms that 72 per cent of global companies mentioned SDGs in their annual corporate or sustainability report. Further, Indian companies have aligned their CSR activities with item#1 of Schedule VII on poverty and hunger of the Companies Act relating to CSR.

However, on the other hand, the effects of the Corona virus pandemic have confirmed firms’ failure of achieving SDGs and, in particular, poverty reduction, which was partly reversed. Only 25 per cent of companies were found to have included SDGs in their published business strategy. The top three goals reported by firms are SDG-8 (Decent Work and Economic Growth), SDG-13 (Climate Action), and SDG-12 (Responsible Consumption and Production). Conversely, the least frequently mentioned goals are SDG-2 (Zero Hunger), and SDG-14 (Life Below Water). Companies, therefore, need to be more balanced in their commitment and approach to SDGs. Else, accusations of ‘SDG-washing’ are already steaming up against corporations.

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