Social equality and poverty

Authors: Yelyzaveta Goloshchuk, Kathrin Haase, Veronika Masiuk, August 31, 2024 

1 Definition and Relevance

Social equality and poverty are deeply intertwined topics. Social equality is defined as a situation in which a group of people with possibly different social prerequisites receive the same treatment and have the same opportunities^[i]. Poverty – specifically absolute poverty – is a condition characterized by a severe lack of basic human needs, including food, clean drinking water, sanitation, health, shelter, education and information. It often means a lack of income and resources sufficient for secure and sustainable living^[ii]. Both conditions can strongly influence each other. This becomes clear when looking at the causes of poverty.

Poverty can have a wide variety of causes. Economic factors like unemployment, low wages or the overall economic situation highly influence the probability of poverty^[iii]. Poor education is another factor generally increasing poverty due to limited job opportunities^[iv]. Poor health care often results in health issues and tends to increase poverty as it decreases job prospects. Political factors such as corruption and ineffective governments also severely determine the probability of poverty. Especially when looking at situational poverty, geographical factors and climate change severely impact the financial situation. These factors increase the chances of natural disasters occurring.^[v] Family structure (like single-parent or very large families) may also lead to higher risks of poverty. Lastly, social inequality and social factors such as discrimination, social exclusion and other inequalities strongly correlate with poverty. Some of these factors interact and reinforce each other, so that individuals and communities are trapped in a vicious circle of poverty that is difficult to break.^[vi]

To establish the relevance of the aforementioned issues, they need to be measured. A frequently used approach to measure poverty is considering income. In low-income countries the threshold to extreme poverty lies beneath $1.90 per day. About 9.3 % of the world’s population lived beneath this threshold in 2020. For upper-middle-income countries incomes below $6.85 per day are considered poverty. Nearly 50 % of the global population is considered poor by that standard.^[vii]

Besides monetary poverty, there are other attempts to measure poverty that focus on the multidimensional (social) aspects of poverty. The United Nations Department Programme introduced the Global Multidimensional Poverty Index. It considers the deprivation of various factors associated with poverty like nutrition, years of schooling, child mortality, housing, electricity etc.^[viii] Another closely related approach by the United Nations Department Programme is the Human Development Index. It does not directly measure poverty but highlights the role of human development as criteria for the development of a country^[ix].

Poverty can be divided into several different types. One possibility is the differentiation between absolute and relative poverty. Absolute poverty refers to a set standard that is the same over time and across countries and is usually defined by the international poverty line (e.g. living on less than $1.90 per day as defined by the World Bank). Relative poverty, on the other hand, is context-specific and refers to the economic status of individuals or families in relation to the wider society in which they live. Situational and chronic poverty are other types of poverty that refer to the causes of poverty. The situational type describes cases of poverty caused by a specific event, whereas chronic poverty is often passed down through generations.

Social inequality and poverty are complex social phenomena that undermine people’s dignity and potential and require concerted efforts by governments, organizations and communities to alleviate its effects and eliminate its causes.

2 Sustainability analysis

Equal rights and freedoms, absence of corruption, high GDP per capita and economic growth in general, change of political power – these are some of the criteria of a developed country^[x]. While some economies are thriving, the difference between developed and developing countries continues to widen^[xi]. Growing inequality on a global scale can be seen in the increase in unemployment and income differences^{[xii],[xiii],[xiv]}. The International Labour Organization states that in 2024 the global unemployment rate will increase up to 0.1 per cent¹². And according to the World Economic Forum, less than a third of global wealth is held by developing countries¹⁴. The technological process as well as economic growth is an advantage for developed countries, but not for countries that are developing, since the difference in the development across countries increases. The private business sector, however, can contribute to improving this issue by taking various initiatives^[xv] to increase the income level of the population at the local level and drawing attention to global problems such as inequality, poverty and the climate crisis.

