Washington File - January 22, 2004

A global survey of business leaders shows that firms are not very active in combating HIV/AIDS, even in the face of expectations that their businesses may be adversely affected by the advance of the epidemic. Commissioned by the World Economic Forum (WEF) and the Joint United Nations Program on HIV/AIDS, the survey was conducted among almost 7,800 business leaders in 103 nations. Entitled "Business and HIV/AIDS: Who Me?," the survey also concluded that businesses have made an incomplete assessment of the actual risks they do face from the disease, and have an inaccurate understanding of how widely their workforces are affected by the virus. The findings were presented January 22 at the World Economic Forum in Davos, Switzerland. The study also found a correlation between business leaders' outlook on their capability to cope with the epidemic and their opinions about the quality of governance in their nations. Those survey respondents who regard their countries as generally well governed with respect to economic and social policies are also more optimistic about battling the epidemic. Respondents in low-income countries with high rates of disease voiced the most concern about the impact of the epidemic. "Society would undoubtedly benefit significantly if businesses made a greater contribution to tackling the HIV/AIDS epidemic," the report says. It suggests that international leaders must provide more accurate information about the threats of the disease in order to create greater incentive for business to act.

The report is available in full at http://www.unaids.org/en/default.asp Following are excerpts from the report: Business and HIV/AIDS: Who Me? A global review of the business response to HIV/AIDS 2003-2004 Introduction "Business and HIV/AIDS: Who Me?" presents findings from the first global survey of business leaders'opinions on and responses to the threat of HIV/AIDS. The report, which was commissioned as part of the 2003/2004 Global Competitiveness Report of the World Economic Forum, is the first of these publications to address HIV/AIDS. Recognition of the virus's importance by this prestigious and wide-ranging study reflects the growing concern of policy-makers and business leaders across the world. HIV/AIDS is increasingly recognized as a potentially serious threat to economies, businesses and communities. This report provides an analysis of the data collected by the Global Competitiveness Report's Executive Opinion Survey. The survey gathers the opinions of over seven thousand business leaders in 103 countries, tackling such issues as their concerns over HIV/AIDS, their estimates of HIV prevalence within their firms, and their responses to the disease. It allows us to paint a picture of the type of environment that is most vulnerable to serious impacts of HIV/AIDS on businesses and communities. Geographical location, national incomes and quality of governance are all significantly correlated with firms' perceptions of the virus's likely impact. Responses to the survey highlight which factors are seen by business as most important. The report is divided into three sections. Part 1 assesses the literature on the impact of HIV/AIDS on economies and businesses. It looks at the areas of a business that are most likely to be affected and at how businesses are measuring the effects. Part 2 discusses the data from the Executive Opinion Survey, focusing on the questions covering HIV/AIDS. It examines firms' estimates of the scale of the epidemic and its impact on their operations; the nature of that impact; the perceived effect on the communities in which business work; and how businesses have responded to the threat. It also looks at how the policy environment faced by a business can have a major effect on how firms perceive the virus. Finally, in part 3 of the report, we draw out the main conclusions from the data and offer recommendations for future action. We conclude by making recommendations for the content of future Executive Opinion Surveys.

