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No study on socio-economic impact of Business

Published Time: August 31, 2019, 12:01 am
Updated Time: August 30, 2019 at 10:44 pm

M S Siddiqui writes for DOT

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.

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.
Governments, inter-governmental organizations, civil society groups, social investors, ethical
consumers, shareholders, and employees are increasingly interested in business’ socio-economic
impact. Some are sceptical, 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
neighbours, their growth and well-being matters to the bottom line of the business activities.
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.

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.

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 aresome 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).

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?
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.
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.
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 researcher and policy makers may initiate study on
such important issue on local businesess.
The writer is a Legal Economist.