Wednesday
February 19
2014

Fernando Casado Cañeque

It’s Time for Inclusive Business to Move Beyond Pilots: We’ve shown that the concept can work – now it’s time to increase the impact

Editor’s note: This article is part of the 2014 Trends Series, in which several professionals in the field of inclusive business and social enterprise share their perspectives on what is coming in 2014.

Just half a decade ago the concept of inclusive business was born, and already it seems that we are reaching early retirement. The birth was conceived in the womb of the United Nations and the headquarters of the World Bank, with the participation of the World Business Council for Sustainable Development and the International Business Leaders Forum. Universities like Cornell and Harvard nurtured the concept and businesses were quick to adopt it and nurse it in their action strategies.

It was no wonder. Transcending the insipid model of corporate social responsibility (CSR) was very tempting. In short, the CSR concept was never entirely independent of its philanthropic name. CSR was represented by someone who was not quite entirely corporate or social, possessing a budget that was neither low enough to ignore nor high enough to generate a real impact, with representation on the board of directors that was neither negligible nor decisive to change the company policy. The lack of transformative capacity ended up disillusioning core stakeholders. CSR did not gain influence and slowly it began to be buried in the cemetery of forgotten departments. Although its initials are still inscribed on the doors of some departments of large companies, many (managers) smile and say they have moved on to other things when they are reminded of their early relationship to CSR.

On the other hand, inclusive business had everything CSR lacked. It went straight to the core business of the income statement, it aligned with entrepreneurship trends that have been in vogue in recent years, and it was well received and accepted by all sectors of society. NGOs felt respected by the word inclusiveness, governments could delegate their responsibilities to economic activities without recrimination, and businesses could finally talk about business and profitability without feeling criticized.

The height of its fame came suddenly. In just seven years, it seemed no international conference, journal, cooperation policy or development plan remained unseduced by its proposals. And its special virtue fell precisely where CSR failed: putting pilot projects on the table that combine economic profitability and business strategy with social impact and contribution to development goals.

Examples surfaced: Danone opened a market in Bangladesh fighting malnutrition; Cemex contributed to decent housing, diversifying the product; Unilever accessed previously unreachable rural markets, promoting women entrepreneurs; Ikea reinvented the supply chain, achieving sustainable cotton production.

However, when reflecting from a distance and watching the results closely, one finds that the great achievements have been pilot projects that ultimately ended up being only that: pilot projects. Why hasn’t Danone Grameen altered the traditional way Danone operates? Why do inclusive businesses remain a tiny part of Cemex’s turnover? Why doesn’t Ikea promote inclusive supply chains for all of its products?

It’s not that there is a problem with the fundamental concept of inclusive business, but rather that there’s a problem of dimension. It’s not enough for major companies to showcase inclusive business pilot projects at conferences or publish stories about them in annual reports. The expectation was and remains social transformation through a more sustainable and inclusive economic model. Therefore, business models, however inclusive they are, are still just models; they have not met social expectations to really help solve the big challenges of development.

The tendency for those of us who believe in and promote the potential of inclusive economic models must be to increase the level of impact and transform the way companies operate, so that together they transform the society in which we live. Therefore, the phase of pilot projects has come to an end. We have shown that some work; now it is time to show that through them we can create a fairer and less destructive world.

Fernando Casado Cañeque is the director of the Centre of Partnerships for Development. He can be contacted on Twitter @Fernando_Casado.

Categories
Entrepreneurship, Impact Assessment
Tags
corporate engagement, corporate social responsibility, multinational corporation, social business, social development, social impact