2.1 Contribution of firms to the sustainability issue

Inequality is often associated as an economic term meaning inequality of wealth^[xvi], but it is not only the inequality of income between developed and developing countries and the endowment of natural and labor resources that are considered in the issue of social inequality and poverty.

Reason	Examples
Geographical characteristics	Lack of coastal regions and easy access to maritime trade, crop growing opportunities (soil type), agricultural development, weather conditions, prevalence of diseases.
Poor governance at the national and institutional levels	Lack of investment in infrastructure (roads and irrigation systems), non-compliance with the law at the state and private business level, politicians’ permission to capture a certain sector of the market by monopolies, corruption.
Ineffective policy	Popular uprisings, wars, political conflicts, trade wars.
Underinvestment	Lack and absence of investment in development of medicine, education, institutions and lack of control under institutions.

To analyze the level of inequality in a country, it is necessary to consider not only income and malnutrition indicators, but also literacy rates, school completion rates, and mortality rates^17,[xviii].

Social inequality has negative consequences for society, which can result in reduced economic growth, discrimination against communities, and impacts on health and life expectancy^{[xix],[xx],[xxi]}.

In social equality, all people in a given society have equal rights, freedoms, and status, including civil rights, freedom of expression, autonomy, and equal access to certain public goods and social services^[xxii].

In addition to addressing the causes that lead to inequality, the pursuit of growth and sustainability is also effective in overcoming poverty and social inequality^[xxiii].

Global companies can participate in the development of local communities by investing and implementing projects and initiatives that are aimed at developing and improving human society^[xxiv]. In this way, private business can improve its reputation, become more attractive to investors due to concern about global problems, to some extent realize the goals of its corporate social responsibility, declare its social position and attract public attention to a global problem.

Government reforms, non-profit organizations and the private sector can make efforts to overcome social inequality and poverty. Initiatives can be different: from financing through a fund to creating a project and developing it. It is necessary to distinguish between a company’s internal activities: investments in the development of its own employees by providing them with advanced training courses; providing the employees with more equal employment opportunities and adequate wages from the company’s desire to improve the economic and social indicators of certain local communities. Best practical examples of how organizations have contributed to overcoming social inequality and poverty by providing initiatives in such areas as improving the economic condition of the local community, health, access to food, gender equality can be seen in the table below.

2.2 Methods for measuring firms’ sustainability performance related to the issue

Sustainability ensures that human rights, fairness and ethics are respected in all firms^[xxxi]. A company can analyze its social sustainability, if it is affected by its stakeholders, there is pressure from government reforms, and pressure from customers, who are also stakeholders of the company^[xxxii]. A culture of sustainable development is in itself an incentive to develop a business in a more sustainable direction.

Measuring the social sustainability indicator is a complex task because different companies may include different criteria in their analysis^[xxxiii], which means that there is no single system for analyzing the sustainability of a company. Metrics that may be applied by companies in one country may not be applicable to a firm located in another country due to cultural, social, environmental and political aspects that are different between different geographic locations^[xxxiv]. Another problematic aspect is that clients may have a different point of view from the company’s management and not accept the analysis criteria as important^[xxxv], which in turn makes the analysis ineffective.

The main criteria for a company’s social sustainability are adequate wages, respect for employees regardless of their position, non-discrimination against minorities, provision of equal opportunities, training and education both at the company level and globally: for employees and for the population in developing countries^[xxxvi].

Methods that can be used to study the impact of a company on social inequality are the use of socially responsible practices by suppliers^[xxxvii], working conditions in partner companies (wages, shift length, number of days off and vacation length). Other indicators are the use of social standards at the company level, such as ISO 26000, SA 8000^[xxxviii].

One way to measure sustainability is the concept of ESG which takes into account environmental, social and corporate governance. This concept is mainly used to analyze the effectiveness of investments, but also takes into account stakeholders whose interests include finding out whether the organization’s operations are sustainable^[xxxix].

