Since Theresa May became prime minister this year, we’ve been keen to find out what approach her government will take in encouraging responsible business behaviour. Government wields a lot of regulatory power – last year’s Modern Slavery Act, for example, requires business to open up about what they are doing to address risks of human rights abuses in their supply chains.
So I was keen to find out what minister for corporate responsibility, Margot James, who spoke ahead of me at a Chatham House event this week, has on her to do list. She suggested her job title alone indicates that government wants to send a signal about the importance of the agenda.
She praised positive steps by “mission-led” businesses, where there’s recognition of “a need for a business to consider its social impact as core to all its operations.” But there were challenges too – echoing the prime minister’s call for “an economy that works for everyone, not just the privileged few” and calling the alternative to responsible business “deeply damaging”.
James’ speech coincided with another by Theresa May, who was speaking across town at the CBI, in which she challenged business about very low levels of public trust in them – 35% according to her.
Government needs to get serious about responsible business. At Fairtrade we see every day how much poverty and human rights abuse is evident among many of the communities around the world who grow the food in our shopping baskets. 40% of cocoa farmers do not have enough food to sustain a balanced diet for two months of the year; 30% of children in tea growing communities are malnourished, rising to 50% in the poorest countries. And yet, in 2016, it was a good year for the profits of commodity trading companies buying and selling these very goods. Something is badly wrong and needs to change.
If the moral case was not compelling enough, there’s a powerful business case too. Climate change and poverty are undermining the production of many of the products which stock our supermarket shelves. Farmers tell Fairtrade all the time about the damage to their harvests caused by unpredictable weather, and with prices so low and unpredictable they can neither invest to grow their businesses or sadly even deal with their families basic needs. Food could become less available – certainly more expensive – if we can’t find a different way of doing things.
Part of the government’s immediate plan it seems, flagged up by both the PM and the minister, is to review corporate governance – that is, the way businesses are run at board level, and the duties which directors have for company performance and behaviour. That’s an important opportunity for Fairtrade and others to call for more duties in the UK’s board rooms to act on human rights, poverty and environmental issues.
I wouldn’t be surprised if we were joined in calling for a tougher line by businesses themselves, especially companies that are already working hard to make a difference. Because doing things better can cost more – at least in the short term – and too often you hear the argument that changes would carry the risk of losing business. If the same rules apply to everyone, it helps progressive companies move quicker, and forces those who haven’t got the message to step up. We saw many businesses come out in support of the Modern Slavery Act when plans were drawn up by government, so I hope we’ll continue to see businesses lending their voice towards tougher demands on responsibility and ethics.
And of course, consumers are crucial in this debate. It is so powerful when consumers put companies on the spot, asking what conditions are like for farmers, miners, workers providing goods for the shelves, how much they are paid, and what rights they have. As Margot James said: “Increasingly people rightly want to know where the goods they buy were made and how they were brought to the market.” The UK’s consumers are also UK voters, and we also need the government to keep hearing the call for action from those who have the power at the ballot box.
Following the EU referendum, in years to come the UK government is likely to have more freedom than at present to set the rules within which business operates. There’s a risk here, and an opportunity. Government can strengthen and smarten regulation – or it can scrap useful policies. So we, together with poor farmers and workers around the world will be calling for any changes to be for the better.
While I welcome the warm words from ministers, and indeed the evidence we see of companies actively changing the way they do business, I am concerned that the pace of change is far too slow. We won’t solve the hunger of coffee farmers, the poverty of tea farmers, or the right of garment workers to a fair wage through slow incremental change and tweaks to policy guidance here and there. The change that is needed is radical and it is needed fast. We need to get down to business.
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