Inclusivity: the next frontier for sustainable business

The World Business Council for Sustainable Development (WBCSD) coined the term ‘inclusive business’ in 2005 to describe a new approach to sustainability. Corporates are increasingly acknowledged as playing a key role in solving major global development challenges such as poverty and inequity.

Many leading businesses are now recognising this and moving from a ‘do-no-harm’ company-centric approach, to strategies that have mutual benefits for business and society and that are resulting in real product innovations. Inclusive business isn’t philanthropy. It’s about conducting profitable core business activities that also provide wider opportunities for disadvantaged communities.

Inclusive business is still in its infancy, but you don’t have to look very far to find inspiring examples. For the past decade brewer SABMiller has been doing inclusive business in Africa, driven by a desire to ward off the competition. It recently launched a beer in Mozambique made using surplus cassava – Africa’s most widely grown crop.

Working with a local partner, SABMiller has developed an innovative solution to the challenges of processing cassava, which degrades quickly after harvest and is difficult to transport, in the form of a mobile processing unit that travels to the country’s cassava growing regions.

This is the company’s latest step to develop products that appeal to local tastes, are more affordable and, as such, enable it to grow its market share. However, much more than that it gives SABMiller access to critical raw materials and creates valuable employment opportunities for local farmers.

Meanwhile in India, Unilever has developed products suited to the local market – low-cost sachets of detergent and shampoo – while creating opportunities for the poor communities it is targeting. Local rural women are trained to sell the products to their family and friends, contributing to their independence.

Similarly Vodafone, with its M-PESA mobile banking innovation, has grown its market share in emerging economies whilst transforming the lives of the millions of people who live there. Launched by Vodafone and its affiliate Safaricom in Kenya in 2007, M-PESA enables people without a bank account to transfer money as quickly and easily as sending a text message.

It is easy to see what the rewards of inclusive business can be – product innovations, access to new markets, access to critical raw materials, job creation and more. But what about some of the challenges organisations are grappling with as they seek to develop their own inclusive business models – whether to provide innovative solutions that meet the needs of the poor or create livelihood opportunities for disadvantaged communities?

In its 2008 report Creating Value for All the United Nations Development Programme identified constraints in five areas: market information; regulatory environment; physical infrastructure; knowledge and skills, and access to financial services.

Interface has experienced several of these first hand while exploring the potential of inclusive business, latterly with Net-Works – a pilot we are working on in The Philippines with the Zoological Society of London. We’re aiming to create a community-based supply chain for discarded fishing nets – which can be recycled into raw material for our carpet tiles – and deliver socio-economic benefits for the communities involved.

This is unknown territory for us so our collaboration with local experts Project Seahorse and KAMADA (Alliance of Fishers in Danajon Bank) is going to be crucial. They bring an understanding of the local market and can offer training and guidance on the ground.

We have learnt that inclusive business requires a different approach and mindset to traditional business. It doesn’t follow conventional processes and often takes longer to get off the ground than standard business projects. This means that a company’s existing structure can present a barrier to success. It takes support from the top to surmount this, and Unilever is a case in point; its inclusive business commitment is very much driven by CEO Paul Polman.

Having the diverse expertise of an interdisciplinary group can also make a difference, helping to identify challenges and potential issues early on. Looking back, our ‘successful failure’ FairWorks – so called because it has taught us valuable lessons – would certainly have benefited from having more business divisions involved.

What FairWorks has also shown us is the importance of focusing inclusive business on your core area of expertise and that’s exactly what we’re doing with the Net-Works pilot and with our fledgling venture, Fotosfera. Fotosfera is our first commercial carpet tile made from bio-based raw materials – from castor plant oil, a crop that is grown sustainably in rural India. Its early days but the local farmers are often able to achieve revenue more than ten times what it cost to start the crop, for minimal effort and outlay, so this is a great win-win.

Getting inclusive business right is the challenge of all challenges but when done properly it can bring significant socio-economic benefits to disadvantaged communities, whilst providing companies with a competitive differentiator for products. It takes time and skills that are different from traditional business ventures and requires management buy-in for openness, innovation, collaboration and partnership.

Pilots like Net-Works and Fotosfera are just in their early stages. However, if we develop them to be profitable, scalable and sustainable they will have the most chance of success in the long run.

Nigel Stansfield is chief innovations officer at Interface