In order to improve their social image, companies may finance certain initiatives or projects aimed at improving a certain local or global problem. Since there is a wide variety in how a company can specifically contribute to improving the problem of social inequality and poverty, we come to the conclusion that if a company has made a certain investment in some initiative or project, then the most effective way to analyze whether this initiative was effective is the return on investment, but the problem is that the funded initiatives are often not profitable. Therefore, conducting a survey and interviewing the participants of these initiatives can give a clear understanding of how the project can be improved and whether it was effective.

2.3 Pros and cons of KPIs

KPI represents a specific evaluation system, which can be financial or non-financial and helps an organization determine the level of achievement of its goals. This metric can include such indicators as customer satisfaction, financial indicators, for example, profitability and revenue. KPIs can be used to measure the effectiveness of individual employees or managers or to analyze the implementation of a specific organizational plan expressed as a percentage^[xl].

Positive aspects	Negative aspects
1. The implementation of this metric helps to motivate the company’s staff as it demonstrates that the intended goals are realistic in execution.	1. There are no universal KPI components that can be suitable for all organizations.
2. This metric helps optimize the process of achieving a goal by setting specific objectives, simplifying the planning of the pace of subgoal execution, and establishing indicators for achieving subgoals.	2. The system of indicators may not be effective in an organization since not all metrics can be assessed quantitatively.
3. This method helps to objectively evaluate the results obtained, identify and reward those employees who have put in the greatest amount of effort and identify unproductive employees.	3. Each specialist’s KPIs are considered in relation to the overall performance of the team, which can distort the true indicator of the individual’s performance.

This metric may not always be appropriate and effective, as it aims to demonstrate what return an organization will receive from its efforts and how this will be reflected in its performance indicators. Indicators such as social inequality are difficult to quantify, consequently, it is difficult to analyze the KPI from the implementation of a project to reduce this problem.

At the same time, poverty can be assessed in quantitative terms, for example, through income inequality within a country, income inequality among the poor and rich population in the context of different countries^[xlii]. The question remains what specific indicators a company can use to apply this method when solving a problem related to sustainability. The intended performance indicators will vary depending on the firm’s goals and desired results. 

This technique is useful when implementing a project at the local level, since it is relatively simple to change problems at the local level than on a larger scale and a local-level project is easy to control. Moreover, solving a local problem can allow a company to gain customer loyalty that refers to residents living in a given specific area.

2.4 Recent development in sustainability measurement for inequality and poverty

Researchers from IIASA and Hong Kong University of Science and Technology proposed the Human Life Indicator as an alternative to the conventional Human Development Index. Both of these methods aimed at measuring progress in development^[xliii].

HLI expresses well-being in years of life, taking into account inequality in life expectancy. Thanks to this indicator, it is possible to calculate the degree of distribution of mortality over the life cycle as an additional measure of inequality and a social determinant of health. This indicator better represents data on human development as a whole and on the inequalities that exist between regions. This can give policymakers better insight and ideas on how to develop measures to overcome inequalities^[xliv].

3 Practical Implementation – Processes, measures, and tools for social equality management

A variety of processes, measures and tools are available for the implementation of social equality within the confines of a company^[xlv]. These concepts are fundamental in management and organizational development and play an important role in the implementation of strategies and goals. In essence, processes are structured and repeatable sequences that are often standardized in order to achieve concrete outcomes. In contrast, a measure is a concrete action that is taken with the objective of achieving a specific goal. Tools are specific methods or techniques that are used to support processes and measures. In complex management systems, such as the implementation of sustainability strategies, it is often more effective to view processes, measures and tools as an integrated system^[xlvi]. They are often closely interlinked and interact with each other. 

Accordingly, six possibilities are described below and illustrated with best practice examples of how processes, measures or tools can be used to increase social equality companies and at the same time contribute to reduce poverty.

