About this Report
This working paper introduces BSR’s perspective on the business role in creating
inclusive prosperity.
This paper is the result of an extensive research process, including interviews
conducted with leading practitioners within and outside of BSR, as well as aliterature review of important publications from business, academic, and NGO
thought leaders. Moreover, the authors drew on lessons from more than two
decades of BSR insights and experience working with business to tackle
complex sustainability challenges.
BSR’s strategy to promote business action in support of an inclusive economy
should be considered a mutually reinforcing and equally important priority to ourclimate strategy—Business in a Climate-Constrained World, which promotes
practical business action to build climate resilience.
As with all BSR working papers, this report contains preliminary research,
analysis, findings, and recommendations that are circulated to stimulate timely
discussion and critical feedback and to influence ongoing debate on emerging
issues. Most working papers are eventually published in another form and theircontent may be revised. We welcome input and engagement from readers.
ACKNOWLEDGEMENTS
The authors are indebted to many for their peer review and contributions: ourcolleagues at BSR, including Dunstan Allison-Hope, Edward Cameron, Aron
Cramer, Sara Enright, John Hodges, Melanie Janin, Faris Natour, Tara Norton,
Jeremy Prepscius, Peder Michael Pruzan-Jorgensen, and Julia Robinson; andexternal partners and experts, including Christine Bader (Duke University),
Melissa Fifield (Gap Inc.), Daniel Lee (Levi Strauss Foundation), Ernst
Ligteringen, Pamela Mar (Fung Group), Lauren Moore, Sasha Radovich (GapInc.), Lene Serpa (Maersk Group), and Tyler Spaulding (eBay Inc.).
We would also like to thank BSR’s Sunhee Choi for designing the originalgraphics in this report.
DISCLAIMER
BSR publishes occasional papers as a contribution to the understanding of therole of business in society and the trends related to corporate social responsibility
and responsible business practices. BSR maintains a policy of not acting as arepresentative of its membership, nor does it endorse specific policies orstandards. The views expressed in this publication are those of its authors anddo not reflect those of BSR members.
ABOUT BSR
BSR is a global nonprofit organization that works with its network of more than
250 member companies to build a just and sustainable world. From its offices in
Asia, Europe, and North America, BSR develops sustainable business strategies
and solutions through consulting, research, and cross-sector collaboration. Visit
www.bsr.org for more information about BSR’s more than 20 years of leadershipin sustainability.
SUGGESTED CITATION
Davis-Pluess J.; and Meiers, R. (2015) “Business Leadership for an Inclusive
Economy: A Framework for Collaboration and Impact.” BSR Working Paper.
BSR, San Francisco.

Contents
4

Executive Summary

7

Introduction: Making the Economy Work for Everyone

11

Business Opportunities in an Inclusive Economy

16

Business Leadership for an Inclusive Economy
Pillar One: Good Jobs
Pillar Two: Access to Essential Goods and Services
Pillar Three: Investments for Prosperous Local Communities

30

Our Approach to Advancing Inclusion: Insight, Integration,
Collaboration

33

References

BSR | Business Leadership for an Inclusive Economy

3

Executive Summary
We are living in an era marked by substantial gains in human well-being but also
rising income inequality and persistent jobless growth. The latter two issues wereboth called out by the World Economic Forum in its Global Outlook for 2015.1
Coupled with climate change, achieving inclusive prosperity for 9 billion people
without exceeding planetary boundaries is the defining challenge of the 21 st
century.
From the billion people expected to remain in extreme poverty, to demographic
groups systematically excluded from economic participation and benefit, to themembers of an increasingly vulnerable middle class—our economy is notworking for everyone. Integrating these excluded groups into the economy—
through good jobs, access to goods and services, and investments in theircommunities—is critical to maintaining and expanding economic growth andsocial progress. Inclusive growth is fundamental to prosperous and resilientbusinesses and societies.
Business has much to gain from more inclusive economic prosperity, throughaccess to new markets, unleashing more innovation, and greater social stability
so necessary for markets to function. Conversely, business has much to lose
from an economy that fails to capitalize fully on human capital, constricts
markets, and experiences sluggish demand.
We define an inclusive economy as one in which all individuals andcommunities are able to participate in, benefit from, and contribute to global andlocal economies. Businesses that promote an inclusive economy—through fairand safe employment that provides for strong livelihoods, access to essential
products and services, and investments that enable communities to thrive—willreap significant benefits.
The Business Case for Inclusion
The four main business benefits of an inclusive economy are innovation, market
expansion, improved operating environments and risk mitigation, and long-term
growth.
Inclusion drives innovation by exposing companies to new sets of consumers
with unique needs. Within companies, a diverse staff and an inclusive
environment drive a culture of innovation. Inclusion of new consumers,
particularly the poor and otherwise marginalized, represents a significant market
growth opportunity for companies. Benefits to individuals and economies will be
maximized where companies prioritize meeting basic needs for this consumer
group.
Promoting inclusion and mitigating exclusion are important investments to
support efficient, productive, and stable operating environments and social
license to operate. Inclusion can also support long-term economic growth. For
example, closing gender gaps in employment would increase GDP in the UnitedStates by 5 percent, in Japan by 9 percent, in United Arab Emirates by 12
percent, and in Egypt by 34 percent.2 Likewise, raising the minimum wage in the
United States would increase U.S. GDP by 0.3 percentage points, or US$48
billion, in the first year.”3

1

WEF, 2015.
Elborgh-Woytek, Katrin, et al, 2013.
3
Smialek, J., 2014.
2

BSR | Business Leadership for an Inclusive Economy

4Defining Business Leadership for an Inclusive Economy
As the primary engine of the global economy, business has a fundamental role,
responsibility, and self-interest in ensuring that the economy is more inclusive.
Many companies are already looking at new ways to reach and empower people
that are currently excluded, and to improve the quality of employment acrosstheir value chains. Tremendous potential exists to expand on these efforts andmore fully leverage businesses’ core skills—employment, innovation, and capital
allocation—to solve social problems and unlock business opportunities aroundthe world.
Business Leadership for an Inclusive Economy is BSR’s strategy to work withbusiness to enable the emergence of an inclusive economy. Our framework isbased on three pillars:
1. Good jobs that enable strong livelihoods, based on equal opportunity,
investment in human capital and skill development, and fair treatment in
the workplace, all driving toward productive enterprises.
2. Access to essential goods and services, enabling full participation ineconomic activity. Access to goods and services helps individuals
improve their well-being and standard of living and realize theirpotential—creating significant macro-economic benefits and serving as adriver of innovation and productivity, which benefits businesses.
3. Investments for prosperous local communities that ensure economic
benefits accrue to communities where business activity occurs. Investingin communities delivers stronger infrastructure, local enterprisedevelopment, and increased human capital, and strengthens social
license to operate.
Companies across sectors and geographies will approach and implement thesepillars in different ways, relevant to the context of their business operations andpriorities. Businesses have varying levels of leverage across their different
spheres of influence to promote inclusion—within their direct operations, alongsupply chains and with business partners, and in the broader economic
environment. Individual companies can do much on their own to promote an
inclusive economy, but collaborative efforts—with other businesses and outside
the private sector—will extend and deepen benefits to business and society.
Examples abound of best practices being implemented by companies acrossindustries and geographies. Much potential exists to scale and build on these
efforts, as well as to innovate new solutions for unmet social and businessneeds.
BSR’s Approach to Advancing an Inclusive Economy
As the preeminent global network of business sustainability leaders, BSR is wellplaced to promote business action to advance an inclusive economy. We will use
our framework for business leadership—the three pillars of an inclusive
economy—to engage and support our members and broader partnershipnetwork.
Drawing on our strengths as an organization, we will promote businessleadership through insight into key business trends impacting on and benefitingfrom inclusion; integration within companies to build more inclusive businesspractices across operations; and collaboration across industries and with otherstakeholder groups—including government, civil society, and philanthropies—topromote inclusion of marginalized groups in economic activity.
To focus our approach further, we have identified a few issue areas to prioritize
for research and collaboration:» Promoting women’s full economic participation through good jobs, access toessential goods and services, and inclusive community investment
BSR | Business Leadership for an Inclusive Economy

5»Preparing employers and employees for the impacts of automation on job
availability and quality in global supply chains»

Supporting inclusion for economic revitalization in advanced economies

This initiative, while focusing on topics of emerging importance, builds on a twodecade record of commitment to promoting sustainable business. As we build
our inclusive economy initiative, BSR will seek to elevate our attention to waysthat this work can increase economic opportunities for those who are currently
underrepresented.
This paper marks the launch of our efforts to advance business leadership for an
inclusive economy, as well as the opening of an ongoing dialogue about how thatleadership will be most effectively realized. We invite you to join us throughconversation, leadership efforts, and collective action.

