SDG#1 No Poverty and Why Businesses Need to Care

30 January 2023

With the new year in full swing, we bring our focus to the first Sustainable Development Goal (SDG); to end poverty in all its forms everywhere. The United Nations' definition of poverty is to live off less than $1.25 per day. This is classed as absolute poverty, which makes it impossible for people to access basic needs such as food, drinking water, shelter, education and healthcare.

We can also consider the concept of relative poverty which is when households receive less than 50% of the median income in their country. Relative poverty results from skewed income distribution and leads to inequalities within societies. This can leave some parts of the population feeling left behind and disenfranchised by their situation, especially when they can see the lives that other people around them are experiencing.

The researchers Wilkinson and Picket, in their book 'The Spirit Level', highlight the way in which unequal societies have worse health and social outcomes, such as physical and mental health, drug use, incarceration, violence, trust and other aspects. Additionally, photographer Johnny Miller uses arial photography to capture inequalities in cities around the world, to show stark differences in standard of living that can occur in neighbouring areas.

Sustainably oriented companies have a lot to gain in supporting their communities away from poverty. This is because as people can afford to spend more than just what is required for basic needs, they will have the financial means to choose to consume sustainable products and services. In this way, SDG 1 can be linked to SDG 12; to ensure sustainable consumption and production patterns. In the UK, 43% of consumers say that price stops them from buying locally or sustainably. Therefore, helping people in your community who are facing poverty not only helps the people around you, but could also increase the consumer demand for your sustainable business.

How can you help?

There are many charities that help with poverty reduction which you can support. Some fundraising ideas include karaoke/bingo/games nights, sports days, car washes raffles and corporate dinners. As an alternative to donating money, you can support charities by encouraging your company to take part in corporate volunteering days (check out our blog on corporate volunteering here).

Furthermore, businesses hold great power in the way that they can employ people to support their livelihoods. Quality employment is the most sustainable way to reduce poverty in the long term since formal employment can reduce poverty by 67%. The private sector is responsible for providing 90% of jobs globally, and companies that employ people in poverty can experience benefits such as access to an untapped talent pool as well as brand reputation and social value credentials.

Additionally, in order to reduce relative poverty, some organisations suggest having a maximum pay ratio of 20:1. This means that the lowest paid worker in a company cannot earn lower than 20 times less than the highest paid worker in the company. The idea behind this is to reduce income inequality, but it can also have the effect of better productivity due to workers in the company feeling less resentment.

Another way to improve economic fairness within a company is to implement share ownership schemes. John Lewis has done this, meaning that their employees own part of the business and have a say in how it is run. This means that employees are rewarded when the company does well, rather than profits going to non-employee shareholders.

In conclusion, we can see that poverty occurs both as an absolute form, in terms of ability to buy basic needs, as well as in the relative form, which is measured based on the income of other people in the same area. Both forms of poverty can affect sustainably oriented businesses because consumer demand is more directed towards sustainable goods and services when people have more buying power. Your organisation can implement actions in order to help reduce poverty in your area by supporting charities through fundraising or volunteering, employing people in poverty and considering management techniques such as maximum pay ratios and share ownership schemes.