IB

Inclusive Business Models

Business can play a role in reducing poverty while improving the bottom line.

The Problem: Despite recent progress in reducing the total number of people living in extreme poverty (living on US$1.25 or less per day), some 4 billion still earn less than US$3,000 per year. This population is commonly referred to as the “base of the pyramid.”

The Solution: The base of the pyramid represents a significant business opportunity with a combined purchasing power worth US$5 trillion and growing. By using an inclusive business model—commercially viable, scalable business solutions that expand access to goods, services and livelihood opportunities for the economically disadvantaged—business can play a role in reducing poverty while improving the bottom line.

The Business Case

  • It’s a competitive advantage. The base of the pyramid is still a relatively untapped market segment. Inclusive businesses will have an early-mover advantage over competitors. They will also enhance their license to operate by building their reputation as a business partner of choice.

  • It’s a supply chain strategy. Inclusive business models source materials locally from small-scale producers. This helps build stronger and more productive suppliers and enables more secure access to local resources.

  • It expands the labor pool. By using local laborers, inclusive businesses have increased access to appropriately skilled and more cost-effective employees. Local populations benefit from better wages and more secure livelihoods and are more able to contribute to local economies.

  • It encourages innovation. Providing goods and services to the base of the pyramid will require new ways of thinking. From marketing to transportation to product design, inclusive businesses will find innovative approaches to business-as-usual with the potential for new solutions to positively impact business in more mature markets.

  • It’s been done before-successfully. Major multinational corporations have launched inclusive business solutions and are scaling them up.

Timeline

This initiative will engage business leaders across industries, in a collaborative effort with international organizations, government agencies and Global Network partners, to overcome both internal and external barriers to scale inclusive business ventures around the world.

Now

Overcoming internal barriers to scale within companies by:

  • Continuing to illustrate best practices and rolling out lessons learned from leading companies.

  • Training company managers mandated to incubate and scale inclusive business ventures by expanding the ongoing WBCSD online training program implemented in collaboration with five BOP Learning Labs.

Overcoming external barriers to scale:

  • Engaging the Inter-American and the Asian Development Banks in targeted dialogues with policymakers. We will focus our effort on the challenge of insufficient access to finance and risk mitigation instruments for companies operating in this space.

  • Locally, by engaging policymakers in collaboration with Global Network partners.

Brokering and catalyzing inclusive business opportunities by:

  • Working through WBCSD’s Latin American Leaders Network with Global Network partners to convene meetings of local executives on advancing the inclusive business agenda.

  • Building “hubs” that can kick-off and implement local working groups and initiatives (e.g., Indonesia, Korea, Japan) in collaboration with Global Network partners and other allies (most notably GIZ).

Enablers

  • Regulations. Regulatory frameworks that uphold property rights, accelerate entry to the formal economy and root out corruption.

  • Policy. Policies supporting integration of producers or suppliers and provision of basic goods and services to the base of the pyramid.

  • Market Mechanisms. Designing subsidy and incentive systems for green and inclusive innovations.

Relevant priority areas