3.1 Diversity and inclusion management

The Universal Declaration of Human Rights (UDHR)^[xlvii], adopted by the United Nations General Assembly in 1948, asserts that all human beings are born equal in dignity and rights. Article 1 and Article 7 place particular emphasis on the right to equality and protection from discrimination. “Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, color, sex, language, religion, political or other opinion, national or social origin, property, birth or other status”³. This implements the fundamental principle of social equality as a universal human right. By recognizing that everyone, regardless of their individual characteristics or social status, is entitled to the rights and freedoms set out in the Declaration, the UDHR creates a normative basis on which social justice and equality can be promoted. It is now imperative for companies to develop and implement processes, measures and tools that prioritize social equality^[xlviii]. Concurrently, the corporate structure can be leveraged to alleviate poverty. Companies can implement processes to promote diversity and inclusion in their workforce^[xlix]. This includes creating policies for equal employment opportunities, promoting diversity in hiring and promotion processes, and training to raise awareness of unconscious bias.

One process to implement as a company is to sign the Diversity Charter (Charta der Vielfalt)^[l]. The Diversity Charter is a voluntary commitment for companies and organizations that have set themselves the goal of creating a working environment that is free of prejudice and recognizes and values the diversity of their employees.

Best-practice example:

There are numerous best-practice examples of companies and organizations that have signed the Diversity Charter and actively promote diversity in their company^[li]. The Mercedes-Benz Group, one of the world’s leading automotive manufacturers, is an exemplary founding member and first signatory of the Diversity Charter^[lii]. The Mercedes-Benz Group AG has implemented a large number of initiatives to promote diversity, including mentoring programs for women, measures for internationality and inclusion^[liii]. Specific measures include diversity awareness training and ambitions to increase the proportion of women in senior management positions by 2030. In addition to the Diversity Charter, the Mercedes-Benz Group AG has other external partnerships and commitments. Among others, they are part of the UN Women and Free & Equal United Nations initiative ⁸. These memberships are further opportunities to achieve commitment within the company to promote equality and at the same time diversity and inclusion on a global level. Through these initiatives, the company, in this case Mercedes-Benz Group AG as an example, has the opportunity to implement various measures to further advance its goals in terms of social responsibility and inclusion.

3.2 Social supply chain management

Social supply chain monitoring is a process to ensure fair labor conditions throughout the supply chain^[liv]. This may include conducting supplier assessments, regular social assessments, and enforcing standards to ensure that no exploitative work, such as child labor or forced labor, takes place. There are various ways to control the supply chain and improve it in a socially sustainable way^[lv]. One of the many possibilities is blockchain technology^[lvi]. Blockchain enables the immutable recording of all transactions within the supply chain, which improves transparency and traceability. Companies can track the origin of raw materials and the provenance of products in real time. As an illustration, blockchain technology is employed by companies such as Walmart for the purpose of monitoring the distribution and traceability of food products. Collaborations and partnerships also provide the opportunity to improve the social supply chain¹¹. By participating in industry-wide initiatives and networks to promote best practices, common standards can be developed within an industry. NGOs and other organizations are often involved. In addition, risk management tools are available ^[lvii]. These can be used to identify and assess risks in the supply chain. Among other things, geopolitical risks, environmental impacts and social risks can be identified more quickly. Subsequently, the plans and processes for responding to crises or problems within the supply chain are discussed. Other ways to achieve a social supply chain include supplier assessments, supply chain management software, certifications and standards, ethical supply chain platforms, data analytics and artificial intelligence¹¹.

Best-practice example:

It is positive when companies not only use one option for social and sustainable supply chain tracking, but several processes that together provide greater security. The Patagonia brand, an outdoor apparel company, serves as an illustrative case study. The company uses the “Footprint Chronicles”^[lviii], an interactive platform that enables customers to track the entire supply chain of their production^[lix]. Through regular social and ecological audits and fair-trade certification, Patagonia ensures better working conditions and fair wages in its production facilities. Furthermore, the company engages in collaborative endeavors with esteemed organizations such as the Fair Labor Association^[lx]. It is also pioneering the utilization of blockchain technologies with the objective of enhancing the traceability and transparency of its supply chain^[lxi].