BSR | Business Leadership for an Inclusive Economy

6

Introduction: Making the
Economy Work for Everyone
Recent decades have seen substantial social andeconomic development around the world. As
economies and societies have prospered, so hasbusiness.
At the same time, growing evidence shows that
economic progress is uneven, with many
populations excluded from opportunities toparticipate in and benefit from this progress.
Over the last half century, global economic growth has lifted nearly a billion
people out of extreme poverty4 and bridged huge divides in average incomes
between countries. We are living longer and, on the whole, are richer than wewere 50 years ago.5 Nearly every country has improved its human development
status in absolute terms since 1990,6 and in the next 40 years, billions more are
expected to join the global middle class,7 with most of this growth in emerging
economies.
Social progress has seen advancements in the rights and participation of women,
racial and religious minorities, migrants, and other marginalized groups ineconomic, cultural, and political activity. Significantly, women, while still facedwith many barriers, have come to take their rightful place in the formal economy
more fully than at any other time in human history.
Amid impressive progress, however, today’s economy is not working foreveryone—from the very poor to the middle class, many are struggling toparticipate in and benefit from global economic activity. In its “Outlook on the
Global Agenda 2015,” the World Economic Forum calls out rising income
inequality and persistent jobless growth as the two most important economic
trends facing the global economy, contributing to rising inequality and restricting
consumer spending and growth.8 Concerns exist that in the coming decades,
current rates of economic progress will slow or reverse, and that many willcontinue to be excluded from economic opportunity, which not only has direct
economic impacts but also could jeopardize social progress and stability.
Experts estimate that more than a billion people will remain mired in extreme
poverty for some time to come,9 and that gains in many key indicators of humandevelopment, such as child and maternal mortality, access to primary education,
and access to clean water, will remain elusive. Furthermore, many marginalized

4

The Economist, June 1, 2013.
Deaton, 2013.
6
UNDP Human Development Report 2013.
7
Oxford Martin School, 2014.
8
WEF, 2015.
9The Economist, May 30, 2013.
5

BSR | Business Leadership for an Inclusive Economy

7populations10 continue to lack access to basic products and services that would
enable them to live in dignity. For instance, approximately 59 percent of adults inlow- to middle-income economies do not have a bank account, 11 59 percent do
not have mobile phone subscriptions,12 and 30 percent lack access tosanitation,13 limiting their opportunities to thrive in the modern economy. Womenare particularly affected by lack of access: In low- and middle-income countries,
women are 28 percent less likely than men to have a bank account,14 14 percent
less likely to own a mobile phone,15 and are disproportionately impacted by thehealth consequences of unsanitary living conditions. In specific locations, othergroups, such as minority ethnic groups, indigenous peoples, and rural
populations, face similar disparities.

Inclusive growth
is required tobuild prosperous
and resilient
societies andsuccessful
businesses.

Poverty persists alongside economic growth in many middle-income countries.
India, for example, despite seeing an overall rise in income, is home to 33
percent of the world’s poorest people.16 Poverty levels also appear to beworsening in many mature markets. In the United States, more than 45 million
people live at or below the poverty line.17
Economic inequality is also increasing, and that is a concern to business.
Between 1990 and 2005—despite healthy global economic growth—
approximately two-thirds of countries with available data experienced an increase
in income inequality.18 Today, seven out of 10 people live in countries where
income disparities have grown in the past 30 years.19 Extreme economic
inequality has a corrosive effect on almost every driver of social and economic
progress, as well as on business success, by reducing economic and social
mobility, discouraging political participation, hollowing out the purchasing powerof the majority, undermining the tax base and support for the social safety net,and stimulating social unrest.
Not only are the poor and marginalized being excluded from growth andeconomic opportunities, economists are tracking a “hollowing out” of the global
middle class as well.20 The decoupling of growth from wages, a trend that has
been building since the mid-1990s, has reduced the incomes of middle-income
earners in many mature markets,21 including the United States and the United
Kingdom. At the same time, rising costs of healthcare, housing, and higher
education (college costs in the United States have risen 65 percent since 1995,
alongside no real growth in average incomes22) threaten access to economic
opportunities for this group. Meanwhile, as millions enter the growing middle
classes in India, China, and Latin America, economists warn that in order to keepthem there—and prevent a descent back down the economic ladder—major
reforms to labor, taxation, and social security policies are required.23“Marginalized populations” refers to groups suffering social exclusion due to a range of factors—
gender, race, religion, language or linguistics, disabilities, physical isolation (e.g., living in remoteareas), economic status, or social-cultural restrictions (e.g., caste systems).
11
Demirguc-Kunt and Klapper, 2012.
12
GSMA and Altai Consulting, 2015.
13
Defined as access to improved or shared sanitary facilities in developing countries. WHO/UNICEF,
2014.
14
Demirguc-Kunt and Klapper, 2012.
15
GSMA and Altai Consulting, 2015.
16
World Bank, October 2013.
17
Huddlestone, 2014.
18
United Nations, 201219
Oxfam, “Even it up—Time to end extreme inequality,” 201420
Hollinger, P. 2012.
21
Brynjolfsson, E. and McAfee, A., 2012.
22
See: http://money.cnn.com/infographic/economy/heres-why-the-middle-class-feels-squeezed/
23
World Bank, 2013.
10

BSR | Business Leadership for an Inclusive Economy

8Rising income inequality in many parts of the world is both a cause and aconsequence of exclusionary market conditions. It is widely agreed that whilesome income inequality is inevitable in a market economy, too much inequality
imperils not only those at the bottom of the scale, but the entire economy.
Economic inequality reduces the benefits of growth for the poor,24 and canexacerbate exclusion by making it difficult for the poor to invest in education andengage in entrepreneurial activity.25 It can bias political decision-making, thus
compounding other social and political inequalities.26 Economic inequality canalso stall economic progress and threaten growth27—for example, economists
warn that rising inequality will slow growth in Asia.28

Business
Leadership for an
Inclusive
Economy is
BSR’s strategy towork withbusiness toenable theemergence of an
inclusive
economy.

BSR believes that a strengthened focus on inclusive economic growth is central
to sustaining—and extending—the global economic gains of the past few
decades. While government creates the frameworks in which businesses
operate, the private sector has the capital, capacity for innovation, and ability to
put ideas into action that are crucial to the emergence of an inclusive economy.
Moreover, business has much to gain from more inclusive economic prosperity,
which provides access to new markets, unleashes more innovation, and creates
greater social stability—so necessary for markets to function. Conversely,
business has much to lose from an economy that fails to capitalize fully onhuman capital, constricts markets, and experiences sluggish demand.
We define an inclusive economy as one in which all individuals andcommunities are able to participate in, benefit from, and contribute to global andlocal economies. In our view, business makes the greatest contribution toachievement of inclusive economic progress through fair and safe employmentthat enables strong livelihoods, access to essential products and services, andinvestments that enable communities to thrive.
We identify three groupings of excluded populations to prioritize in building an
inclusive economy: (1) Low-income, unskilled population cohorts cutting acrossall demographic groups; (2) Specific populations that face structural exclusion,
such as women, migrants, and ethnic/racial minorities; and (3) Middle classes
across geographies who may find themselves excluded from the formal economy
as conditions change. We further recognize that exclusion carries particularrisks—for people and for business—in lower-income countries where
infrastructure is less developed and governments’ are less able to meet theneeds of all citizens.
Business Leadership for an Inclusive Economy is BSR’s strategy to work withbusiness to enable the emergence of an inclusive economy. Our framework forbusiness leadership for an inclusive economy is based on three pillars:
1. Good jobs that enable strong livelihoods, based on equal opportunity,
investment in human capital and skill development, and fair treatment in
the workplace, all driving toward productive enterprises.
2. Access to essential goods and services, enabling full participation ineconomic activity. Access to goods and services helps individuals
improve their well-being and standard of living and realize their24

Africa Progress Panel, 2013.
Davis Pluess, 2014.
26
Fuentes-Nieva, R. and N. Galasso, 2014.
27
Berg, 2011.
28
Asian Development Bank, 2012.
25

BSR | Business Leadership for an Inclusive Economy

9potential—creating significant macro-economic benefits and serving as adriver of innovation and productivity that benefits businesses.
3. Investments for prosperous local communities that ensure economic
benefits accrue to communities where business activity occurs. Investingin communities delivers stronger infrastructure, local enterprisedevelopment, and increased human capital, and strengthens social
license to operate.
The remainder of this paper is organized into three chapters. The initial chapter
explains how promoting an inclusive economy generates business benefits,
including innovation, better operational performance, market growth, and longterm economic stability. The second section outlines the core of BSR’s
strategy—the three pillars of business action to promote an inclusive economy,
including examples of how companies are already leading the way. The paper
concludes with insight into how BSR plans to work with our member companies
and partners to realize our vision of an inclusive economy.

