Emerging and developing countries represent the growth markets of the future. Already accounting for more than half of the world's gross domestic product, their economic weight is likely to increase substantially over the coming decades. Inclusive business helps companies reach these markets, and at the same time can help provide the economic growth that is the key to poverty alleviation.
Inclusive business involves doing business with low-income populations across companies' value chains, incorporating them in the supply, production, distribution and marketing of goods and services. This generates new jobs, income, technical skills and local capacity. Likewise, poorer consumers can benefit from products and services that meet their needs in affordable ways.
"Given that most economic activity now occurs in developing countries, and given that over 90% of population growth will happen there, the companies that master inclusive business will be those who realize great success in the coming decades," notes Samuel A. DiPiazza, Jr., former Global CEO of PricewaterhouseCoopers and Chairman of the World Business Council for Sustainable Development (WBCSD).
In 2006, the WBCSD and SNV Netherlands Development Organization joined forces to form the Alliance for Inclusive Business in Latin America. The Alliance is active in 9 countries, operating in close collaboration with SNV’s local offices and with WBCSD’s national business partner organizations: Bolivia, Chile, Colombia, Ecuador, El Salvador, Honduras, Nicaragua, Panama and Peru.
The Alliance has reached out to some 300 companies in these countries, and has generated some 40 inclusive business ideas, now being implemented in areas such as agriculture, affordable housing, micro-insurance, mobile banking, forestry and biofuels. The WBCSD and SNV are also working toward expanding the uptake of inclusive business by starting activities in Asia and Africa. Projects have begun in Zimbabwe, Mozambique and Vietnam.
Latin American Network of Inclusive Business Leaders
To keep this momentum going, the WBCSD has been coordinating a Latin American Network of Inclusive Business Leaders, led by Roberto Salas, CEO of WBCSD member company GrupoNueva. The Network's aim is to engage CEOs to champ ion the cause of inclusive business to both their peers and governments: promoting inclusive business in their own companies, sharing learning with others, and contributing to a common, business-based advocacy voice to government for framework conditions that support inclusive business practices.
“The biggest challenge we face is to create the ‘snowball effect' in the business community,” said Salas. “We therefore need to move from ‘nice stories' to real examples of value creation. We also need to move from pilot projects to activities with relevant results. The network will help us promote leading-edge thinking and to innovate in the ways in which we communicate our perspectives on inclusive business.”
The Council and its Regional Network partners have so far convened national-level meetings in Colombia, Argentina, Ecuador, Chile and Brazil, gathering some 70 executives from national and international companies.
On Thursday 27 August, the Brazilian Business Council for Sustainable Development (CEBDS) convened such a meeting on the premises of Philips in São Paulo. Around 30 executives of leading Brazilian companies and subsidiaries of foreign enterprises attended the meeting, which featured WBCSD President Björn Stigson and Roberto Salas as special guests.
In his introductory remarks, CEBDS Executive President Fernando Almeida highlighted the importance of combating poverty through business solutions – not philanthropy.
This was followed by a keynote address by Björn Stigson, who emphasized that meeting the infrastructural needs of the growing and increasingly urbanized population of developing countries in a sustainable way is the key sustainability challenge of the future, but also a significant opportunity for business to come up with solutions. He further noted that implementing inclusive business opportunities could help the private sector regain some of the trust that it lost during the recent economic and financial crisis.
Roberto Salas outlined the concept of inclusive business in greater detail, illustrating his presentation with various company case studies. He remarked that inclusive business can be applied by all sectors. He added that is not just about selling cheaper products to the poor, but rather about looking holistically at opportunities to productively engage with low-income populations across the whole value chain of a company. He concluded by inviting Brazilian business leaders to join the Latin American Inclusive Business Leaders Network in order to implement projects within their own enterprises, promote the concept among their peers, and advocate for governments to set the appropriate framework conditions to scale up such ventures.
This was followed by a lively debate, which concluded by a call from Marcos Bicudo, CEO of Philips Brazil and President of CEBDS, for Brazilian CEOs to join the initiative.
In the months ahead, another CEO-level meeting will be held in Lima, Peru. The WBCSD 's annual meeting in Washington, DC, in mid-October will be used to communicate achievements and outlook to both WBCSD members and the leadership of the Inter-American Development Bank (IDB), building on the memorandum of understanding signed with the IDB in September 2007 aimed at catalyzing, developing and scaling up inclusive business opportunities in Latin America.
SNV and WBCSD are currently working on a publication profiling the Alliance's achievements in Latin America over its 3 year history. The publication will also capture best practices, key learnings and success factors, as well as core messages to the business community, governments and development agencies.
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