Measuring socio-economic impact of business

EDEN BUILDING TO STOCK EXCHANGE 09 December 2018 https://dailyasianage.com/news/153047/measuring-socio-economic-impact-of-business

Measuring socio-economic impact of business M S Siddiqui Businesses are always been part of society. They should be seen more as the locus of productive activities that must be harnessed for the greater good of society as a whole. Understanding their social impact is an essential step in that process.

Governments, inter-governmental organizations, civil society groups, social investors, ethical consumers, shareholders, and employees are increasingly interested in business' socio-economic impact. Some are skeptical, and they want proof that companies are at least doing no harm.

Business has all the stakeholders such as employees, customers, suppliers, distributors, retailers, and neighbors, their growth and well-being matters to the bottom line of the business activities.

There are questions whether business keep their commitments and fulfill the expectation of the stakeholders. A sustainable and responsible business should consider the social impact of its business operations on employees, those employed throughout the supply chain, and on the community.

Businesses should have feasibility of their business with socio-economic impact and know the demand and supply gap in the society for innovative and value added products etc.

Business organizations have wide-ranging socio-economic impact in the society from creating products and services. These impacts are stemming from consumption of the products and services, policies and practices in their own operations and along the value chain. They are also involved in infrastructure development investments and tax payments, philanthropic initiatives, and others.

The major impact is creation of employments including training employees giving livelihood to the citizens. The creation of demands and supply of products and services and up gradation of standard of living is the indication of national development activities. The educations, skill development, transfer of technology are another major contribution of business ventures.

The infrastructure for living, market, entertainment parks and other facilities are part of the life of citizens. The health care and education require huge investments and this is now almost in the private sector.

Business are expanding opportunity and access to products and services ranging from food and healthcare to energy and information technology, companies affect people's assets, capabilities, opportunities, and standards of living - sometimes positively, sometimes also negatively.

The sustainable business is performance related to society and social justice, often referred to as social impact with viable existence. The social impact of a business's operations is viewed both internally and externally and ensures that the business's entire operations across the supply chain are socially responsible and ethical. Internally, the social impact of a business often refers to practices related to employees and employment with the business.

A sustainable business is also concerned for the labor practices and working conditions for employees with healthy work environments. The sustainable business's social impact would include such items as the business's practices and policies related to working conditions, diversity in hiring, opportunities for advancement for women and minorities, lack of discrimination, and the provision of affordable health care and other necessary benefits.

In addition, social impact includes wages, breaks, adherence to employment laws, safety, training, and numerous other specific labor practices. Above all, social impact includes the impact on the citizen and social services sector as a result of the business's activities.

The sustainable business is not only expected to treat its employees in a responsible manner but also ensure that it is engaged with suppliers that share similar values. The business also should know the impact on other stakeholders such as small traders, suppliers, and support businesses.

These stakeholders have contribution to the growth of big business. They should measure the loyalty, performance, stability, and capacity for growth of suppliers, distributors, and retail partners identifying vulnerabilities and opportunities to address them.

When sourcing products from outside an industrialized country, some sustainable businesses will seek fair trade products. Fair Trade certification verifies that living wages were paid to producers and that fair and ethical employment practices were used in the creation of products.

The supply chain should make sure that the supplies and products they purchases were produced responsibly and ethically. Sustainable businesses will make reasonable efforts to ensure they are not purchasing from suppliers engaged in the use of sweatshops, child labor, or other human rights abuses.

In some cases, businesses have worked diligently with suppliers to correct these problems, while in other cases businesses have chosen to change suppliers. This entails the respect of individuals and other businesses encountered locally and around the world.

A sustainable business will make reasonable efforts to ensure its policies, practices, products, advertising, logo or mascot, and other aspects of the business are not offensive or disrespectful to clients in the global market.

Business around the world is responsible for pollution and also offering a great array of innovative solutions to tackle key environmental and social challenges - and they are benefiting from doing so.

It is also some time questioned whether any business activities create social risk and conflict. There is a debate whether the budgets of corporate social responsibilities are utilized properly.

The business community may go in depth study to know, whether they are fulfilling our commitments and the expectations our stakeholders. Is there a gap between our impacts and our stakeholders'

perceptions? To what extent do our activities create social risk or conflict? Where should we invest our corporate responsibility budget?

The social impacts of any action are much easier to identify than measure. At its broadest, social impact includes anything that affects company-stakeholder relationships: from how much and how reliably suppliers (retailers) are paid, to how a product (alcohol etc) affects health and lives. From how small shareholders are affected of monopoly at market. The business should be also sustainable and viable to serve long run keeping in mind the social impacts.

There are some practices that will help measure social impact: (1) Review the 10 principles of the United Nations Global Compact and abide by them, whether or not the business becomes a signatory. The Ten Principles of the United Nations Global Compact are derived from: the Universal Declaration of Human Rights, the International Labour Organization's Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption. (2) Seek out opportunities to purchase Fair Trade products as input of business.

Bangladesh is familiar with fair trade clothing with labor standard and working conditions etc. Other products such as: handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, flowers, and other products some standards of fair trade. (3) Evaluate philanthropic programs and the impact of such programs. (4) Proper use of fund for Corporate Social Responsibility (CSR).

With measuring socio-economic impact, they can show policymakers what and how they contribute to public policy goals through profitable business activity - helping those policymakers develop the right mix of rules, incentives, and public services needed to maximize the business contribution. On the other hand they get help from external stakeholders - like governments, donors, and civil society groups?

Measuring socio-economic impact can help companies understand the needs, aspirations, resources, and incentives of their customers - enabling them to develop winning new products and services and improve existing offerings. To what extent are our business activities contributing to local, national, or international public policy goals? Whether they are aware of the negative impacts, if any? How the business activities contributing to the society with the products and services?

Business refer the society, government and other stakeholders wither they have positive contribution to the society and nation. There is a global negative publicity about business activities particularly in the developing countries where the left politics frame the idea of the society and economy with free distributed or low cost political theory books of communism. A fair study can mitigate the risk of negative publicity.

The employees are also inspired by the positive outcome of their activities and livelihood. The challenge is therefore to find and focus on socio-economic impacts related to business performance.

A related challenge is to select those indicators.

The cost and complexity of measuring socio-economic impact must be proportional to the value that measuring enables a company to create. In the recent time, the mobile operators in Bangladesh measures the socio-economic impacts of mobile phones in order to inform dialogue with governments on regulatory frameworks that foster innovation and growth in the industry.

In the market the businesses also compete with each other's with new products and new technology to survive the market with feasible and profitable business. They look into four strategic business drivers: achieving growth; achieving operational efficiency and increased productivity through the value chain; responsible business; and enhancing the operating environment.

Socio-economic impact measurement can also help business, government, and civil society design more effective collaborations by providing insight into the value it is possible to create and the roles the different partners can play in creating it.

The writer is a legal economist Email: mssiddiqui2035@gmail.com