BSR | Business Leadership for an Inclusive Economy

10Business Opportunities in an
Inclusive Economy
The exclusion of individuals and communities fromincome-generating opportunities, such as jobs andsmall business creation, and access to essential
goods and services represents a failure of ourglobal economic system.
Promoting a more inclusive economy can help
right these failures and unlock significant
opportunities for society and business.
Enabling a more inclusive economy requires a holistic effort that involves all
actors in society: business, government, civil society, and communities. Different
approaches will be required in different economies where socio-economic,
cultural, and historical contexts define exclusion.
Business alone does not have the responsibility, solutions, or means to create an
inclusive economy, but it plays a key role as a job creator and employer, adeveloper and distributor of products and services, and an investor incommunities where economic progress is most needed. Companies thatleverage these assets toward the goal of inclusive economic outcomes will reap
significant benefits.

The Inclusion Opportunity
An inclusive economy offers four main business benefits: innovation, market
expansion, improved operating environments and risk mitigation, and long-term
growth.
Figure 1: The Business Benefits of Inclusion

BSR | Business Leadership for an Inclusive Economy

11Inclusion Drives Innovation
The growth of base-of-the-pyramid business models has demonstrated the valueof considering the unique needs of low-income groups as a source of productand service innovation.29 Creating products tailored to the unique needs of
traditionally excluded customers was one of the key drivers for the developmentof microfinance and micro-insurance, for example, which are considered by many
to be among the most important innovations in the last 30 years. Likewise,
telecommunications operators in emerging markets such as the Philippines,
Kenya, and Pakistan were early adopters of transformational mobile moneytransfer services, providing millions of people who were previously “unbanked”
the opportunity to send, store, and receive electronic payments. These services
have now begun to be offered in developed markets such as the United Statesand Europe.30 Healthcare innovations designed for lower-income settings arealso finding their niche in developed markets. For example, GE’s handheld
ultrasound imaging device, originally designed as a low-cost, high-quality solution
for use in rural India and China, is now used in hospitals throughout the world for
20 percent the price of traditional ultrasound services.31
These examples of reverse innovation only just touch on the vast opportunities
for companies to benefit from the insights they are gaining from inclusion. Suchinsights open opportunities for creating products and services that are attractive
to a global market for their improved functionality, simplicity, affordability, andaccessibility.
Inclusion in employment practices and organizational culture is an importantdriver of innovation within companies and among their suppliers. For example, a2012 study by the National Center for Women in Technology found that IT
patents produced by mixed-gender teams were 30-40 percent more likely to becited than patents of non-mixed teams.32
Studies demonstrate that companies that value diverse views and representation
also tend to possess greater openness and willingness to share radical andtransformative ideas, which is essential to innovation. 33 These benefits are wellknown to many companies and drive human resources investments at thecorporate level. Implementing diversity and inclusion policies and capturing thesebenefits throughout operations and value chains represents a less realized
opportunity.
Inclusion Expands Markets
Just as designing new products and services to reach traditionally excluded orunderserved populations drives innovation, it also provides the best way tocapture fast-growing opportunities in new markets.
Enabling more people to participate in and benefit from the economy can unleash
significant market growth opportunities for companies, particularly with the
majority of population growth happening in the developing world over the next
half-century.
The International Finance Corporation (IFC) estimates that the roughly 4.5 billion
low-income people in developing countries collectively spend more than US$5
trillion a year (in US$PPP 2005), representing more than middle- and higher-

29

Prahalad, C.K. and A. Hammond, 2002.
EY, 2014.
31
Medicine Plus, 2013.
32
NCWIT, 2012.
33
Hewlett, S., Marshall, M, Serbin, L., Stanford Social Innovation Review, 2013.
30

BSR | Business Leadership for an Inclusive Economy

12income consumer segments in those countries combined. This presents
significant opportunities for companies to expand their reach in a way that meetsthe needs of new consumers, while improving their well-being and living
standards.34 For example, the market for healthcare products and services forpeople at the base of the economic pyramid (defined as people earning less than
US$2 per day) is currently estimated to be US$158 billion alone.35
Expanding opportunities for women to be included in the economy represents asignificant market growth opportunity in and of itself. Already, women represent
85 percent of all consumer purchases and control US$20 trillion in global
spending.36 This figure could grow to US$28 trillion in the next five years, while
US$13 trillion in current earnings could climb to US$18 trillion in the same period.
Taking these two figures together, women represent a growth market more than
twice as large as the market in China and India combined.37 Meeting these
women’s unmet needs in healthcare and financial services represents a global
market opportunity.38 More broadly, female consumers continue to want and lackproducts and services that speak to their priorities, such as time, money, andwell-being;39 that are provided where and how it is most convenient to them; andthat acknowledge their consumer perspective as different from men’s.
Collaborating with women can also expand market penetration, particularly
among hard-to-reach populations. For example, Grameenphone and Telenor in
Bangladesh are giving female Grameen Bank customers mobile phones toprovide “village phone” services to rural areas with poor mobile penetration.
In addition, just as inclusive practices within companies foster innovation, theyalso contribute to more success in market expansion. A 2013 study by the Center
for Talent and Innovation found that companies that prioritized both demographic
diversity (e.g., representation of different genders and races) alongside acquired
diversity (e.g., diversity of opinion and mindsets40) in employment practices were
70 percent more likely to capture a new market and 45 percent more likely to
improve market share, in addition to generating more new ideas.
Inclusion Improves Operating Environments and Mitigates Risk
Inclusive economic conditions also support operational efficiency and stability.
Simply put, communities that perceive themselves to be excluded from thebenefits of large-scale commercial activity have the leverage to interfere withbusiness operations. There is also evidence that inclusive practices can improve
operational matters. Numerous examples exist of business discontinuity due toconcerns about exclusionary practices.
In China, for example, growing dissatisfaction and unrest among migrant workers
demanding access to social services, benefits, and wages have contributed tolabor strikes and disruptions in manufacturing operations in the country, creating
frustrations and bottlenecks in global supply chains. 41 This is an example ofwhere exclusions due to government policy—e.g., the hukou social benefit
system—has direct impact on business.
Community discontent over exclusion from decision-making and access toeconomic benefits from inward investment in the oil, gas, and mining sector also

34

World Bank, Global Consumption Database: http://datatopics.worldbank.org/consumption/market
Hammond, et al, 2007.
36
Gilhool, Jennifer, 2013.
37
Silverstein, M., and K. Sayre, 2009.
38
World Bank, 2014; Hewlett, S. and A. Moffett, 2014; Partners in Health, 2013.
39
Fabry, S., 2011.
40
Hewlett, S.; M. Marshall; L. Sherbin, Harvard Business Review, 2013.
41
The Economist, January 6, 2012.
35

BSR | Business Leadership for an Inclusive Economy

13has led to project delays, interruptions, and stoppages across the globe, as well
as security pressures that create cross-cutting tensions with communities,
governments, and investors.
There is also evidence that inclusive employment practices can strengthen theoperational efficiency of labor-intensive industries. Promoting access to goods
and services that support employee livelihoods and well-being, for example, has
a number of benefits to employers in the form of productivity, quality of work,
recruitment, and retention. BSR’s HERproject, which promotes access to healthand financial education for women working in export manufacturing, has found a
US$4:US$1 return from reductions in health-related absenteeism and turnover infacilities where the project operates.42
Moreover, an inclusive economy also helps ensure a robust talent pipeline tomaintain and improve operations. Youth unemployment and mismatches
between education systems and the skills required to meet companies’ needs,
coupled with aging populations of skilled workers, represents an impending
threat to operations, as well as a significant opportunity to secure competitive
advantage through inclusion. For example, almost 40 percent of energy workers
in the United States will be eligible to retire in the next five years. 43
At a macro-economic level, research shows that economic inclusion is an
important factor for stability and the broader business environment. By contrast,
excluded groups and individuals—such as the world’s more than 73 million
unemployed youth—may also be a factor in destabilizing societies, increasingsocial conflict, and reducing overall economic activity.44 For example, countries
with the greatest levels of inequality in the world suffer from homicide rates thatare almost four times higher than those of more equal nations.45 Moreover, lowhuman development, limited education levels, and lack of safety nets increase
market vulnerability to shocks resulting from diseases, natural disasters, andconflicts.
Inclusion Supports Long-Term Growth for Companies and Economies
The International Monetary Fund (IMF) has found that exclusion leads to lessresilient economies by reducing the duration of periods of economic expansion
and limiting an economy’s ability to withstand and mitigate financial, social,economic, and environmental shocks.46
Conversely, increasing the participation of excluded groups in economic activity
can create positive multiplier effects. For example, the benefits of women’s
economic participation are well documented, leading to improved household wellbeing and school enrollment,47 and contributing to increased GDP at national
levels. A 2013 report by the IMF found that closing gender gaps in employment
would increase GDP in the U.S. by 5 percent, in Japan by 9 percent, in United
Arab Emirates by 12 percent, and in Egypt by 34 percent.48
Increased purchasing power among lowest-income earners in the labor force
also provides overall economic benefit.49 In the United States, economists haveargued that an increase in the minimum wage would boost GDP. A 2013 update

42

Meiers, 2011.
Sullivan, A., 2013.
44
ILO, 2013.
45
Oxfam, 2014.
46
Berg, April 8, 2011.
47
Kabeer, 2013.
48
Elborgh-Woytek, Katrin, et al, 2013.
49
Keynes, J., 1936.
43

BSR | Business Leadership for an Inclusive Economy

14

by the Chicago Federal Reserve Board showed that increasing the federal
minimum wage to US$9 from the current US$7.25 would boost U.S. GDP by 0.3
percentage points, or US$48 billion, in the first year.50 Higher increases to wage
levels could exponentially expand and extend benefits to growth. 51
At an individual company level, greater diversity and inclusion can also improvefinancial performance. For example, a recent Credit Suisse report found thatcompanies with greater gender diversity in senior management have higher
returns on equity, higher valuations, better stock performance, and higher
payouts of dividends.52
It is clear that businesses have much to gain from supporting an inclusive
economy. The following section defines an inclusive economy and details how
businesses may engage effectively to support inclusion.

