Inclusive business can create markets and business opportunities where basic goods and services are missing.
Inclusive business brings development
Company initiatives demonstrate that profitable business activities achieve development results such as improved livelihood opportunities for poor people or expanded access to affordable goods and services.
“The benefits of focusing on inclusive business models go beyond immediate profits and higher incomes for the companies. For businesses, they include driving innovations, building markets and strengthening supply chains. And for the poor, they include improving communities, enhancing productivity, generating sustainable earnings and greater empowerment,” says Sahba Sobhani, Acting Programme Manager of the BCtA.
Inclusive business models engage low-income populations within a company’s value chain through models that target and incorporate them for instance in the supply, distribution, production or marketing of goods and services. Businesses that do engage with poor people as clients and customers, as well as or as producers, employees and business owners, show profitable returns beyond the short term, while at the same time creating value for the poor. Business Call to Action seeks to spread the knowledge of inclusive business:
“The BCtA is valuable because it gives us an opportunity to understand and interact with businesses. Basically BCtA is an important business advocacy initiative where we track and measure results,” says Sahba Sobhani.
Inclusive business can create markets and business opportunities where basic goods and services are missing. To be defined as an inclusive business, the initiative should be commercially viable at the same time as it provides access to goods, services and livelihood opportunities for people living in poverty.
The BCtA initiative challenges companies to take action and explore inclusive business models. It also showcases examples of how the private sector create and deliver jobs, products and services to people and communities as part of their core business operations, thus making the engagement long-term and sustainable.
“This high-visibility global leadership platform helps drive knowledge around better implementation of pro-poor inclusive business models. By communicating good examples, and sharing best practices, BCtA inspires new companies to take action, thereby tapping into the major potential of the private sector to contribute to poverty alleviation and global sustainable development,” says Lena Ingelstam, Sida’s representative in the BCtA Steering Committee.
The BCtA differentiates itself from other private sector initiatives that support the MDGs through its emphasis on core business and results measurement. The initiative is a global multi-stakeholder partnership involving Sida, UNDP, the UN Global Compact, DFID, USAID, the Netherlands Ministry of Foreign Affairs, AusAID, the Clinton Global Initiative, and the International Business Leaders Forum. This network of partners provides access to a wealth of best practice information, knowledge, networks and experience.
Some key BCtA commitments include:
- Through 400 clinics Sorridents in Brazil will provide dental care to close to one million low-income holders by the end of 2016
- The IKEA Group of Sweden has commitedto the BCtA and reinforced its goal to only use cotton produced entirely in line with the Better Cotton Initiative (BCI) in all IKEA products by end of 2015. As part of this effort, IKEA also plans to grow worldwide demand for sustainable cotton at affordable prices.
- In India, over the next five years, 80,000 families will gain access to maternal and child healthcare at prices 30-50 percent lower than normal rates at Life Spring’s small hospitals.
- In Mozambique 4,000 hectares of indigenous forest is expected to be saved every year when families exchange firewood for an ethanol-based cooking fuel produced by the company CleanStar Mozambique.
Since its launch in 2007 the BCtA has steadily increased the recruitment of national companies and small and medium-sized enterprises, while continuing to attract major multinational organizations.
“A significant evolution has occurred over the last couple of years within the business sector, primarily in the way companies do business with people living in poverty. By deploying their core business competencies to include underserved markets, companies can reap commercial benefits through substantial market growth and new opportunities,” says Sahba Sobhani and continues: The development impact of their actions in terms of increased household income, skills and enterprise development, environmental sustainability or access to affordable and appropriate goods and services can have a substantial effect on poverty reduction and on reaching the MDG targets. In promoting inclusive business BCtA goes beyond both philanthropic and corporate social responsibility (CSR) initiatives."
In addition, BCtA organizes a variety of high-level programs and events for knowledge exchange, including workshops, webinars and business-to-business meetings. The intention is to create learning opportunities and advance the evolution of inclusive business models in the business community:
“It’s a relatively new concept and the resources of the BCtA help encourage and develop the role of business in society,” says Sahba Sobhani.
He also believes that BCtA members will help shape and advance the post-2015 agenda through creating innovative new business models, sharing lessons learned, and forging partnerships that improve and increase development impact. This, according to Sahba Sobhani, will be increasingly important as part of the shift in discourse and when South-South cooperation continues to grow.
How to join
Companies can apply to become members of BCtA by submitting a proposal for a time-bound inclusive business initiative with specific, measurable, projected outcomes demonstrating both financial returns and clear contributions to development. Membership is free, but the companies must finance their own initiatives. Other BCtA membership eligibility criteria for companies include:
- Having the potential to generate financial returns for the company and economic and social returns for low-income communities in developing countries, as well as having a clear link to the company's core business.
- Incorporating a "fresh" or “new approach” to business for the company, enabling it to access and serve markets in new ways of generating measurable results.
- Having a sustainable plan in place for the financing of the initiative.
“We want to be a one-stop shop for businesses that are looking at inclusive business models. The more companies we encourage to join, the more business models we will have as examples for others to follow. This is important in creating an entire ecosystem of inclusive business actors,” says Sahba Sobhani.
Finally, as part of the commitment, companies are requested to report annually on the progress towards the achievement of their BCtA goals. The reported results include, providing measurable contributions of the initiative to emphasize both development and commercial goals. The BCtA web site also communicates up-to-date results of company efforts and updates on relevant insights and innovations.
“It is also important for us to tell the stories behind the results,” concludes Sabha Sobhani.
Business Call to Action
Supported by Sida, AusAID, Clinton Global Initiative, DFID, International Business Leaders Forum, the Netherlands Foreign Ministry, UN Global Compact, UNDP and USAID.
Business Call to Action (BCtA) aims to accelerate progress towards the Millennium Development Goals (MDGs) by challenging companies to develop inclusive business models that offer the potential for both commercial success and development impact. Worldwide, 67 companies have so far responded to the BCtA by making commitments to improve the lives and livelihoods of millions through commercially viable business ventures that engage low-income people as consumers, producers, suppliers, and distributors of goods and services.
Participating companies benefit from the BCtA’s ability to provide:
Demonstrate private sector impact on meeting the MDGs and reducing poverty as well as increase the number of companies engaging in inclusive business models. By challenging companies, collecting best practice examples and sharing results, the BCtA aims to:
Programme period: 2011-2014
Sida contribution: SEK 2,25 million per year for three years