Inclusive Business – The Next Frontier for Corporate Responsibility
Anne Stubert, Senior Consultant, Corporate Citizenship
Since its foundation in 1997, Corporate Citizenship has worked with leading sustainable businesses around the world, advising them on all aspects of what it means to be a responsible business. Over the past few years, our clients and partners have increasingly explored the opportunities of Inclusive Business and our work in this area has grown.
In the latest report ‘Inclusive Business - The Next Frontier for Corporate Responsibility’ (June 2012), Corporate Citizenship has analysed a number of multinational companies’ Inclusive Business models in emerging and developing markets. The focus is on business models across the entire value chain, from product innovation, through to distribution and market place. The report gives comment and analysis into the motivations and drivers behind various business models, the role of partnerships, financing, profitability and scalability. In addition, it looks at the process from idea to implementation, as well as challenges faced along the way.
As an integral part of the research project, Corporate Citizenship conducted interviews with a broad range of multinationals such as SABMiller, Heineken and Interface, and intermediaries like International Finance Corporation (IFC), and Professor Stuart L. Hart from Cornell University. The in-depth interviews offered unique insights into the experiences of companies already using Inclusive Business models to grow in emerging and developing economies.
An interesting example is the global brewer Heineken, which is expanding its model of local sourcing across Africa. The company set up a local sourcing initiative in Sierra Leone in 2005, following a request by the country’s president to involve more local farmers in the sourcing as a way to increase local economic opportunities. Heineken explains that the drivers for the initiative were both economic and social: the company wanted to ensure a stable supply chain (taking into account exchange rates, import costs etc.), at the same time improving the positive impact in the communities in which they operate, as it strengthens the license to operate.
Another example is the food and beverage giant PepsiCo, which in September 2011 launched the initiative Enterprise EthioPEA, together with WFP and USAID. The initiative aims to develop a locally sourced supplementary food to address malnutrition, and scale-up and strengthen the Ethiopian chickpea supply chain, for both the domestic and export markets. For PepsiCo, chickpea-based products constitute an important part of the company's strategy to build a $30 billion global nutrition business by 2020.
Our research shows that the opportunities presented by Inclusive Business for global companies are significant. It is proven to drive product and service innovation, provide access to new markets, help differentiation from competitors and strengthen brand reputation. With regards to supply chains, benefits include cost reductions and secured access to critical raw materials.
In the report, Corporate Citizenship has identified ten steps companies should take when exploring and building Inclusive Business models. For example, companies should evaluate the socio-economic impact of their operations in a given market, identifying where across the value chain socio-economic benefits could be further enhanced. Companies should focus on their core competencies and strengths - how can they be applied to address societal and development challenges through core business activities? In addition, it is crucial to get senior management on board at an early stage as well as deciding on the commercialisation of the business model. We believe there is great potential for companies to leverage the skills and expertise of their CSR departments, to develop and test innovative ideas and business models.
Finally, our research shows that when companies get it right, Inclusive Business is a successful growth strategy for operating and expanding in emerging and developing economies. At Corporate Citizenship, we see Inclusive Business as the next frontier and the way forward for sustainable businesses looking to take traditional CSR to the next level.
To hear more about the report and our work in the area of Inclusive Business, please contact Corporate Citizenship’s Anne Stubert