50

Smialek, J., 2014.
Ibid.
52
Credit Suisse, 2012.
51

BSR | Business Leadership for an Inclusive Economy

15

Business Leadership for an
Inclusive Economy
The proposition that underpins our strategy issimple: Leverage traditional business assets more
effectively in support of inclusion, and the shortand long-term benefits to business and society
alike will multiply.
We have seen that an inclusive economy mitigates risk, drives innovation,
expands markets, improves operational performance, and supports long-term
growth. These represent strong motivating factors for business leaders topromote inclusion.
As the primary engine of the global economy, business has a fundamental role,
responsibility, and self-interest in creating truly inclusive economic growth. Manycompanies are already looking at new ways to reach and empower people thathave been excluded from the economy. Tremendous potential exists to expand
on these efforts and to more fully leverage businesses’ core competencies andassets—employment, innovation, and investment—to unlock business
opportunities around the world with a focus on greater inclusion.
Our framework for business leadership for an inclusive economy is organizedaround three pillars:
1. Good jobs for direct and indirect employees
2. Access to essential goods and services, especially for marginalizedgroups
3. Investments for prosperous local communities
Figure 2: A Framework for Business Leadership for an Inclusive Economy

The inclusive economy pillars can be promoted effectively by individualcompanies through business-to-business partnerships and collaboration with
BSR | Business Leadership for an Inclusive Economy

16other actors. The relevance and significance of each pillar will differ acrossindustries and geographies, and the way they manifest themselves will also vary
greatly.
As individual companies build their inclusive economy strategies, they will need
to identify blind spots, understand risks and value opportunities, and findindividual and collaborative solutions. Priorities can be identified across different
spheres of influence: Companies can support the inclusive economy pillars within
their direct operations, across supply chains and with other business partners,
and within the broader economic environment.
Figure 3: Implementing an Inclusive Economy Strategy across Business
Operations

The remainder of this section explores each inclusive economy pillar in moredetail, introducing definitions, business motivations, frameworks for businessaction, and examples and outcomes of their application.
Underpinning the discussions that follow below are crucial foundational elements
to businesses’ practicing good citizenship in the communities where they
operate, source, and sell. These include respect for human rights, support forrule of law, tax compliance, and community dialogue and stakeholder

BSR | Business Leadership for an Inclusive Economy

17engagement. Where these activities are undertaken consistently, investments ininclusive growth are more likely to yield mutual benefit.

Pillar One: Good Jobs
Human capital is the cornerstone of any successful company, and employment is
one of the most basic ways that business enables people to achieve their goals
and participate fully in the economy.
While employment is necessary for inclusive growth, it is not sufficient to achievethat goal. Jobs that enable prosperous livelihoods in the 21st century havedifferent features than in the past. It is clear that we are living in a period of
substantial disruption, with economic, technological, and cultural/demographic
conditions changing very rapidly. In the mature economies, the promise of
lifelong jobs with defined benefit pensions are rapidly disappearing. In fastgrowing economies, new technologies and changing natural resource conditions
threaten to reduce employment opportunities in global supply chains, which—however imperfect—have provided a valuable entry point for tens of millions ofpeople into the formal economy over the past 30 years. For example,
researchers predict that 47 percent of the U.S. workforce is at high risk of
automation and, after several years of decline in middle-income jobs, it is now
low-income and low-skill jobs that are most likely to be automated.53 At the sametime, global “robot-driven” job creation could reach 1.5 million through 2016. 54
Demographic changes and the increasingly diverse societies and workforces that
result are both shaping and reflecting inclusive employment opportunities. The
advance of women in employment worldwide is well documented, and has beenan engine of economic advancement in multiple contexts. Global supply chains
have been populated in large part by women who had not previously been able
to participate in the formal economy. While stories of labor rights violations arewell known, these employment opportunities have also opened up immense
opportunity for many women. There is still more opportunity ahead: The
International Labour Organization states that 48 percent of women’s economic
potential remains unutilized, compared to only 22 percent for men.55
In addition, new economic models—such as the sharing economy and thecircular economy—present exciting opportunities for job creation and workforce
development, just as other developments may lead to job elimination. For
example, a recent report from the Green Alliance and WRAP predicted that ashift to the circular economy could create 200,000 new jobs in the U.K. 56
Companies that use or support those models can foster longer-term growth byintegrating considerations of good jobs into planned transitions, and by
supporting educational reform and vocational training that seek to prepare thecurrent and future workforce for employment in the context of such new models.
Some of these opportunities can be focused explicitly on lower-wage earners,
such as Gerdau Aza in Brazil, which pays low-income individuals to collect old
steel and aluminum, which is used as a primary input in their processing.
In light of these changes, employment that leads to more inclusive participation
depends not only on working conditions in one’s current job, but also skill
development over the long term. Moreover, this approach is greatly strengthenedby the existence of an enabling environment that promotes human capital

53

Frey, C., and M. Osborne, 2013.
PWC, 2014.
55
IFC, 2013.
56
Morgan, J., and P. Mitchell, 2015.
54

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18

development and ensures a viable social safety net. In the service economy aswell as in supply chain manufacturing, this means a focus not only on working
conditions and compensation in one’s current job, but also an effort to enable
workers to develop skills that they can apply elsewhere. This could mean
financial literacy skills that allow people to manage their resources, or training
and education that can be applied in one’s next job, regardless of whether that iswith their current employer.
This kind of approach is beneficial not only for individual employees, but also forenterprises and societies at large. Customer-facing employees—whether a store
associate, a bank teller, a call-center staff, or a café barista—who have higher
skills, greater job satisfaction, and a clear understanding and ownership of
responsibilities, will pay dividends in customer experience, efficiency, andprofitability.57 Along the value chain, suppliers who ensure their employees are
fairly paid, healthy, and respected are rewarded through reduced absenteeism,
higher productivity, and better communications between workers andmanagement.58 At a societal level, good jobs support consumer spending andinvestment. Higher earning and spending also contribute to tax revenues, whichbolster education, social services, and infrastructure, which in turn support higher
potential students and future employees.
Figure 4: Promoting Good Jobs, Best Practices
Direct Operations

Supply Chain andBusiness Partners

Broader Economic
Environment»

Pay competitive salary andbenefits which enable
employees to meet basic
needs, improve their standardof living, and build wealth overtime»

Promote compliancewith minimum
employment and humanrights standards with all
business partners

»

»

»

Support employee health andwellness»

Invest in workforce
development of current andfuture employees; anticipate“the future of work” needs intraining and hiring»»

Prioritize diversity andinclusion at all levels, andensure effective integration ofpolicies and practices acrossgeographies and business
units

Promote “good jobs”
with business partners
through advocacy ofliving wage, equal pay
for equal work,
workforce development
and training, and wellbeing programs (e.g.,financial inclusion,
health education, life
skills)Support labor policies
which enhance job
quality and productive
capacity, such as
minimum wage increases
in line with cost of living,mandated leave, oraccess to healthcare
Understand marketspecific exclusion risks—such as gender, race,
religion—and related
business risks (e.g.,
health, harassment,
grievances, etc.)»

Speak out about key
regional, national, or
global exclusion issues,
including gender, race,and others»

Support public educationand vocational school
enhancements to meet
anticipated future skills
needs

»

57
58

Promote employee investment
in company success throughroles and responsibilities,
stock options, andorganizational culture»

Identify high-risk worker
groups (e.g., women,
migrant workers,
indigenous people) anddevise strategies inpartnership with
suppliers to manage
risks for workers andemployersTon, Zeynep, 2014.
CIPE and SAI, 2009; Meiers, R., 2011.