3.3 Fair-trade programs

Adopting fair trade practices within the company can help ensure that producers in developing countries receive fair prices for their products^[lxii]. Fair trade certifications guarantee that farmers and workers in the supply chain are paid fairly, which helps to reduce poverty. The advantage of fair-trade programs is that not only are workers’ wages fair, but ecological requirements in agriculture are also respected. This combines social, economic and ecological sustainability^[lxiii]. Nevertheless, fair trade certifications are criticized because they often mean high fees for small producers^[lxiv]. They are also accused of not always rigorously monitoring certification standards, which leads to inconsistencies in implementation and impact. Lastly, there are concerns that fair trade certification predominantly favors larger companies and could push smaller businesses out of the market.

Best-practice example:

Starbucks is an international coffee house and roasting chain that specializes in coffee drinks, baked goods and other food products^[lxv]. Starbucks sources a significant proportion of its coffee from Fairtrade certified farmers, which ensures that coffee farmers in developing countries receive a fixed price for their harvest regardless of price fluctuations on the world market^[lxvi]. As a result, farmers have a secure income and can improve the quality of their lives locally through, for example, education and health care.

3.4 Equal pay

It is the responsibility of companies to implement measures that ensure equal pay for all employees, regardless of gender, ethnicity, or other discriminatory factors^[lxvii]. This includes regular reviews of pay structures and adjustments where inequalities are identified. Equal pay not only supports social justice, but also promotes employee satisfaction, which in turn can increase productivity.

Best-practice example:

Salesforce is a leading global provider of customer relationship management (CRM) software and a leading example of equal pay^[lxviii]. Since 2015, the company has carried out annual salary reviews to ensure that all employees are paid equally, regardless of gender or origin. If inequalities are identified, salaries are adjusted immediately. In addition, Salesforce relies on a transparent remuneration policy by establishing clear communication channels and guidelines on remuneration^[lxix]. The employees are made aware of the methodology employed in determining salaries and the factors that are considered in this process. 

3.5 Social Impact Assessments SIA

Social Impact Assessments (SIA) are systematic processes that help a company or organization to assess the impact of its activities on social, economic and cultural aspects^[lxx]. Positive and negative effects that can be caused by possible corporate decisions are worked out. SIAs have the advantage that potential negative social impacts can be identified at an early stage. This gives a company the opportunity to take active measures to minimize the risks. The process requires the involvement of stakeholders such as local communities, employees and NGOs. The positive aspect is that the encouragement of cooperation and dialogue serves to reinforce the values of transparency, acceptance and support. Once the risks have been identified, the SIAs can be used to develop optimization processes for the social impacts, e.g. initiatives that maximize the social benefits of their projects while minimizing negative effects.

Best-practice example:

Rio Tinto is a multinational mining company active in the extraction and processing of mineral resources worldwide^[lxxi]. As the company operates in regions with sensitive environmental and social contexts, comprehensive social impact assessments are of crucial importance. Rio Tinto systematically integrates Social Impact Assessments (SIA) into the planning and implementation of its projects, particularly in the early stages of project development^[lxxii]. SIA helps the company to evaluate the potential social impacts of its mining activities on local communities. This includes analyzing the impact on local employment, social structures, health, safety and culture.

3.6 Global Reporting Initiative (GRI)

The Global Reporting Initiative (GRI) is an international standard framework for sustainability reporting^[lxxiii]. It can be used to measure environmental and social impacts. With the help of the GRI, companies or organizations can create standardized and comparable reports on their sustainability performance. These reports are publicly accessible to stakeholders such as customers, investors and the government. This ensures transparency regarding social, environmental and economic impacts. 

The GRI Standards have a modular structure and comprise various categories, each of which contains specific requirements and guidelines for reporting^[lxxiv]. Firstly, there are the Universal Standards. These include GRI 101 fundamentals, GRI 102 general disclosures and GRI 103 management approach. In addition, there are the other topic-related standards. The GRI 200 series deals with economic topics, the GRI 300 series with environmental aspects and the GRI 400 series with social aspects. Not all areas have to be covered to the same extent. The GRI applies the materiality principle, which means that the topics that are most relevant to stakeholders and their ability to do business must be addressed in particular.

