Global Policy Forum

By Mattias Creffier

Does the presence of Heineken beer in Sierra Leone contribute to reduction of child mortality? And to what extent does the chemicals company Akzo Nobel contribute to prevent environmental damage?

The Dutch have set up an 'MDG Scan' to keep the score on what multinational companies do towards realisation of the Millennium Development Goals (MDGs). In September 2000, the United Nations member countries made a commitment to reaching eight MDGs by 2015, such as halving the proportion of people suffering extreme poverty and hunger, achieving universal primary education, and promoting gender equality and the empowerment of women. The Dutch Commission on Sustainable Research (NCDO) has now financed the MDG Scan as a tool to raise awareness of the MDGs in the private sector. The scan allows for detailed comparisons between companies within the same sector and evaluation of the progress of a company over time.

"The quantitative approach will make the discussion on private sector contribution to the MDGs less speculative and anecdotal," the NCDO states. It wants to benchmark sufficient companies to be able to launch an index and a 'Millennium Development Fund' with stocks of companies with the best MDG performance. The MDG Scan, financed by the NCDO, was developed by Dutch Sustainability Research (DSR), an independent research organisation that advises institutional clients on socially responsible investments. It split the eight MDGs, which originally apply to governments, into 77 measurable and comparable indicators relevant to multinational companies with significant activity in middle or low income countries.

The score for the first MDG on halving the number of people living in extreme poverty by 2015, depends on stimulating community development by measures such as promoting local entrepreneurship and providing essential products and services, provision of employment and salaries, stimulating local agricultural production, and fighting malnutrition. The second MDG on universal primary education depends on company guidelines and programmes, its efforts to combat child labour, and promoting private education.

The scores for each indicator are weighted and aggregated to a score between 0 and 100 for each MDG. At this stage, the scan does not add up the scores for each of the eight MDGs to a final score on all MDGs. "It is questionable if high performance on one of the MDGs should compensate for a relatively low performance on another," says DSR director Ronald Lubberts.

Moreover, each industry can contribute to the MDGs in a different way. "A pharmaceutical company can diminish child mortality, stimulate maternal health and can halt the spread of HIV and AIDS solely by the nature of its products and services," Lubberts said. "A mining company cannot, but it can contribute to local community development in remote areas by improving local medical care and education opportunities."

Six multinational companies have so far passed the MDG Scan: ABN Amro (banking), Heineken (beer brewer), Philips (electronics), Akzo Nobel (chemicals), BHP Billiton (mining) and TNT (logistics). The results indicate that all six companies contribute positively to each one of the eight Millennium goals. The MDG scan takes into account positive as well as negative contributions to the MDGs. But judged by the number of indicators, the MDG Scan currently stresses indicators that measure positive contributions. Generally speaking, companies get more chances to win than to lose points.

However, the indicators that measure negative contributions are weighted substantially in order to outweigh positive indicators. Companies receive scores for negative contributions if evidence is found that the company is involved in a controversy related to the MDGs. BHP Billiton for instance had points deducted because of its involvement in controversies related to its impact on the environment.

"The negative indicator in this model has been kept simple," Lubberts told IPS. "This version is meant to gain experience and needs some fine-tuning." Lubberts says more companies need to be assessed with the MDG Scan before the results of a benchmark can be properly interpreted. Only when several beer brewers have gone through the evaluation process, will it become clear if Heineken's score of 44 on MDG3 (gender) should be qualified as "average" or "good".

"The MDG Scan rightly focuses on the positive impact companies can have," says Johan Verburg, expert in sustainable entrepreneurship with the Dutch Oxfam-Novib. "This probably will never be a tool to uncover the dark side of private companies." According to Oxfam-Novib too little attention is paid to the role international companies play in tax matters and corruption.

"First and foremost, MDGs are structural and long-term goals for governments, who need to levy taxes to finance these efforts. Companies are constantly looking for ways to pay as little tax as possible. Sometimes they optimise profits by shifting them from a local branch to the seat of the mother company. In this way, locally produced extra value gets lost."

The United Nations Development and the Global Compact, the UN's voluntary corporate responsibility initiative, have already shown interest in the MDG Scan. The MDG Scan will be made available online later this year as a self-assessment tool in a slightly modified version. "Companies and stakeholders have asked us to attribute more weight to performance indicators that measure real impact results," Lubberts said. "That is important to them from a communications perspective".