BSR | Business Leadership for an Inclusive Economy

19Companies in many sectors have demonstrated in practice how these principles
can be put into action.
Providing Good Jobs in Direct Operations»

Consumer sectors—retail employees: Gap,59 IKEA (2014), Walmart,60 and Target61 (2015)
committed to voluntarily raise minimum wage of U.S. retail workers; IKEA made similarcommitments in Japan as well. Walmart and Starbucks have also committed to address shiftscheduling challenges for U.S. employees, and Walmart is designing a training andadvancement program for U.S. hourly employees. Offering competitive salary and benefits isgood for business too: Costco—which provides higher-than-average wages, fixed schedules for
employees that want them, and competitive healthcare benefits for employees—saw their shareprices triple between 2003 and 2013.62»

Extractives—local hiring and sourcing: Most companies today take steps to hire and source
locally, which is sometimes a requirement of government contracts. This may require skills
training, refined hiring requirements, and potentially paying slightly more to buy from local
companies. BSR worked with ExxonMobil to create a robust “national content” program fordeveloping a qualified local workforce and supplier base in Papua New Guinea.

»

Healthcare—Direct employees: BSR has worked with Novartis for the past decade to achieveliving wages for all direct company employees. Thus far, hundreds of employees around theworld have had their wages adjusted.

»

Information and Communications Technology (ICT)—diversity and inclusion: Many companies
are investing in talent pipeline issues. For example, Intel is investing in science and matheducation, with an emphasis on diversity, through the Girl Rising campaign and partnerships
with groups like Girls Who Code.63 Companies are also working to improve employment
practices and opportunities for advancement once hired. For example, women’s leadershipprograms and “unconscious bias” training for management.

»

Manufacturing—creating high wage jobs: Caterpillar employed 114,000 across 180 countries in
2014, and with wages 17 percent higher than other sectors, those jobs provide exceptional
opportunities to the people that fill them. Moreover, for every manufacturing job created, 2.2
additional jobs are created in direct support and service support capacity.64

Promoting Good Jobs with Business Partners and in Supply Chains»

Consumer sectors—supply chain workforces: Addressing wage issues across sourcing
countries is challenging. H&M’s Fair Living Wage project is seeking to show suppliers that wage
increases can support operations and profit.65 Beyond wages, companies are creating
partnerships to improve workforce well-being, acknowledging gaps in government capacity andlow levels of human development in sourcing countries. The Levi Strauss Workforce Well-Being
program works to address identified worker needs—like health, financial literacy, access towater and sanitation, and access to electricity—through partnerships with strategic suppliers
and NGOs. BSR’s HERproject promotes gender equality through programs promoting women
workers access to health and finance in light manufacturing, agriculture, and horticulture supply
chains.66

59

See: www.letsdomore.com
See: http://makingchangeatwalmart.org/factsheet/walmart-watch-fact-sheets/fact-sheet-wages/
61
Tabuchi, Hiroko, 2015.
62
Ton, Zeynep, 2014.
63
See: http://www.intel.com/content/www/us/en/technology-in-education/programs-for-women-andgirls.html
64
Caterpillar Sustainability Report, 2014.
65
See: http://about.hm.com/en/About/sustainability/commitments/responsible-partners/fair-livingwage.html
66
See: www.herproject.org
60

BSR | Business Leadership for an Inclusive Economy

20»

Extractives—influencing business partners: Leading examples include requiring extraction sites
to purchase certain categories of goods and services locally; requiring contractors—such as
EPCMs (engineering, procurement, and construction management firms), who build mines—touphold corporate local hiring and sourcing policies; and multiple mining companies operating insame geographic area acting to guarantee long-term sourcing contracts to spur development ofservice clusters, such as catering and manufacturing.

»

ICT—influencing business partners: The Electronics Industry Citizenship Coalition works
collectively to improve labor standards and support workforce development across
manufacturing supply chains. Such pressures are also extended to other business partners—
for example, Microsoft recently announced a new requirement for 2,000-plus U.S. contractors
to provide employees with 15 days of paid leave for illness and vacation, in light of gaps inregulatory requirements.67

Promoting Good Jobs in the Broader Economic Environment»

ICT—technology skills development: Cisco’s Networking Academies teach foundational skills in
ICT, alongside problem solving, collaboration, and critical thinking, to thousands of students
every year in 9,000 academies across 170 countries.68»

Extractives—building job skills for underrepresented groups: The Mining Skills Strategy in Chilebrought together 12 large mining companies, 30 suppliers, training institutions, and the Ministryof Labor and the Ministry of Mining to identify employment needs and mobilize public sector
investment, with a focus on inclusion of youth and women.69»

Manufacturing—building job skills for underrepresented groups: Caterpillar Foundation ispartnering with Global Communities and the Middle East and North Africa Youth Empowerment
Strategy (MENA-YES) to deliver industry-specific job skills training and access to finance foryouth ages 15-29 in Jordan, Lebanon, and Yemen.70

The provision of decent work continues to be an expectation of global business
today, and one of the primary mechanisms available to expand inclusive growth.
Addressing good jobs in the context of inclusion—paired with attention to
fundamental changes in the nature of jobs in a digital, connected, resourceconstrained, and automated world—will preserve economic opportunity for
individuals, deliver strategic advantage for companies, and build more resilient
economies.

Pillar Two: Access to Essential Goods and Services
While great progress has been made in recent years, many millions of people
around the world continue to lack access to essential goods and services,
including basic healthcare, financial services, energy, food, and information andcommunications technology. This represents missed opportunities for individuals
and communities to improve their standard of living and reduce poverty, as well
as missed opportunities for business for market expansion. Moreover,communities made up of individuals who lack access to crucial goods andservices are more vulnerable to shocks like natural disasters, making the broader
operating environment less resilient.
Maximizing access to essential goods and services not only has direct social
benefit, it also can add tremendous value for companies. The business benefits
include opportunities to reach new markets, enhance reputation, increase
innovation, strengthen workforce engagement and productivity (e.g., through

67

Miller, C., 2015.
See: https://www.netacad.com/web/about-us/about-networking-academy
69
World Bank, 2013.
70
See: http://www.globalcommunities.org/node/37464
68

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21

distribution of health products), and engage customers. For example, financial
inclusion initiatives ranging from product innovation to financial education haveresulted in 700 million previously unbanked people using financial products forthe first time through banks and mobile providers between 2011 and 2014. 71
Moreover, greater access to essential goods and services contributes to a betteroverall economic climate, particularly in developing markets. For example, a2014 report72 from Deloitte (commissioned by Facebook) posits that reaching 75
percent of the population in developing markets with internet access “could
generate US$2.2 trillion in additional GDP, a 72 percent increase in the GDP
growth rate, and more than 140 million new jobs”.73
Companies enable access in two main ways: as creators, manufacturers, andmarketers of their own products and services, and as facilitators of access toother companies’ products and services, as laid out in the table below.
Figure 5: Access to Essential Goods and Services, Best Practices
Direct Operations

Supply Chain andBusiness Partners

Broader Economic
Environment»

Integrate consideration of
marginalized consumer groups,
such as women, in design process

»

»

»

Develop pricing and customer
engagement models that consider
flexible financing terms for lowincome consumers (e.g., layaway
or pay-per-use), or crosssubsidized models from higherincome customers

Work with manufacturing
and processing partners
to produce more inclusive
goods

»

Encourage retail partners
to increase access for
marginalized customer
groups (e.g., throughmarketing and flexible
financing options)»

Promote repair and re-use
models and services
provision to expand
relevance and affordabilityof goods and services for
low-income consumers

Partner withgovernments todevelopmechanisms
through which
essential goods
and services canbe taken to market
through
intellectual
property andtechnical skills
transfer»

Help build publicawareness andtrust to support
behavior change
and uptake ofproducts andservices that
improve quality oflife»

Contribute to local
enabling
environment andinfrastructure for
distribution of
goods andservices»

Innovate end-use or re-use options
to engage lower-income customers»

Build capacity of service providers
or customer service agents toimprove access and enhancecustomer uptake»

Integrate consumer education
within product and service
marketing to increase uptake (e.g.,financial inclusion, healtheducation)»

Leverage mobile technology toincrease access to and reduce costof delivery of information, goods,
and services»

Promote access to essential goods
and services at work as part of
employee assistance programs for
low-income employees»

Explore innovative
distribution partnerships toreach new consumers,such as leveraging global
supply chains to reachfactory and farm workers»

Link microfinanceplatforms and otherbanking programs for lowincome consumers to
information and access toessential goods andservices

71

World Bank, Global Findex Report, 2015.
Deloitte, 2014.
73
Enright, 2014.
72

BSR | Business Leadership for an Inclusive Economy

22

Many examples of these best practices exist across sectors.
Promoting Access Through Product and Service Innovation»

Consumer sectors—product innovation to reach new customer groups: Danone has undertaken
many innovations for localization of products in developing countries, including designing a setof baby food products to serve different income groups in Indonesia.74 Getting low-income
consumers to buy products isn’t just about finding the right price point. For example, Unilevercreated local scent preferences to increase sales of their Lifebuoy soap in India, a hygiene
product designed for low-income customers.75»

Financial services—product and service innovation to reach new customer groups: The
Standard Chartered “Diva” account provides specialized services and features to female
customers in markets in Africa, South Asia, and the Middle East. They also offer women-onlybank branches in India and Sri Lanka.76 Working with BSR, Western Union has hosted a seriesof stakeholder summits to explore unique product and services needs for women, small
business owners, and civil society organizations. MasterCard Foundation is working withpartners to develop new products and services for customers in sub-Saharan Africa, and todevelop youth-oriented services in particular.77»

Healthcare—Innovative products to address neglected disease: In 2014, and after 20 years of
research and development, GlaxoSmithKline created a vaccine for malaria, one of the top
killers of children under 5 years old worldwide.78 Neglected diseases prioritized by healthcarecompanies for R&D and distribution of medicines include leprosy by Novartis, sleeping sickness
by Sanofi, blinding trachoma by Pfizer, flatworms by Merck KGA, soil-transmitted helminthes by
GSK and Johnson & Johnson, among other examples.

