Tapping Into the Inclusive Business Opportunity in Asia: Can the SDGs Fuel Inclusive Business?
According to a soon-to-be-launched report by the Asian Development Bank (ADB) on impact investing in Southeast Asia, the base of the economic pyramid (BoP) market in East and Southeast Asia is comprised of 1.3 billion people with a purchasing power of US$4.7 trillion. Inclusive businesses – commercially viable enterprises that provide livelihoods and essential goods and services to people at the BoP – can play a key role in responding to this market’s unmet needs.
In February of this year, the Second Asian Inclusive Business Forum brought together more than 400 participants representing inclusive businesses, financiers, development partners and government representatives to explore the inclusive business opportunities in Asia. Participants had the opportunity to glean insights on best practices and opportunities in the region as well as discuss the roles of different stakeholders – from development financiers and financial institutions to business associations and governments. The forum was organized by the ADB and held at its headquarters in Manila.
As part of the summit, the Business Call to Action (BCtA) led a plenary session on inclusive business and the Sustainable Development Goals (SDGs), which explored how the new development goals can provide momentum to advance inclusive business. The SDGs, unanimously agreed upon by heads of state last September, provide a shared vision and framework for global development through 2030. They are much wider in scope than their predecessors, the Millennium Development Goals (MDGs), with nine more goals and an estimated price tag of between US$3.4 trillion and US$4.5 trillion per year in state spending, investment and aid. There is no doubt that these goals cannot be achieved without the private sector’s active involvement.
In fact, the SDGs highlight opportunities for inclusive businesses to tap into new markets. Leading companies, such as the biotech firm Novozymes, are already using the SDGs to assess new business opportunities. Introducing the company’s approach, Novozymes’ Stefan Maard emphasized the thinking behind aligning strategic decisions with the SDGs: “the SDGs will drive policy, finance and partnerships in the emerging markets, where the growth is.”
According to Sahba Sobhani, UNDP’s Global Private Sector Advisor and BCtA’s Acting Programme Manager, accelerated growth and replication of inclusive business models have particularly important roles in the ambitious new development agenda – both globally and at the country level. By providing people at the BoP with access to livelihoods, healthcare, financial services, skills and new technology on a commercially sustainable basis, inclusive business models enable governments to accelerate the achievement of the SDGs.
Monitor-Deloitte’s Specialist Leader on Social Impact, Robert de Jongh, explained that governments are increasingly seeing value in providing both fiscal and non-fiscal incentives for inclusive business. In the Philippines, the national Board of Investments has developed an inclusive business accreditation system to distinguish inclusive business models from other types of investments. The system seeks to provide a shared definition and accountability for government programmes and banks to better target investment support for inclusive businesses.
Kennemer Foods, the Philippines’ leading cacao producer, participated in the pilot for developing this accreditation system. May Lynn Lee, Kennemer’s Chief Operating Officer, highlighted the importance of companies showcasing the impact of inclusive business to government counterparts. Welcoming the effort to develop an accreditation system, she pointed out however that the incentives and benefits for companies to seek accreditation still need to be clarified.
Measurement and reporting on the private sector’s contribution to the SDGs will be a key topic for discussion in global and national forums as governments set up the reporting architecture to track SDG progress. Aligning corporate reporting on SDGs and developing systems that allow national governments to gather evidence of private-sector contributions to the goals enables more effective dialogue on policy frameworks for inclusive business.
A recent report by PricewaterhouseCoopers found that while many businesses are aware of the SDGs, they have not yet found the tools to assess their own impact on these goals. The SDG Compass, developed by the UN Global Compact, the World Business Council for Sustainable Development and the Global Reporting Initiative, provides a starting point that helps companies to align their business strategies with the SDGs and measure their contributions. And in May, the BCtA, UNDP and Monitor-Deloitte will launch a guidance report and web-based toolkit on inclusive business and the SDGs.
Listen to BCtA’s recent webinar discussion, What Does it Take to Scale Inclusive Business Models in the Philippines?