Executive Summary HIV/AIDS has become a major global policy issue, with United Nations Secretary-General Kofi Annan describing it as, "not only the world's biggest public health challenge, but in some countries the biggest single obstacle to development". The Global Competitiveness Report 2003-2004 (GCR) addresses HIV/AIDS for the first time. This report analyses the results of the GCR Executive Opinion Survey, which asks 7,789 firms in 103 countries about their concerns over and responses to the threat of the virus. Part 1 assesses studies of the impact of HIV/AIDS on economies and businesses. From the limited evidence available in the existing literature, the following conclusions can be drawn: Serious macroeconomic impacts are likely to be limited to high HIV prevalence countries. Individual businesses may see adverse effects in both low- and high-prevalence settings. The effect on the labour force is likely to be most visible and, particularly in hard-hit countries, damaging. The impacts on markets and costs of capital are harder to detect and are likely to be felt, if at all, in the longer term. For large multinational businesses with high-profile brands and for companies in certain sectors, reputation may be the key driver for action on HIV/AIDS. Part 2 discusses the Executive Opinion Survey (EOS) data, focusing on the questions covering HIV/AIDS. Only 13% of firms in the survey have conducted quantitative studies of HIV prevalence levels among their workers. 64% nevertheless provide estimates of infection rates, with the majority reporting lower rates than the UNAIDS estimate of overall prevalence in their countries. The disparity between EOS and UNAIDS estimates is greatest in Africa, where 45% of firms report less than 1% prevalence, despite estimates from UNAIDS that just 10% of respondent firms in Africa are located in such low-prevalence countries. Firms that have carried out quantitative surveys report lower infection rates than other firms. Despite perceived low infection rates among workers, business leaders nevertheless regard HIV/AIDS as a serious problem and are concerned about its impact on their business: The most concerned firms are based in high-prevalence and low-income countries. Firms in countries with strong overall governance indicators -- including an effective, open and fair national legislative body with a strong focus on improving health, education and poverty reduction; a favourable business environment; and a free press -- are less concerned about the threat of HIV/AIDS to their businesses than firms in badly-governed settings. Firms show a similar pattern of concern over the virus's impact on their communities. Although operating costs are generally not perceived to have increased substantially as a result of the epidemic, firms believe that if their communities are hard hit, they themselves are unlikely to be immune to the effects. Businesses' response to the epidemic has so far been piecemeal. 83% of firms have no HIV/AIDS-specific written policy. The 6% that do have policies (the remainder do not answer the question) do not always implement them. Prevention programmes focus primarily on information provision, with employees the main target. A significant proportion also target employees' dependents and surrounding communities. Care, support and treatment programmes target both employees and their dependants with a range of policies including diagnosis and treatment of sexually transmitted diseases, treatment for opportunistic infections and provision of anti-retroviral drugs In countries with high HIV-prevalence and low incomes, many respondents are unsatisfied with their firms' existing policies.

Part 3 of the report summarizes the main findings from the EOS data. It draws three important conclusions. First, businesses are not particularly active in combating HIV/AIDS, even when they are concerned about the epidemic's effect on their business. Second, firms are making decisions on what to do about HIV/AIDS without comprehensive knowledge of the risks they face. Few firms have conducted quantitative studies of HIV prevalence among their workforce and, while many are worried about the epidemic, highlighting specific aspects of a business that are likely to be affected proves difficult. Those firms that do provide estimates of prevalence rates among their workers systematically believe that a smaller proportion of their workforce is infected than national prevalence rates would predict.

The third main finding is that businesses are more sanguine about being able to cope with HIV/AIDS if they believe their countries are generally well governed. Businesses appear to support a broad response to the epidemic, involving private and public sectors and nongovernmental organizations. Governments and NGOs are likely to benefit from working in partnership with businesses, providing them with the information they lack and designing incentives to encourage business involvement. ....

Conclusions: What have we learned Taken as a whole, the Executive Opinion Survey suggests three important conclusions on business and its current level and quality of response to the HIV/AIDS epidemic: 1. Firms are not particularly active in combating HIV/AIDS, even when they expect the epidemic to cause serious problems for their business. 47% of the business leaders polled felt that HIV/AIDS is having or will have some impact on their business, and 21% estimate a serious impact. HIV/AIDS is consistently regarded as a more serious threat than either malaria or tuberculosis, both globally and across all regions. Respondents do not believe they will be immune to the virus when it makes inroads on their local communities. Businesses estimate roughly the same level of impact on the communities in which they operate as on the firm itself (overall, 20% perceive a serious impact on the community and 21% on the firm). Business leaders' levels of concern about HIV/AIDS also rise in line with prevalence rates in their country of operation. For example, in Africa, where infection rates are highest, 89% of firms report some impact and 60% a serious impact. Even in areas where prevalence rates are high, there are many firms that do not believe they will be affected by HIV/AIDS. Globally, moreover, fewer than 6% of businesses surveyed have an HIV/AIDS-specific written policy that has received formal approval, and firms that report a serious current or future impact from the epidemic are only twice as likely to have a programme in place. Even among those firms that have conducted workforce surveys, only 15% have board-approved policies Despite the dearth of policies and programmes, and the inconsistent nature and implementation of those that do exist, 37% of all business leaders are satisfied with their response to HIV/AIDS, despite relatively low levels of activity. However, firms become less sanguine in areas where the epidemic is at its worst. 2. Businesses appear to be making decisions based on a patchy assessment of the risks they face. Among those who report a severe current or future impact from HIV/AIDS, fewer than 25% can point to specific areas of the business that the virus will affect. Further, two thirds of business leaders have not seen a serious impact against any of the five operating indicators.