»

ICT—access to technology: Facebook’s internet.org seeks to improve internet access throughinnovations to expand connectivity in remote areas by using drones and through content
adaptations to reduce bandwidth.79

Promoting Availability and Accessibility Through Distribution Partnerships»

Consumer sectors—leveraging supply chains, retail outlets, and distribution networks: CocaCola’s Last Mile Partnership packages critical health products inside bottling crates, thenleverages the soft drink company’s rural distribution networks to reach isolated populations.80
Danone created a distribution model in Bangladesh that leverages female micro-entrepreneurs
as door-to-door sellers of low-cost nutritional products. Diconsa stores in Mexico, throughpartnerships with the government and service providers, distribute government benefits andprovide financial services to store customers in poor, remote regions, with the potential to reachup to 4 million households.81»

ICT—technology as a distribution network for essential goods and services: Mobile banking has
been one of the most significant innovations in providing financial services for the poor.
Vodafone and SafariCom’s MPESA products, developed and offered in Kenya in partnershipwith Equity Bank, are held up as the gold standard. Norwegian telecom company Telenor’s“Enable” initiatives create telemedicine and mobile banking service innovations for Telenorcustomers in Bangladesh, Pakistan, and other markets.82 Etisalat, a mobile provider

74

See: http://www.danone.com/en/for-all/mission-strategy/our-way-of-doing-business/adapting-tolocal-realities/
See: http://www.unilever.com/brands-in-action/detail/Lifebuoy/292086/
76
See: https://www.sc.com/en/about-us/diversity-and-inclusion/women-in-business.html
77
See: http://www.mastercardfdn.org/financialinclusion/program-strategies
78
See: http://www.gsk.com/media/281064/malaria-factsheet.pdf
79Nath, T.
80
See: http://www.coca-colacompany.com/press-center/press-releases/%20project-last-mileexpands-in-africa
81
Chaia, A. et al, 2010.
82
See: http://www.telenor.com/sustainability/extending-the-benefits/enabling-services/75

BSR | Business Leadership for an Inclusive Economy

23

headquartered in United Arab Emirates and serving African markets, has developed mobile
applications specifically targeted for businesswomen in Togo and Benin.83 BSR’s HERhealthprogram is partnering with Qualcomm’s Wireless Reach program in China to create a mobilebased platform to support health education and access to health services for female factory
workers in China.
Improving Affordability Through Innovation and Flexible Financing»

Healthcare—improving affordability of medicines: Pharmaceutical companies have createdtiered pricing systems based on need and income levels. They also distribute large quantities of
medicines for free through civil society organizations like such as Direct Relief, which collects
medicines for donation and then distributes to hospitals and clinics globally. Other approaches
to improve affordability are technology and intellectual property transfer, which enables local
companies to produce generic versions of more expensive drugs. For example, 99 percent ofGilead’s HIV therapy used in low- and middle-income countries is produced and sold bylicensing partners based in India and South Africa.84»

Manufacturing—improving affordability through training and flexible financing: Cemex’s
Patrimonio Hoy program provides training to local communities on how to produce their own
housing from Cemex cement and construction products, as well as offering flexible financing
schemes for low-income, rural communities to build their own housing over time (e.g., adding
rooms as the family grows).85

Promoting Availability and Acceptability Through Consumer Education»

Financial services—promoting financial literacy: ANZ Bank runs an extensive financial literacy
initiative, focused on building money management skills and confidence and linking to products
to reward saving.86 BSR helped adapt this corporate-wide commitment to new markets across
Asia.

»

ICT—supporting digital literacy: Intel’s SheWillConnect program seeks to overcome the gender
gap in technology access by providing women and girls with digital literacy training, the creationof online peer networks, and the development of tailored online content.87

To improve and scale efforts such as those described above, more inclusive
product design processes are essential. This can be accomplished throughstakeholder engagement processes, new market research approaches, and cocreation and consultation with target customer groups. Great examples of thisexist, as well as tools—such as IDEO’s Human Centered Design Toolkit.
However, many industries and individual companies have yet to adopt theseprocesses effectively or to use them to their full potential.
Opportunities also exist to evolve and innovate customer financing models,leveraging mobile-based and other technology-supported financial products andservices. For example, expanding pay-per-use and pay-as-you-go businessmodels, as well as innovating “shareable” products to expand access for
marginalized groups. For example, many women in the developing world might
opt to share mobile phones as an interim step to purchasing their own. The
sharing economy more broadly offers exciting opportunities to increase accessby allowing use of products and services without full ownership.

83

See: http://www.gsma.com/mobilefordevelopment/gsma-mwomen-grantee-etisalat-launches-weena
See: http://www.gilead.com/responsibility/developing-world-access/access%20partnerships
85
See: http://www.cemex.com/SustainableDevelopment/HighImpactSocialPrograms.aspx
86
See: https://anz.com/about-us/corporate-responsibility/framework/financial-capability/
87
See: http://www.intel.com/content/www/us/en/technology-in-education/she-will-connect-programclose-gender-gap-video.html
84

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24

Distribution often remains the last hurdle to getting essential goods and services
to isolated populations. Access may be extended by exploring shared distribution
networks or outsourcing distribution to private providers, rather than individualcompanies maintaining branded distribution systems. Such collaboration could
potentially result in cost savings for both companies and their customers.
Moreover, business-to-business distribution partnerships—building on the CocaCola Last Mile partnership model, which packages critical health products insidebottling crates to reach isolated populations via the company’s rural distribution
networks—hold significant potential as well.
Many of the examples shared in this section focus on low-income consumers indeveloping countries. However, significant opportunities also exist for large
businesses to partner with social entrepreneurs and civil society organizations to
replicate successful developing world models with low-income consumers inmature markets.
Access to products and services has been one of the great success stories of theera of globalization that has taken hold over the past 30 years. Extending thisthrough innovation based on those currently excluded from the formal economy
will deliver both great human benefit and significantly expanded market
opportunities.

Pillar Three: Investments for Prosperous Local Communities
Global businesses have significant impacts on local communities where they
make investments through supply chains, exploration and production of natural
resources, establishing retail presence, or building infrastructure. The
deployment of these investments can ensure that maximum economic benefits
accrue for both business and communities.
Companies that make investment decisions that generate local economic benefit
can reap benefits of their own, including securing social license to operate andincreased social stability, catalyzing local economic “ecosystems” that improve
economic conditions, and enhancing risk mitigation on issues such as poor public
governance and corruption. For example, a 2011 survey of 40 extractives
industry leaders, insurers, law firms, and research institutes suggested that amajor mining project could lose US$20 million per week if conflict delays
production.88
Inclusive community engagement and investment can also deliver returns at a
macro-economic level. For example, if people are better able to access healthservices because of improved roads, transport services, health facilities, orservice providers, productive capacity of the whole community is increased.
Local content requirements89 are becoming increasingly widespread—particularly
for companies in the energy and extractives, and heavy manufacturing sectors—
in an effort to extend the benefits to communities generated by multiyear
investments. While challenges exist to implementation, there are strong businessincentives for local sourcing and hiring because they can help build pipelines ofskilled labor at technical and managerial levels and hedge risks of cost escalation

88

Davis and Franks, 2011.
“‘Local content’ refers to the added value brought to a host nation (or region or locality) through:Workforce development, including employment of local workforce and training of local workforce; andinvestments in supplier development, including developing supplies and services locally; andprocuring supplies and services locally.” (IPIECA, 2011)89

BSR | Business Leadership for an Inclusive Economy

25due to increasingly expensive and complex logistics chains, while at the sametime supporting social license to operate and workforce productivity. 90
Sustainable local enterprises are a cornerstone of prosperous communities.
Companies invest in enterprise development through access to capital, technicalskills development, and providing market linkages for products and services.
Enterprise development also offers particular opportunities to target excluded orunderrepresented groups, such as women, youth, or indigenous groups, toenhance their economic participation and contributions. For example, CocaCola’s 5x20 commitment has provided business training and improved access tocapital for 300,000 female entrepreneurs across the company’s global value
chains.91
Infrastructure development supports local economic development, business
operations, and long-term competitiveness. These investments can be very
effectively leveraged for community benefit. For example, mining companies are
increasingly installing fiber-optic networks along their grids, railroad tracks, andpipelines to monitor infrastructure reliability and safety.92 The added cost ofextending these networks to nearby communities is incremental. Costs could befurther reduced through partnerships with technology companies interested in
expanding internet access. For example, Compania Minera Antamina partneredwith Teleonica del Peru to extend mobile connectivity to communities along themine’s pipeline.93
Strong rule of law and good governance are also essential ingredients toensuring local economies thrive and public services meet the needs of citizens.
Companies across industries are investing in collaborative efforts to fightcorruption and promote good governance. The Extractive Industries
Transparency Initiative, for example, promotes full disclosure of taxes and otherpayments made by oil, gas, and mining companies to governments. The BSRchaired Maritime Anti-Corruption Network, which seeks to eliminate corruption in
the maritime industry by tackling root causes of corruption in hotspot regions, isanother example.
Best practices in company operations, supply chains, and the broader economic
environment are outlined in the table below.

