Creating shared value through inclusive business strategies

Create Shared Values

Executive Summary

The concept of shared value aims to address social needs in a way that is commercially viable for businesses. It provides businesses with an opportunity to improve competitiveness whilst simultaneously addressing global challenges and contributing to development. This paper focuses on addressing poverty through interventions in a company’s value chain that can provide opportunities for poor people whilst also providing commercial benefits for the business through improving the competitiveness of the value chain. Two-thirds of the world’s population lives in poverty and many of them lack access to basic services. Poor people alone are often unable to improve their economic prospects and inclusive business interventions are aimed at creating economic opportunities for them along commercial value chains. Women are often particularly vulnerable and being aware of gender issues along value chains is an important aspect of development. The same is true of human rights since poor people are vulnerable and prone to being victims of abuse.

The private sector has been a huge alleviator of poverty, creating the jobs and wealth that can provide people with economic opportunities through employment and supply chain opportunities for small businesses. But there is more that the private sector can do and many businesses are increasingly interested in finding solutions to reduce poverty, engaging the poor and contributing to the development process.

Inclusive business strategies seek to contribute towards poverty alleviation by including the poor and low income communities in its business processes in a commercially viable way and increasing the competitiveness of its value chain. Successful inclusive business strategies should be based on three characteristics:

  • Improved living conditions for poor people: Increased incomes and employment opportunities, increased knowledge and skills, access to markets, improved infrastructure, access to goods, services and premium prices benefiting poor communities.
  • Shared value creation: Low-income communities are integrated into efficient value chains of leading companies in a productive way, increasing incomes, improving living conditions and creating a more competitive value chain.
  • Commercial success for businesses: Lower supply costs, increased productivity, improved quality, differentiation opportunities and market expansion through the inclusion of poor people creating long term economic value.

 

Thus the inclusive business approach will leverage a range of innovative initiatives that allow a lead business to include poor communities into its value chain, generating shared value for the business and those communities. It creates growth, productivity, profits and new opportunities for the business, at the same time generating income and wealth for the poor and creates a potential win for the environment and resources by introducing more sustainable techniques and technologies.

 

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