A recent United Nations Development Programme report sees business as usual as “not sustainable and therefore without a future.” So what next?
ISTANBUL, Turkey – “The model by which businesses focus on the higher end of the income-pyramid consumers, with the poor and the disadvantaged being mainly supported by the State, is not sustainable and therefore no longer has a future.”
That rather epic quote comes from a newly released United Nations Development Programme report on the private sector’s contribution to human development, and it summarizes neatly the reason why companies and organizations gathered at the 16th International Business Forum in Istanbul.
This year’s conference theme was “inclusive business,” which means business that includes and benefits low-income communities by reaching out to them on the demand side as consumers and on the supply side as producers. If there were any buzzwords to replace the previous development-world mantra, “sustainability,” then “inclusiveness” would surely be one of them.
There seems to be few words of criticism about businesses that directly support people at the bottom of the income pyramid. But can these companies really bring about a global change? That is, if we believe that the end of non-inclusive models of business must come as soon as possible, are a relatively few, small and inclusive companies sufficient to change the impact the private market has on development?
Roger Oakeley, from British consulting firm the Springfield Centre, would say no. “Transforming individual firms is not enough,” he said during the Istanbul conference. “Entire markets must change in order for green and inclusive business practices to become the global norm.”
Indeed, the notion that markets must change does not spark too much disagreement at an inclusive-business forum, but how they should change invites various opinions from the usual left-to-right palette of economic policy.
Abdi Dorre, head of the Somali Chamber of Commerce, confidently stated that inclusive businesses can grow, and will grow, in his country without any help from the government. However, Archana Bhatnagar, President of Madhya Pradesh Association of Women Entrepreneurs and Managing Director of Haylide Chemicals Pvt. Ltd, raised the issue of green and inclusive businesses not managing to compete with, if we may call them so, brown and excluding firms. It is simply too expensive to do the right thing, she said.
“Governments should take their responsibility and better support companies that contribute to social development and that do not pollute,” Bhatnagar said.
Positions on whether free market incentives are sufficient to make inclusive business the new global norm tend to drift apart.
One thing did stand clear: Not all stakeholders in global business were represented at this conference in Istanbul. Small and medium-sized enterprises and nonprofits from all around the world gathered to pat each other on the shoulders and say “good job”—and rightly so. But large multinational corporations, some arguably more powerful than entire nations, were missing.
One conference attendee from a development organization, who wished to remain anonymous, said, “The private sector will continue to bring social injustice and environmental degradation as long as it is not forced to change.”
The attendee added, “There should not be anything like CSR [corporate social responsibility] departments at big firms. The pure existence of a business should benefit all people in the certain community where it functions, and likewise not be bad for the environment.”
It has even been shown how a small group of corporations control global markets, and their ambitions are what the future of inclusive markets relies on. Alice Hutchinson, head of advocacy at the nongovernmental organization Care International UK, points out in an article on inclusive markets that “a plethora of standards currently exist to try and hold companies to account, but these have nearly all been voluntary.” She further notes that “Harvard Business School estimates that out of the 82,000 multinational companies out there, only 3,000 or so are exploring inclusive models.”
It seemed that most representatives at the International Business Forum would agree that markets should change, but the question of how produces diverse answers. Unfortunately, green and inclusive companies are not even close to being the most influential stakeholders in international business, no matter how many conferences are hosted in their honor. And beyond the politically complex question of how markets can change to benefit those at the bottom of the income pyramid, there are the ambitions of the large and powerful corporations that profit from the way markets function today.