90

World Bank, 2013.
See: http://www.coca-colacompany.com/stories/5by20
92
Toledano, P. and Roorda, C., 2014.
93
Ibid.
91

BSR | Business Leadership for an Inclusive Economy

26

Figure 6: Investments for Prosperous Local Communities, Best Practices
Direct Operations

Supply Chain and Business
Partners

Broader Economic
Environment

»

»

»

Engage inanticorruption efforts,
including promotion ofrevenuetransparency, ideallyin collaboration withother companies.

»

Collaborate with local
and national
governments to
identify and addresscommunity needs,
workforce skills gaps,
and infrastructure
concerns.

»

Identify communities
impacted by decisions
concerning location ofoperations, whether throughinfrastructure, natural
resource extraction, retailpresence, or others, andconduct social andenvironmental impact
assessments that include
local communities.
Promote local economic
development and vitality
through procurement
policies, skills development,
business incubation,
infrastructure investments,
and investments incommunity needs.

»

Encourage suppliers andother partners to practiceinclusive community
engagement and investment(e.g., contributing to
infrastructure, like roads andelectricity; hiring local
individuals and business
partners; and investing incommunity needs, such as
health, sanitation, safety, andeducation.
Devise and practiceprocurement policies that
promote local sourcing andsmall business capacity
development, and encouragebusiness partners to do thesame.

Many examples of these best practices exist across sectors.
Promoting Prosperity Through Local Content (Hiring and Sourcing) and Enterprise
Development»

Extractives—supporting enterprise development: To support local economic diversification,
Teck Resources Ltd. supported a program to enhance the competitiveness of the tourism
sector in Andacollo, Chile. ExxonMobil investments in Papua New Guinea have incubated local
businesses providing road maintenance, timber, and plant and equipment leasing, as well as a
women’s agricultural group.94»

Financial services—investing in economic revitalization: Prudential leverages its investment
portfolio for economic development. In 2014, the company committed to a US$1 billion portfolio
in impact investing to support social enterprise and real assets in high-need communities andto act as financial intermediaries to community banks and microfinance institutions.95 JPMorgan
Chase made a major commitment to Detroit’s revitalization after the city filed for bankruptcy in2013, providing US$25 million over five years to support renovation of abandoned homes;
US$12.5 million to provide job training for residents; US$12.5 million to grow small businesses
and improve city infrastructure, including a new streetcar system; and US$50 million tocommunity lending to redevelop a set of high-potential neighborhoods.96»

Food, beverage, and agriculture—investing in local supplier capacity: As changing climates,
droughts, and labor shortages challenge farms around the world, companies in the industry
know that the skills and financial stability of farmers underpin the resilience of their supply
chains. To help build this resilience, numerous companies support farmer training and technicalskills development, helping farms improve crop yields and quality. Financing programs areanother major area of focus in supplier development. Starbucks, for example, takes a multi-

94

See: http://pnglng.com/commitment/national-content/supplier-development/meet-local-businesses
See: http://www.prudential.com/view/page/public/31314
96
Yaccino, S. and Silver-Greenberg, J., 2014; Tankersley, J., 2014.
95

BSR | Business Leadership for an Inclusive Economy

27tiered approach with farmer support centers that provide technical training, a loan program for
qualified farmers, and social investments in farming communities.97 In Ghana, Nigeria, andTanzania, Unilever is working with partners to develop a cluster of enterprises to supply
Allanblackia oil (a sustainable alternative to palm oil) through entrepreneur training andfinancing, community development, and by providing initial market access and set prices for
products.98»

Various industries—supporting women entrepreneurs: Coca-Cola’s 5x20 commitment isestimated to have provided business training and improved access to capital for 300,000
female entrepreneurs across the company’s global value chains,99 and Walmart has changed
sourcing models and provided training and mentoring to increase the percentage of goods
sourced globally from women-owned businesses.100 ExxonMobil has developed a mobile
application to provide business training and advice to female entrepreneurs; it has also
partnered with the UN Foundation to conduct extensive research into effective strategies toinvestment in women’s empowerment.101 Goldman Sachs 10,000 Women has provided
business training to more than 10,000 female entrepreneurs across 43 countries; the company
has now launched a US$600 million fund to encourage banks in local markets to lend to
women-owned SMEs.102»

ICT—growing local enterprise and global markets: eBay’s Opportunity Project supports thedevelopment and expansion of social enterprises all over the world, through training andfinancing programs, and helps connect them—when relevant—to eBay’s global marketplace tosell their goods online.103

Promoting Prosperity Through Investments in Infrastructure»

Financial services—enabling commerce: In a stakeholder engagement platform facilitated by
BSR, Western Union learned of the impacts of corruption on teacher pay and school resourcesin Africa. To address the issue, the company created NGO GlobalPay, which has helped morethan 700 NGOs safely send US$2.3 billion around the world since 2013.104»

Extractives—extending infrastructure investments to local communities: Compania Minera
Antamina in Peru partnered with Teleonica del Peru to extend mobile and internet coverage tocommunities near the mine, connecting to a fiber-optic network installed by Antamina forpipeline management.105»

Food, beverage, and agriculture—infrastructure investments in supply chain communities: In
Nigeria, Diageo built a new road to connect one of their production and distribution sites andthe surrounding communities to main Lagos road networks.106 In India, PepsiCo manufacturing
facilities achieved positive water balance in 2010 and 2011, restoring 14.7 billion liters in 2011.
In Jordan, PepsiCo partnered with the Ministry of Water and Irrigation to fund the construction
cost of the Wadi Al-Ahmar dam project, which will collect rainwater for distribution to local
communities and for ecosystem rehabilitation.107

97

See: http://www.starbucks.com/responsibility/community/farmer-support
See: http://api.ning.com/files/zKp*NapaDOK9pQVWQ17SSSV3bwTvA9RHlDJHZfu2lTPtVoU0z5hY2mRw9kADT2vrU*Kq0rhifnsKgDGEAyGe2SZVzggcd2/IBLFCaseUnileverNovellaAfrica.pdf
99
See: http://www.coca-colacompany.com/stories/5by20
100
See: http://cdn.corporate.walmart.com/ea/cc/20f1ac8c4bb88f9640f58cdc45dc/global-womenseconomic-empowerment-initiative-fact-sheet-2013.pdf
101
See: http://corporate.exxonmobil.com/en/community/womens-economic-opportunity
102
See: http://www.goldmansachs.com/citizenship/10000women/index.html
103
See: http://www.ebayinc.com/social-innovation/economic-opportunity
104
See: http://business.westernunion.com/industry/non-governmental-organizations/globalpay/
105
Toledano, P. and Roorda, C., 2014.
106
See: http://srreport2012.diageoreports.com/our-impacts/socio-economic-development/communityinvestment/supporting-local-interests-and-infrastructure.aspx
107
See: http://www.pepsico.com/Purpose/Environmental-Sustainability/Water.html
98

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Promoting Prosperity by Building Social Capacity and Institutions»

Extractives—aligning social investments with community needs: BSR works with many of ourmembers to conduct social impact assessments to inform their investments. For example, BSR
conducted a socio-economic baseline assessment with Rio Tinto in the United States. We also
conducted multiple socio-economic assessments for Shell in the United States, leading to thedevelopment of investment priorities informed by local communities. In Chile, BSR is working
with Freeport-McMoRan to support inclusive community engagement and development—
expanding the number of voices included in organized roundtables—as well as designing andimplementing social investments in partnership with community members.