Best-practice example:

The BMW Group, a global automotive manufacturer, uses the GRI Standards to document its sustainability performance in a wide range of areas, from environmental and climate protection to social and ethical standards in the supply chain^[lxxv]. BMW reports in accordance with the GRI Standards and ensures that the reports not only fulfil legal requirements, but also meet the expectations of stakeholders. Among other things, the report includes information on CO2 reduction in production, resource efficiency and social initiatives.

4 Drivers and Barriers

4.1 Drivers

With a lot of companies striving to become more sustainable, there are a wide variety of factors promoting this change. Economic factors like economic growth and the associated creation of jobs help to reduce poverty. In this context, fair and equal payment is crucial in promoting social equality and poverty reduction. As growth itself is not necessarily a sustainable long-term solution, other factors must be combined with this approach^[lxxvi].

Firms and their actions are heavily influenced by their environment and different external factors. Political factors like government policies, regulations and incentives may help companies promote equality and alleviate poverty. Progressive taxation, supportive social welfare measures and strengthened labor rights can support this development. An exemplary political measure could be tax incentives for favorable behavior like promoting social equality and penalties for non-compliance with labor laws. This helps to ensure equal pay, and a non-discriminatory environment^[lxxvii].

Not just politics but also the economic environment impacts firms’ actions. With an increasing demand for ethical products, firms will strive to meet the demand. This is possible if there is sufficient access to capital and economic stability that allows firms to adopt more sustainable practices. The increasing consumer demand for ethical and sustainable products can be attributed to rising consumer awareness. Consumers and workers become more aware of unsustainable practices and are therefore more likely to express their demand for measures sustainable practices that increase social equality and reduce poverty. These sustainable practices are discussed to become a baseline requirement for consumers in the future^[lxxviii].

Technological advancements throughout different sectors can help to become more sustainable in different ways. Resource efficiency is a key aspect of advancing technologies, as this reduces firms’ environmental impact. They can also create new opportunities for disadvantaged communities by making jobs – or other areas of life – more accessible. A prominent example of such a technological advancement would be information and communications technologies^[lxxix].

Combined, all the aforementioned factors also pay into the current ecological needs and help firms to become more sustainable in social aspects as well as in the ecological sphere.

Within a firm, there are several internal drivers of alleviating poverty and supporting social equality. A special role falls to the company’s leadership and the chosen way of governance. If the leadership is determined to prioritize these topics, they can align decision-making processes accordingly. This way, the chosen values can be considered in all decision-making processes and create a value-driven business strategy^[lxxx].

Corporate culture goes hand in hand with leadership. A strong corporate culture – that often depends on clear common goals – can impact a company’s course of action. A company culture characterized by diversity and equality has core values that highly support reducing social inequality. People are very likely to engage in initiatives aligning with their beliefs – for example CSR initiatives ^[lxxxi]. 

Another important way of driving poverty reduction and social equality is to pay close attention to human resources. Creating inclusive hiring practices that are focused on non-discriminatory recruitment, paying fair wages and offering opportunities for education and career advancements can help alleviating poverty and creating a working environment that is characterized by social equality^[lxxxii].

Additionally, sustainable supply chain management ensures ethical practices in line with a firm’s core values along the entire supply chain and not only in its direct sphere of influence. By communicating the relevance of equality and fair wages along the entire chain, the demand becomes clear to suppliers, and they will strive to meet that demand^[lxxxiii].

4.2 Barriers

In the current environment, firms also face several different hurdles in their strive towards increased sustainability. Even though some countries profit from the drivers of sustainability, especially countries in the global south are currently not as fortunate. Economic inequality and a lack of access to education cause social inequality and promote poverty. Economic instabilities and market volatility lead to short-term profit pressure and thus limit a firm’s ability to make sustainable long-term investments. 

