At the Business Roundtable for Inclusive Growth, Fundación CODESPA and a group of Spanish companies dedicated their 2020 annual research study to answer the question above. As a result, it has inevitably sparked another question: Is inclusive growth possible now, in times of socio-economic crisis?
One of the objectives that we pursue in our IV report is to create greater awareness of inequality and make poverty in our country more visible by making its different faces known: child poverty, energy poverty, or the so-called "poor with work," people who, even with a permanent job, do not make ends meet. During the research study (which arose before the pandemic appeared in our lives), we experienced that COVID-19 has contributed to making the realities of poverty and exclusion more visible. Also, the health crisis has brought new indicators of poverty, such as having access to the internet or mobile devices. Children or young people who do not have adequate access to technology may have difficulties accessing education, with repercussions on their development and immediate future.
For companies, we have also seen via the pandemic, a before and after, of "the social." For many, it has been an opportunity to enhance their involvement and social impact. They have devoted much effort not only through their philanthropy, but also by adapting their products, services, and commercial relationships to support their stakeholders in its economic recovery. Also, the pandemic has affected business’ purposes. Taken from a KPMG report and which we collect in our report: "70% of managers feel more connected to social purpose after the health crisis caused by COVID-19."
However, in this context, the question arises: is the pandemic an opportunity to continue promoting the social impact of business or, on the contrary, is it a setback or a stoppage in which companies must focus on surviving and maintaining their employees?
As indicated by Ramón Baeza, partner at Boston Consulting Group and member of the Business Roundtable for Inclusive Growth, the fact that companies have to choose between contributing to triple sustainability and focusing on their survival and conservation of their results is a false dilemma. If the pandemic has left anything clear, it is that inclusive growth comes more relevant than ever in socioeconomic crises, and that the output of this crisis is an equally inclusive economic recovery, which does not increase the inequality gap.
Inclusive growth is equal opportunities; it is a tool that contributes to making society better, fairer and giving more opportunities to those who need it most. As Marc Simón, Deputy Director-General of "la Caixa" Foundation, points out, "when there is no growth - as is happening with the current crisis caused by the pandemic -, unfortunately, inequalities and difficulties increase for those who precisely have the most needs and have less to face any setback."
Poverty and inequality are challenges that all agents in society have to face, and companies must lead them due to their ability to create jobs and wealth. In the words of Antoni Ballabriga, global director of Responsible Business at BBVA: "if society is broken, we will suffer too." For Simón, economic growth and progress operate through the creation of opportunities for the most vulnerable. As he points out: "you cannot think of growing again, without taking into account those who need it most and who have the least to face any setback. It is the only way to achieve progress in the society we are in."
That is why the Observatory proposes the concept of "inclusive growth" with which we promote one "economic growth whose benefits are distributed throughout society, leaving no one behind and creating opportunities for all; in particular, for those who find too many barriers to improve their living conditions." The inclusive growth proposal is based on the fact that the company can inclusively generate wealth and value from its own activity (from its products and services and through its different areas) and consider all its stakeholders (not only shareholders).
Inclusive growth starts from and within companies. Sometimes, it seeks to have an outward impact through philanthropy and social action when the important thing is to start with the organization itself. A company that wants to grow inclusively must start from the heart of its corporation and with its employees, the main stakeholder of any organization. As Jordi Canals (IESE Business School) says in an interview for our inclusive growth report, "there is no more social company than the one that is capable of creating and maintaining employment." However, this contribution does not seem very brilliant or seem worthy of being highlighted in a corporate responsibility report.
Furthermore, to guide companies in their commitment to inclusive growth, we have started a measurement pilot project called Prosper4ALL, which aims to create a framework for analyzing and measuring companies' commitment in the search for social impact through their business areas. To organize the analysis, this project identifies four major dimensions that must be considered when measuring the impact and business contribution to inclusive growth.
The first is the creation of economic value because only a successful business can positively impact society. Companies are the ones who create the most wealth, mainly through job creation, and in times of crisis, through maintaining those jobs. Business economic value provides wealth for others when they follow appropriate tax practices and is also the premise of innovation in products and services that meet social needs or make responsible investments.
The second dimension includes practical ethics because to do good well. This dimension has to do with several topics: respect for human rights throughout the entire value chain, reducing wage gaps with worthy compensation in countries where legislation is laxer, or the design and responsible sale of both products and services.
The third dimension of analysis is the social value generated with business activities. The company's commitment to the training and development of its employees and its suppliers, the establishment of formulas that promote and guarantee diversity in its workforce, the effectiveness of effective non-discrimination policies, or the creation and distribution of inclusive products and services all demonstrate that the company is committed to inclusiveness.
Finally, the fourth dimension analyzes the amplifying capacity of companies in promoting inclusive growth in the interior and in their effort to contribute to the transformation of the industry and the business fabric. In this sense, the definition and defense of a corporate purpose is one that incorporates a positive impact on society and ESG governance mechanisms that promote a more inclusive model.
To achieve an inclusive economic recovery, we need, more than ever, to work on SDG 17, spark a dialogue and greater cooperation between the public administration, companies, and social entities to reduce inequality and achieve the socioeconomic integration of groups most vulnerable. The Business Roundtable for inclusive growth will continue to help companies achieve this goal and create economic and social value for all its stakeholders, especially for those at risk and vulnerable. We encourage other companies and organizations to join and support us in this challenge.