»

Various industries—promoting rule of law and good governance: More than 90 of the world’s
largest oil, gas, and mining companies are supporting members of the Extractive Industries
Transparency Initiative (EITI), which promotes full disclosure of taxes and other payments
made by oil, gas, and mining companies to governments. The Maritime Anti-Corruption
Network (MACN), of which BSR is the secretariat, is a global business network that seeks toeliminate corruption in the maritime industry by tackling root causes of corruption. Member
companies adopt MACN’s seven anticorruption principles and support collective action
partnerships in hotspot regions.108

Global companies also have the opportunity to catalyze investments ininfrastructure that meets acute local needs. This can deliver added benefit when
it looks to align environmental goals and community needs more explicitly, forexample by promoting low-carbon development and access to sustainableenergy. Some mining companies are already implementing solar energy
investments and building desalination plants in locations where they operate withunreliable or unusually carbon-heavy power systems. One example of this is acommitment by SunEdison to connect 20 million people in India to solar power by
2020. The project will be implemented via SunEdison Social Innovations, abusiness group focused on developing new business models and technology forpoor rural environments, in partnership with the Rockefeller Foundation.109
Companies can also seek opportunities for collaboration with other local
businesses to invest in local infrastructure that benefits local communities andimproves the business climate. A number of factories operating in the sameneighborhood, for example, could work together and with their buyers to promotewater and sanitation access for surrounding residential areas and family farms.
This would largely benefit their own workforces, and pooled resources could savemoney.
Economically prosperous and stable communities, individuals with access toessential goods and services to support their well-being and realize theirpotential, and skilled and satisfied workforces are all vitally important tosustainable business and economic growth. Investing core business assets inthese pillars of the inclusive economy—in ways we know work, as well as new
ways we haven’t yet tried—will help advance innovation, expand markets,
maximize operational performance, and sustain long-term growth.

108
109

See: http://www.maritime-acn.org/#home
Bloomberg Business, Feb. 25, 2015.

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Our Approach to Advancing an
Inclusive Economy: Insight,
Integration, Collaboration
An inclusive economy will result when the unique skills and resources of all
sectors—business, civil society, and government—are aligned toward that goal.
As a global nonprofit business network dedicated to sustainability, BSR has
unique assets to examine, encourage, and lead business action andcollaboration.
As outlined in the previous section, much potential exists for business leadershipfor an inclusive economy, through efforts in companies’ own operations, withbusiness partners, and in the broader economic environment.
To support business leadership for an inclusive economy, we will seek topromote business action related to all three pillars of an inclusive economy—
good jobs, access to essential goods and services, and investments forprosperous local communities. Business respect for human rights serves as animportant foundation for our work.
Building on our strengths as an organization, we will promote businessleadership through insight into key business trends impacting on and benefitingfrom inclusion, integration within companies to build more inclusive businesspractices across operations, and collaboration across industries and with otherstakeholder groups including government, civil society, and philanthropies, topromote inclusion of marginalized groups in economic activity.
To focus our approach further, we have identified the following thematic priorities:»»

Women’s economic participation: Both because women constitute theunderrepresented half of humanity and because of the demonstrated
multiplier effects of focusing on women as a catalyst of development
generally, we see further inclusion of women in the global economy as a
crucial priority. Women stand to benefit significantly from efforts to promote
quality employment, access to goods and services, and investments that
stimulate and support local economic development. Moreover, BSR has
been working to promote women’s empowerment for more than 15 years,
enabling us to bring both our own expertise and a global network of partners
to advance this work.
Job automation and employment: New technologies such as robotics and
3-D printing will dramatically transform manufacturing and global supply
chains in the coming decades. These developments are coming at a time
when productivity and employment have already been decoupled in amanner and to a degree that has not been seen for decades. Automation will
have multiple impacts on job availability and quality. These changes coulddeliver changes to global manufacturing at the same magnitude as the rise of
global supply chains more than a quarter century ago, creating demand for a
new set of workforce skills while simultaneously eliminating countless jobs
that, while not perfect, have offered an entry point to the formal economy for
millions of people, including millions of women. Just as the rise of global
supply chains presented the need to balance the opportunities from
distributed manufacturing and social and economic impacts, the samebalancing act will be needed as these technologies are adopted widely. BSR
intends to build on its record of working with companies to find ways toadvance technological and other innovations, with a commitment also to

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»preserve employment levels and quality needed to sustain a vibranteconomy.
Preserving inclusive economic opportunity in mature markets: Matureeconomies (primarily the United States, Europe, and Japan) are facing
economic stagnation at a scale not seen in the post-World-War-II era. While
this has grown more acute since the financial crisis, chronic
underemployment and wage stagnation, as well as pressure on social safety
nets, has been building for a quarter-century. These conditions are leading toincreased poverty rates and disproportionate unemployment for traditionally
excluded populations, including racial minorities, youth, and women.110 The
organized corporate sustainability field has tended to focus much of its
attention on conditions in emerging economies. Current conditions suggestthat renewed attention be paid to preserving widely shared economic
opportunity in more developed markets, which are at a crucial juncture.

Over the course of 2015, we will publish subsequent papers on these themes asa means of promoting business action and collaboration. In each case, we will
share our perspective on the importance of the issue within an inclusive
economy, the challenges to be overcome, the role of business in overcoming
those challenges, and BSR’s intended contribution to that effort.
This initiative, while focusing on topics of emerging importance, builds on a twodecade record of leveraging business activity for broader social benefit. In
pursuing new efforts to advance an inclusive economy, we will build on ourrecord of working with our member companies to integrate human rights andbusiness, inclusive supply chain practices, robust stakeholder and community
engagement, and transparent reporting. As we build our inclusive economy
initiative, we will seek to elevate our attention to ways that this work can increase
economic opportunities for those who are currently underrepresented.
As noted above, BSR will promote business leadership for an inclusive economy
through insight, integration, and collaboration.
Insight into Key Business Trends Impacting Inclusion
BSR will conduct research and promote dialogue to increase awareness about
how inclusion can serve as an effective strategy to gain full advantage in today’s
global marketplace.
We will focus our research efforts around two main areas. First, we will undertake
research to promote economic participation of excluded groups, including womenand at-risk groups in mature markets, by collecting relevant data and bestpractices to inform recommendations for voluntary business action, as well as
actions required by other actors, such as government and civil society, to build amore inclusive economic environment.
Second, we will undertake research to understand mega-trends impacting on
inclusion. Focusing initially on the impacts of automation and advanced
manufacturing on job availability and quality, we will seek to illuminate a diverse
business community perspective—from creators of technologies, to employers
who intend to use technologies, to the workforce that will be impacted by the
adoption of technologies. Drawing on this perspective, we will seek to define
opportunities for ensuring that achieving technological breakthroughs coexists

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31

with a commitment to preserving livelihoods and creating opportunities in the new
economy, through individual business action and collaborative platforms.
Integration to Build More Inclusive Business Practices
BSR will work with our member companies and other key partners to enableeffective integration of the inclusive economy pillars within companies’
operations. Doing so will support realization of the benefits of inclusion—from
innovation, to expanded market share, to operational performance, to long-term
growth.
The inclusive economy pillars provide a framework for business action. We will
work with our members to realize the potential of that framework for theirbusinesses, and to evolve and improve the framework over time through BSR’s
core sustainability service offerings.
Inclusive economy priorities manifest differently across industries, and BSR’s
industry teams will integrate our inclusive economy initiative accordingly.
Collaboration to Promote Inclusion of Marginalized Groups
BSR will support collaboration to realize the full potential of business leadershipfor an inclusive economy. In particular, we see strong potential to use
collaboration to help businesses more effectively engage marginalized groups ineconomic activity—whether promoting quality employment opportunities,
improving access to products and services, or increasing participation incommunity dialogue and decision-making. We will prioritize this objective for
BSR’s collaborative efforts, through existing and new collaborative initiatives, byfacilitating stakeholder engagement and by engaging non-business actors inresearch, convenings, and initiatives.

Next Steps: Promoting Dialogue and Engagement
As collaboration is necessary for meaningful progress, we felt a collaborative
dialogue would be the appropriate way to launch our strategy. In spring andsummer of 2015, we will conduct a series of interviews and in-person events withthought leaders and practitioners from business, civil society, academia,
government, and philanthropy. These conversations will help open a discussion
regarding “Business Leadership for an Inclusive Economy” beyond BSR’s own
view.
Working from farm to factory to the boardroom, BSR works with more than 250
companies across eight industry clusters, integrating sustainability into strategy
and operations, fostering innovation and new solutions, and promoting
collaboration with business and stakeholders to produce systemic andsustainable progress. The companies in BSR’s membership directly employ
more than 16 million people and many more in their supply chains, recorded
revenue of US$6.4 trillion in 2013, and are present in every country on theplanet. We hope to harness the reach, influence, and commitment of ourmembers and partners to truly advance progress toward a more inclusive
economy.
We believe strongly in the potential of business to lead the way to a more
inclusive economy, a process that we believe will create inclusive prosperity forbusiness and society alike. We look forward to collaborating with you on thatjourney, from conversation, to leadership efforts, to collective action.

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