Unstable governments, corruption and resulting discriminatory policies only solidify these issues politically. The social consequences are in inequality rooting social norms, corruption and an unequal access to resources. With unstable governments come inconsistent regulations. These again tend to discourage firms from sustainable long-term investments^[lxxxiv].

Technological innovations can also become a barrier to sustainability once there is unequal access. Poorer groups are therefore at a disadvantage. They may suffer from the displacement of low-skilled jobs through these technological advancements and automation^[lxxxv].

The low incentives for sustainable actions result in negative effects on the environment, as implementing sustainable practices is often associated with high costs. Climate change and resource depletion disproportionately affect the poor, thereby further strengthening inequal structures^[lxxxvi].

Not only can external factors be barriers to equality and poverty reduction, but firm-internal factors can also hinder positive changes. The barriers are to be found in similar areas as the aforementioned internal drivers. With a lacking commitment from a firm’s leadership to those values, the company’s strategy is likely not going to be fully focused on creating positive sustainable change. Especially when a company’s focus is short-term profitability, investing in long-term sustainable changes is no priority^[lxxxvii].

An unclear corporate culture or one that is not aligned with the desired values can also be a hurdle to change. When the need for change is not clear throughout the entire company, necessary support of employees is harder to attain. Employee involvement plays a crucial role in organizational change processes ^lxxxi.

If inequality is already a permanent component in human resource management, this is likely to only manifest itself within a company. Lacking investments into employee development and overall inequal wages further support inequality and poverty amongst employees^[lxxxviii].

Lastly, another firm-internal barrier to social equality and poverty reduction are non-sustainable supply chains. Supply chains tend to be very complex nowadays, which complicates the implementation of fair working conditions throughout the entire chain. Companies may struggle with a lack of transparency regarding their suppliers’ conditions and therefore can hardly collect necessary information. The cost pressure from competing firms only aggravates this issue, as sustainable supply chain management is again associated with higher costs^[lxxxix].

These various barriers to poverty reduction and social equality illustrate why these issues are still so prevalent today, even though their negative effects are widely known. But despite these barriers, several companies made it their goal to make positive changes in these issues. Some of those examples will be outlined in the following.

Best-practice examples:

IKEA is one example of a large company dedicated to ensuring fair labor practices and sustainable sourcing in a global supply chain, contributing to social equality and poverty reduction. As a company with about 219,000 employees along their value chain, IKEA sees it as their responsibility to set an example as a responsible business to advocate for human rights, to be an equal, diverse and inclusive business and to address inequalities^[xc].

By implementing the IWAY code of conduct, IKEA sets strict standards for environmental, social and working conditions (see figure 4) not only for their own company but also for all suppliers and service providers. These IWAY principles have been revised several times to make sure they reflect current challenges, despite being in use since 2000^[xci].

With their course of action, IKEA has successfully mitigated supply chain risks, improved thousands of workers’ working conditions and continues to fight for social equality and poverty reduction within the company and throughout their complex supply chain. 

Another example of a company that overcame the barriers to reduce the issues of poverty and social inequality is Ben & Jerry’s. The company is widely known for its commitment to corporate responsibility and has implemented several strategies to reduce social inequality and poverty. They have embedded their core values into their business model which creates a corporate culture dedicated to these values^[xcii]. Using Fairtrade-certified ingredients ensures that the processed ingredients were ethically sourced under fair working conditions and for fair wages, helping to alleviate poverty^[xciii]. Paying living wages above minimum wage themselves, Ben & Jerry’s makes sure that their own employees are not affected by poverty. The company’s dedication to social equality manifests itself through different measures: The “PartnerShop” program is an initiative where ice cream shops are run by non-profit organizations. The profits generated are reinvested into community programs helping disadvantaged youths^[xciv]. Actively advocating on issues like racial justice, LGBTQ+ rights and climate change is another way of using the company’s platform to raise awareness and bring broader positive changes^[xcv].

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