Conditions for Enabling a Sustainable Environment for Enterprises

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  1. Peace and political stability: Peace and political stability are basic preconditions to nurture the formation and growth of sustainable enterprises, while war and civil conflict are major deterrents to investment and private sector development.
  2. Good governance: Democratic political institutions, transparent and accountable public and private entities, effective anti-corruption measures, and responsible corporate governance are key conditions for making market economies and enterprises perform in superior ways and to be more responsive to the values and long-term goals of society.
  3. Social dialogue: Social dialogue which is based on freedom of association and the right to collective bargaining, including through institutional and regulatory frameworks, is essential for achieving effective, equitable, and mutually beneficial outcomes for governments, employers, workers and society at large.
  4. Respect for universal human rights and international labour standards: Competitiveness should be built on values. Respect for human rights and international labour standards, especially freedom of association and collective bargaining, the abolition of child labour, forced labour, and all forms of discrimination, is a distinctive feature of societies that have successfully integrated sustainability and decent work.
  5. Entrepreneurial culture: Governmental and societal recognition of the key role of enterprises in development and strong support, both public and private, towards entrepreneurship, innovation, creativity and the concept of mentorship, particularly for start-ups, small enterprises and targeted groups such as women and youth, are important determinants of a conducive business environment. Respect for workers' rights should be embedded in programmes targeting entrepreneurial culture.
  6. Sound and stable macroeconomic policy and good management of the economy: Monetary, fiscal, and exchange rate policies should guarantee stable and predictable economic conditions. Sound economic management should balance the twin objectives of creating more and better jobs while combating inflation and provide for policies and regulations that stimulate long-term productive investment. Attention should also be given to increasing aggregate demand as a source of economic growth contingent on national conditions. In the case of developing and least developed countries, achieving sound macroeconomic conditions usually requires the decisive support of the international community through debt relief and official development assistance.
  7. Trade and sustainable economic integration: The varying development levels of countries must be taken into account when lifting barriers to domestic and foreign markets. Efficiency gains caused by trade integration can lead to positive employment effects either in terms of quantity or quality of jobs, or through a combination of both. However, as trade integration can also lead to job dislocation, increased informality, and growing income inequality, measures must be taken by governments in consultation with the social partners, to better assess and address the employment and decent work impact of trade policies, especially the impact on women’s employment. Actions are also needed at regional and multilateral levels to remove trade distortions and to assist developing countries towards building their capacity to export value-added products, manage change, and develop a competitive industrial base.
  8. Enabling the legal and regulatory environment: Poorly-designed regulations and unnecessary bureaucratic burdens on businesses limit enterprise start-ups and the ongoing operations of existing companies, as well as leading to informality, corruption, and efficiency costs. Well-designed, transparent, accountable, and well-communicated regulations, including those that uphold labour and environmental standards, are good for markets and society, as they facilitate formalization and boost systemic competitiveness. Regulatory reform and the removal of business constraints should not undermine such standards.
  9. Rule of law and secure property rights: A formal and effective legal system which guarantees all citizens and enterprises that contracts are honoured and upheld, the rule of law is respected, and that property rights are secure, is a key condition not only for attracting investment, but also for generating certainty, and nurturing trust and fairness in society; property is more than simple ownership. Extending property rights can be a tool for empowerment and can facilitate access to credit and capital. This may be even more so the case for women in the society. They also entail the obligation to comply with the rules and regulations established by society.
  10. Fair competition: It is necessary to establish, for the private sector, competition rules that include universal respect for labour and social standards, and to eliminate anti-competitive practices at the national level.
  11. Access to financial services: A well-functioning financial system provides the lubricant for a growing and dynamic private sector. Making it easier for SMEs, including cooperatives and start-ups, to access financing such as credit, leasing, venture capital funds, or similar or new types of instruments, creates appropriate conditions for a more inclusive process of enterprise development, including enterprises started or owned by women. Financial institutions, particularly multilateral and international ones, should be encouraged to include decent work in their lending practices.
  12. Physical infrastructure: Enterprise sustainability and human development critically depend on the quality and quantity of the physical infrastructure available, such as physical facilities for enterprises, transportation systems, schools, and hospitals. Reliable and affordable access to water and energy also remains a major challenge, especially in developing countries. Enterprises are also particularly assisted by local access to supporting industries such as service providers, and machinery suppliers and producers.
  13. Information and communication technologies: Expanding access to information and communication technologies (ICTs) is another crucial challenge in the era of the knowledge economy. The use of ICTs is, therefore, fundamental to the development of sustainable enterprises and must be fully utilized in this regard. Affordable broad band technology is also of extreme importance to countries and enterprises, and should be facilitated.
  14. Education, training and lifelong learning: Human talent is the single most important productive factor in today's economy. Focusing on the development of a skilled workforce and the expansion of human capabilities through high-quality systems of education, training, and lifelong learning is important for helping workers to find good jobs and for enterprises to find the skilled workers, both men and women, they need. Financial support should also be made available to enhance access of poor workers to training and for skills upgrading. In this way, society can achieve the twin goals of economic success and social progress.
  15. Social justice and social inclusion: Inequality and discrimination are incompatible with sustainable enterprise development. Gender is a particularly important dimension of inequality in societies. Women face particular barriers concerning assets, access and participation in the growth process, with serious implications for the ability of the growth to be pro-poor. Explicit policies for social justice, social inclusion, and equality of opportunities for employment are needed. Effective exercise of the right to organize and bargain collectively is also an effective means to ensure a fair distribution of productivity gains and an adequate remuneration of workers.
  16. Adequate social protection: Sustainable tax-based, or other national models of universal social security that provide citizens with access to key services, such as quality health care, unemployment benefits, maternity protection, and a basic pension, are key to improving productivity and fostering transitions to the formal economy. This is a particularly important issue for women who may be more likely to own an informal enterprise or to be working in the informal economy without social protection. Protecting workers' health and safety at the workplace is also vital for sustainable enterprise development.
  17. Responsible stewardship of the environment: In the absence of appropriate regulations and incentives, markets can lead to undesirable environmental outcomes. Tax incentives and regulations, including public procurement procedures, should be used to promote consumption and production patterns that are compatible with the requirements of sustainable development. Private market-based solutions, such as the use of environmental criteria in assessing credit risk or investment performance, are also effective means to tackle this challenge.

These abovementioned conclusions where unanimously endorsed by employers, workers, and governments from ILO member States at the 2007 International Labour Conference.

For more information on the 17 pillars for sustainable enterprise promotion, see Part 3 of the Toolkit Developing a Strategic Policy Framework.

Each of the 17 pillars described above are based on six key enterprise-level principles for sustainable enterprises. See Box 1, below.

Box 1

ILO: Conclusions concerning the promotion of sustainable enterprises, International Labour Conference, 96th Session, Geneva, 2007.

The ILC's Conclusions concerning the promotion of sustainable enterprises outlined broad roles for social partners in the promotion of sustainable enterprises, see Box 2. Thus, the EESE Toolkit is a resource for Employers' Organisations to guide and support their work in sustainable enterprise promotion.

Box 2

ILO: Conclusions concerning the promotion of sustainable enterprises, International Labour Conference, 96th Session, Geneva, 2007.

(1) ILO: Conclusions concerning the promotion of sustainable enterprises, International Labour Conference, 96th Session, Geneva, 2007.
(2) Ibid.