This finding suggests one of two scenarios. Either many businesses anticipate that they will face increased costs as a result of HIV/AIDS, but only in the future, or they are drawing on insufficiently sophisticated information to disaggregate the impact of the epidemic from other factors affecting business performance. Business leaders also find estimating HIV prevalence rates among their workforce problematic. Over a third did not answer this question, and just 18% overall have conducted a quantitative survey among their employees. Respondents systematically believe that a smaller proportion of their workforce is HIV positive than national prevalence rates would predict, a difference that is more, not less pronounced among those that have carried out studies. This finding suggests that either these businesses are using faulty data, or that their employees are indeed less likely to be infected than average, either due to the type of workers they employ, or to the success of their prevention programmes. 3. Firms seem to favour a broad social response to the epidemic, even if only a small number of businesses currently see themselves as a integral part of that response. Confidence in managing the threat of HIV/AIDS among businesses is affected by broader perceptions of how well equipped they believe their country to be to cope with a range of other pressing issues. In other words, businesses seem to expect a lesser impact from the epidemic if they live in a society that is generally well governed.

Firms with equal prevalence rates (both self-reported and as reported by UNAIDS country figures) think HIV/AIDS will have less of an effect both on the company and community, the more confident they are in a range of governance, economic policy and social policy indicators. Government transparency, freedom of information and effective poverty reduction programmes are all felt to be helpful by business leaders concerned by HIV/AIDS. In other words, business leaders seem to support the view that serious public health problems merit more than a health-based response. How to turn back the 'lethal march' Society would undoubtedly benefit significantly if businesses made a greater contribution to tackling the HIV/AIDS epidemic. However, the observed failure to act suggests that firms lack either information or incentives. In the former case, they may not be able to assess the risks they face, the costs of acting and the potential benefits from successful action accurately. In the latter case, there may be significant externalities, where the benefit from action accrues not just to the business that funds the action, but to the wider society. This suggests an agenda for future action. Accurate, objective and unbiased information on HIV/AIDS must be generated and disseminated, covering areas such as workforce prevalence, the impact of the epidemic on business at different prevalence levels and the cost effectiveness of business-sponsored prevention activity. Studies must be rigorous in their attention to the potential for externalities, taking account of frequently practiced responses, such as where a business chooses to employ new workers rather than provide benefits for sick workers. There should be particular emphasis on demonstrating, beyond question, specific activities for which business can expect an adequate rate of return for any investment they make. The potential of business associations and coalitions to tackle HIV/AIDS should continue to be utilized, as firms have a greater incentive to participate in and sponsor prevention activity if they can focus on the problems facing an industry sector or geographical area. Coalitions are also able to share experience and spread the cost of developing tools and approaches, ensuring lower start-up costs and greater efficiencies. Public-private partnerships should be considered where they capitalize on the relative strengths of and incentives enjoyed by governments, NGOs and businesses. Governments and NGOs should continue to use moral suasion to make firms more likely to act, while being aware of the capacity and financial constraints facing many firms. But governments can also use policy to make action more likely, although they must tread lightly if they are not to generate further ill economic effects. Governments can also design contracts, tax relief programmes and other types of incentives to reward business action or partfund activity through the public purse. What else we need to know Inclusion of questions on the impact of HIV/AIDS on business and firms' response to the epidemic is a new component of the Executive Opinion Survey. The results and conclusions of the 2003 study suggest that in future years it will be important for this part of the survey to focus on specific testing of the following set of hypotheses: --Do businesses perceive AIDS to be a significant business issue? --What information do they use to assess risks? • Do businesses believe they can respond effectively to the epidemic? Why/why not? --What are the components of their response? How much do they spend? Can they quantify any benefits they receive? --What other policy interventions make business more or less likely to respond? --How do these data vary according to company size, business sector, seniority of respondent, region, national income group and national prevalence rates? Data that deals with these questions will inform business leaders and policy-makers alike, and equip them to manage the threat of HIV/AIDS more effectively in three key ways. First, it will provide specific measures of the relationship between business concern and related action on combating the epidemic at firm level, in terms of workforce, customer and community impacts. Second, it will demonstrate the extent of business's ability to quantify and measure the human and financial impacts it is experiencing, or expects to face. And third, it will open up a dialogue between business and policy-makers on how public and private sectors can most effectively collaborate to arrest the 'lethal march' of HIV/AIDS on a global basis.