A ‘Good for Development’ Fairtrade type Kite Mark

3rd September 2009

Samantha Morshed, CEO of Hathay Bunano

The Overseas Development Institute (ODI) in the UK is currently consulting and finalising a new mark for companies and products, Good for Development. Early in the research they reviewed a range of existing ethical standards and labels and found that none of them really measure or even attempt to capture the contribution to development being made by business.

They concluded that there was a gap in the market for this and that a Good for Development product or company mark could facilitate measurement and communication of a company's positive contribution to development. The idea is that the mark would recognise the importance of a company's core business in delivering development gains and will encourage their pragmatic involvement in UN Development foci.
It is widely recognised that business has the potential to be highly effective in reducing poverty and enabling progress towards the other Millenium Development Goals (MDGs). The main question behind this new mark asks 'how do we get businesses in their thousands, both multinational and local, to not only continue to leverage their core business initiatives to be pro-poor but also align CSR actions to UN Development foci within the scope of their operations?'

Certainly it is true that companies who have adopted the Fairtrade Labelling Organisation (FLO) mark, for their commodities have seen benefit from this, are able to charge a premium price for their products and have achieved widespread customer recognition. Whilst the geographic reach of FLO is truly global, the number of products that can be certified is limited. The mark was developed in such a way that each product needed a specific certification process and in some ways this has slowed the rollout of the mark to more products.

Nevertheless, in the UK 53 percent population recognise the FLO logo and more people think that Fairtrade is more effective in reducing developing world poverty than charity. It's clearly been a success for producers and customers.

On the other hand, the UN Global Compact offers recognition of a company's intent through its core business or CSR activities to make progress towards the MDGs but it does not measure those companies or seek to certify them. However in some ways this may be seen as a precursor to the newly suggested Good for Development mark, which takes the concept of recognising a company's intent one step further.
Social business is a growing field, where businesses are conceived potentially to make profit and to address or solve social problems as well. Currently there is no recognition, badge or mark which can inform a customer that the product has been made by a social business and it is likely that social businesses may be some of the early participants in this scheme.

Rod Schwartz, CEO of ClearlySo, a leading social business in the UK and promoter of social business worldwide, thinks “while there are already a great number of marks, badges and memberships to be had, companies which are good for development have not had their fair share. The ODI's willingness to encourage debate on the issues makes it more than likely they will emerge as a survivor in the world of 'marks'. Consumers need an avenue for expressing their growing preference to take development goals into account in their goods purchases”

Learning from the FLO experience would be crucial to its success. Whilst FLO has been a little slow to expand the range of products that it certifies it has been incredibly successful in raising consumer awareness and developing brand recognition of the mark. Customers buy Fairtrade because they want to create a positive benefit for the producers. Tapping into this increasingly questioning and ethical consumer-base makes good sense for business worldwide.

From the other side of the business, there is currently no recognition, badge or mark which can inform social investors, development donor agencies or philanthropists about the development benefit created by social businesses. The International Finance Corporation (IFC), part of the World Bank, in Bangladesh, work with businesses which create 'development impact' and assess this as part of their due diligence process. The Department for International Development (DFID) from the UK is currently financing a project with the Bangladesh Enterprise Institute (BEI) to explore social business in Bangladesh. There is clearly an increasing awareness and understanding among the development donor agency community of the benefits that social business can bring in reducing poverty and progress towards the MDGs within a diversified strategy.

It has been clear over the past few decades that there is no single 'magic bullet' or panacea for reducing poverty and that a fully diversified strategy is required of which social business could play a significant role. A single mark could provide social business, with legitimacy and credibility and ensure a more seamless working relationship in the development arena.

Karen Ellis, a research fellow with the ODI, thinks “a Good for Development company mark could encourage companies to make a real effort to improve their contribution to development through the way they do business, by helping to ensure their efforts are recognised and rewarded by customers and investors.”

One area that has not yet been finalized is supply chains and how far up and down the supply should be examined in the process. If recognition can be developed within the mark for working with suppliers who also have this mark then this could significantly increase uptake and participation and could provide a clear driving force for taking the mark forward.

Corporate social responsibility is a growing concept and now commonly accepted as a necessity for business in the developed world. Focussing CSR strategies on progress towards the UN development goals could result in the most effective progress yet. Business throughout the world including small and medium size enterprises (SMEs) along with well-regulated foreign direct investment (FDI) has been key to delivering economic growth in developing countries, and it is such growth that will ultimately pull people out of poverty.

A Good for Development mark, bringing increased customer recognition of businesses, has the potential to catalyze this process. Mainstream business has the potential to significantly contribute towards solving the world's problems; and encouraging mainstream business to become more 'social' makes good sense.

The consultation process is ongoing but there will clearly be many benefits for both business and development in Bangladesh by being certified 'Good for Development'.

See: http://www.thedailystar.net/newDesign/photo_gallery.php?pid=104104