Reimagining Business for Greater Progress on the SDGs

Last week, I traveled with Mars sustainability leaders to Ghana to visit some of our supply chain partners and programs in cocoa and shea. We met amazing farmers, many of them female, working hard to grow the raw materials we rely upon for our products. Most of them are struggling to earn decent incomes for their work.

This week I'm in NYC for the UN General Assembly & Climate Week where I'll be talking about the ways business must step up efforts to advance the Sustainable Development Goals (SDGs), especially SDG 1: No poverty.

I'm struck by the minimal advancements toward achieving SDG 1: No Poverty. ?The importance of SDG 1 and the eradication of poverty cannot be understated – it is a prerequisite for progress on the other SDGs.

The launch of the SDGs in 2015 sparked some early momentum in reducing extreme poverty. But the pandemic interrupted that progress and caused the number of people living in extreme poverty to rise for the first time since 1998 – from 8.3% in 2019 to 9.2% in 2020. It dipped again slightly but still 8.4% of the world’s population, or 670 million people, are living in extreme poverty. That means living on less than US $2.15 per person per day.

Is there more business can do to address poverty and social inequities?

The goal for SDG 1 is ambitious, but clear: end poverty in all its forms by 2030. Yet 575 million people will still live in extreme poverty by 2030 if current trends continue. Businesses have a role in reducing this number by turning inward to identify, understand, and transform systemic practices that are contributing to income inequality, pay disparity, and poverty. Here are a few areas that I think need to be transformed to level the playing field and begin to address inequity.

Living wages. In the US and elsewhere, minimum wages typically fail to provide sufficient income to support workers and their families. The top 10% of earners take home 52% of total global pay while the lowest paid 50% of earners receive just 8.5% of total global pay. Worldwide, 19% of workers earn less than they need to escape poverty. That’s quite a disparity.

At Mars, we integrated a living wage analysis across our annual rewards processes to understand gaps in living wage in our own operations. We have addressed gaps in living wage across many parts of our business and are working on those remaining. Additionally, we are in active dialogue with our peers and living wage experts on how we can collaborate to overcome the barriers to living wage implementation and adoption.

Precarious work. The gig economy is booming, valued at $355 billion in 2021 and expected to reach $873 billion by 2028. In 2022, one in seven gig workers earned less than the federal minimum wage on an hourly basis, and one in five went hungry because they could not afford to eat. And beyond the usual gig economy suspects, more companies are turning to contingent labor because, simply put, it’s more flexible and less expensive. Many non-salaried workers are paid less and not afforded benefits such as health insurance, vacations, or holidays. This provides workers with little stability or financial security. It’s perhaps not surprising that the ranks of temporary, contract, and contingent workers include a high number of women and migrant workers – populations that already are vulnerable for multiple other reasons.

Through our Responsible Workplace Program, we have identified the importance of addressing risks related to contract labor providers in our own workplaces. This work has led to global wage mapping of contingent labor workers with resulting wage increases for these employees.

Low prices and unfair terms. Negotiating low prices with suppliers creates a domino effect, squeezing the margin for suppliers to support workers with decent wages and benefits. Prolonged and unfavorable payment terms in business relationships worsen the situation. As companies prioritize cost savings, workers at the lower end of the supply chain often bear the brunt of these decisions, facing reduced income and limited access to essential services.

?To address these issues, Mars aims to emphasize mutuality within our value chain and seeks to advance responsible commercial practices. We are committed to fostering fair and equitable supply chain relationships where volatility and risk for farmers and factory workers are reduced and cost-saving measures do not compromise the well-being of workers downstream.

Inequality is a significant risk that is threatening businesses, communities, and societies. As written in WBCSD’s Tackling Inequality report, “Inequality is eroding trust in our political and economic systems, unraveling the social fabric, fueling civil and political unrest, increasing the damage that crises like COVID-19 and climate change cause, constraining economic growth and undermining our collective capacity to tackle complex global challenges.”

The Key to Resilience

Companies sit at a crossroads – with a wealth of resources in their grasp, what is the best path forward to ensure we invest in decent work and fair wages/incomes?

This is the ambition of the Farmer Income Lab (FIL), a ‘think-do tank’ founded by Mars to research and test solutions to improve smallholder farmer income. Insights from the Lab’s research indicate there are many steps businesses can take to help improve farming community livelihoods while building more resilient global supply chains.

A critical unlock we identified is Procurement. This year, in collaboration with IDH, we are working to understand how we can best leverage Procurement practices. As the closest lever to the supply chain, it has the power to revolutionize sourcing to account for the true cost of social and environmental risk. And by transforming procurement practices to better align with sustainability strategies, there is an opportunity to drive greater value throughout the supply chain for all actors.

This means a few things:

• Deepening the partnerships with suppliers to move away from purely transactional relationships.
• Increasing value distribution and reducing volatility and risk for workers.
• Investing in women because supply chains are more resilient when women reach their full potential.
• Offering targeted, bundled services to ensure interventions are effective.

These are the kinds of interventions we were in Ghana last week to test and learn through programmatic interventions with our partner Livelihoods Fund for Family Farming.

Interventions might look a little different in different supply chains, but the business case is the same – transforming procurement strengthens supply chains and builds resiliency for workers and global communities. Equitably distributing value and risk and promoting living wages and income will create a more virtuous cycle for farmers and other workers. When peoples’ livelihoods are supported and their basic needs met, they have more purchasing power as consumers, businesses attract and retain talent, supply chains become more resilient, and we can focus energy on combating some of the world’s other most pressing challenges – such as climate change.

Navigating the Road – Together

Inequality and poverty are complex issues with highly nuanced regional differences. But for corporations operating complex global supply chains, this shouldn’t be an impediment to progress.

We must take the time to understand the issues and the good news is there is a growing array of resources available. I’ve shared a few below that I’ve found valuable. What’s even more critical is cross-sector collaboration to uncover viable solutions and pave the pathway to scale.

As we kick-off this year’s SDG Summit and Climate Week, we need to see more collaboration across all actors – governments, businesses, procurement teams, farming organizations, and beyond to truly tackle the inequities that are present in global supply chains. Collaboration is key – businesses cannot act alone. If you are interested in discussing further, please reach out. I’m keen to discuss how we can leverage the unique power of businesses to build a more equitable society.

• The Case for Living Wages by Business Fights Poverty, University of Cambridge, Shift (2022)
• Roadmap on Living Income (2022) and Roadmap on Living Wages (2021) by IDH
• Improving Wages to Advance Decent Work in Supply Chains by UN Global Compact (2020)