As governments around the world look at shirking budgets and rising costs of development, and as public financial institutions like the World Bank realize that they can only provide a fraction of development finance, a disconcerting fact is emerging: Only wealthy corporations can raise money needed for financing the water and sewer systems, electrification, and roads that are a major part of the development needs of Third World countries. Private money now accounts for 75% of all development financing, and critical development projects that don't generate profits (such as rural electrification or services to the poorest populations) are falling by the wayside.
Twenty years ago, the field of "international development" was dominated by national aid agencies and multilateral development banks. Despite their checkered pasts, government development agencies have mandates to alleviate poverty and improve standards of living. They also possess the institutional capacity to promote gender and class equity, social integrity, participatory planning, community-based stewardship of resources-- the trappings of genuine development. In contrast, the vast majority of private, corporate-driven development is driven solely by profit maximization, and is not informed by such development concepts. As the relative power of governmental development institutions continues to wither, and as governments in the North and South downsize and embrace self-regulation, the corporation is emerging as today's power player in determining the development paths of entire nations. Environmentalists now are asking, "Will profit-driven development place the Third World on a path of sustainability?"; and question whether individual companies are capable of assuming the new responsibilities associated with being an engine of development.
Most corporations protest that participatory decision-making, social integrity and the like are the obligation of local government or civil society; that they cannot bear responsibility for the trappings of development. But nevertheless, the far-reaching impacts of their activities on the environment, women, democracy, equity, and general economic development leave corporations with a moral obligation to address these stakeholder concerns.
As socially conscious investors ponder internationalizing their portfolios, they will realize that a chasm has ruptured between what the SRI community is able to accomplish through social and environmental screening and what cannot be addressed yet through screens. Many social researchers confide that information-gathering on an international level is at an infant stage -- about ten years behind access to information levels in the U.S. Thus, most research firms only are able to identify a multinational corporation's most egregious practices, or certain countries where a company operates.
Though a recent Interfaith Center on Corporate Responsibility (ICCR) report reveals that a small number of companies are increasingly measuring sustainability indicators, it will be years before the SRI community develops a thorough methodology for assessing corporations on the basis of sustainability, or in their new role as sculptor of development in poor countries.
With such limitations, the socially responsible, internationally-minded investor falls into a quandary. But rather than shy away from international investing altogether, the SRI community can take positive strides towards making corporations agents of sustainable development -- trappings and all. Some ideas:
Copyright © 1996. The Light Party.
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