Inclusive business models: Creating a more equitable world

Dec 08, 2018

Inclusive business models: Creating a more equitable world

The World Bank has envisaged the Sustainable Development Goals (SDGs) as a pathway to achieve its twin ambition of ending extreme poverty by 2030 and to create shared prosperity. World Bank President, Jim Yong Kim notes, “If we are going to end poverty by 2030, we need much more investment, particularly in building human capital, to help promote the inclusive growth it will take to reach the remaining poor. For their sake, we cannot fail.” All stakeholders—governments across countries, the private sector, members of the civil society, international institutions and citizens around the world across classes—must come together and employ their collective knowledge, data and resources towards these objectives.

The emergence of inclusive business models

For the private sector to participate more effectively, it is imperative that it revisits its approach to doing business to include a more social orientation. As the global economic dialogue evolves its tenor to include greater equitability, corporate enterprises’ efforts cannot limit their efforts to cheque book philanthropy. Consequently, the concept of inclusive businesses is steadily gaining traction.

Inclusive businesses are commercially viable core-business models that provide at scale innovative and systemic solutions to the problems of the marginalized sections of the society. These entities create goods, services and employment opportunities that are relevant for the lower-strata of the society. Typically, the target segment of inclusive businesses includes the bottom 40-60% of the income brackets of a developing society. Inclusive businesses differ from social enterprises in their size, impact created and returns earned.

They transcend the limitations of corporate social responsibility (CSR) efforts of an organization which are traditionally defined by cheque book philanthropy. Unlike corporate philanthropy efforts, these organizations define clear pathways for change in areas of large social need. For instance, these organizations may be engaged in finding ways to tackle health deficiencies in poor labour forces, or developing products that improve the financial wellbeing of the poor. Their efforts are designed to improve the socio-economic conditions of the low-income population in a systematic manner. Like any corporate, they put in mechanisms to measure progress and results.

Inclusive businesses are good not just for the society

While it is true that Inclusive businesses create better living conditions for the poor and help in eradicating poverty, their positive impact is not limited to the segment alone. In fact, these organizations create a win-win situation for the entire stakeholder value chain. As a business, they create profitable opportunities that have the potential to yield higher returns that their traditional counterparts. Further, investors and consumers see greater value in such businesses – positively impacting their sales, brand value and stock prices.

Many new organizations are leveraging the trend by innovating business models that are directed towards the underserved segments of the society. On the other hand, existing business organizations can also modify their operations and practices to include a inclusive paradigm. However, they may realize that they cannot simply tap into these markets. Instead, they have to find creative solutions to remove the constrains that prevent them from entering these markets. Also, inclusive business models may sometimes be required to rethink their performance outside the box of traditional profit horizons.

CSR

“What is good for communities, society and the environment is good for business”

DHFL Annual CSR Report 2017-2018

wgc
Read more
wgc

Careers

Are you ready to make a mark on the global financial services landscape?

View Job Opportunites
Read more
wgc

Copyright © 2018, Wadhawan Global Capital. All rights reserved.