Verraki: Inclusive Business Models for Lasting Social Impact and Sustainability

In March 2023, we published our first Inclusive Business (IB) report which emphasized the need for organisations to embrace IB models to drive both commercial success and development impact, the ‘WHY’. We reiterated the definition of IB that was echoed in the 2018 G20 summit: the (intentional) provision of goods, services, and livelihoods on a commercially viable basis, either at scale or scalable, to people living at the base of the pyramid (BoP), making them part of the value chain of companies as suppliers, distributors, retailers, or customers. Given the realities of our demographics and income inequalities, there is no gainsaying that our path to economic growth necessarily requires those at the base of the pyramid to become significant contributors to the value chain of companies as employees, suppliers, distributors, retailers, customers, and consumers. As such, inclusive business models serve as a path to realizing the huge market potential that Nigeria portends.
In this edition, we will look at inclusive business models from social impact and sustainability perspectives. Arguably, both themes have increasingly shaped the global business landscape over the last three decades and continue to dominate policy discourse around issues such as environment, diversity, inclusion, economic deprivations, and the future generations. Inclusive business models leverage an organization’s drive for positive social impact and sustainability. This is the kernel of this publication.

So why are social impact and sustainability concerns important?

In today’s rapidly changing world, sustainability has become crucial for businesses. They are increasingly recognized as strategic business imperatives that contribute to commercial success and resilience in a rapidly changing world. Sustainability drives long-term viability, corporate risk management, market competitiveness and innovation, amongst other direct benefits. Engaging with and supporting local communities is a vital component of social sustainability. Businesses can contribute by investing in community development projects, creating jobs, supporting local educational initiatives, or participating in volunteer programs.

Inclusive Business & Social Impact

In recent years, the intersection of business and social impact has become a focal point for enterprises seeking to drive positive change. Inclusive business models are a powerful exemplar of this synergy —a strategy that not only aims for financial success but also prioritizes positive social outcomes. The links between inclusive business and social impact are not only evident but also integral to fostering sustainable development on a global scale.
Environmental Sustainability: Many inclusive businesses incorporate sustainable and eco-friendly practices into their operations. By doing so, they address environmental concerns, contributing to the well-being of communities.
Creating Access to Essential Services: Inclusive businesses often target sectors such as healthcare, education, and sanitation, aiming to bridge gaps in access to essential services.

Mitigating Social Inequalities

Social inequalities, the disparities in opportunities, resources, and outcomes that exist among individuals or groups within a society, are a defining feature of the modern world. These inequalities are often rooted in historical injustices, geographical disadvantages, and limited economic opportunities, pose significant challenges for inclusive growth, and have far-reaching implications for individuals and societies. Nonetheless, addressing social inequalities is not just a moral imperative; it is also essential for creating fair, prosperous, and sustainable societies. One of the most visible forms of social inequality is economic inequality. According to the 2022 World Inequality Report, the richest 10% of the global population currently takes 52% of global income, whereas the poorest half of the population earns 8.5% of it. Tackling income inequalities is by creating jobs and livelihood opportunities. By providing employment to disadvantaged individuals, these models not only put money in the hands of those who need it most but also offer a pathway to improved economic well-being. Also, prioritizing education as a focus area in inclusive business is not only a socially responsible endeavour but also a strategic investment that can yield long-term commercial returns.

Addressing Gender Inequalities

Inclusive business and gender inequality are intricately linked, and addressing gender disparities is a key aspect of promoting inclusivity. Gender-based barriers often limit women’s access to employment, entrepreneurship, and economic opportunities. Gender equality is not just a matter of social justice; it is also a strategic imperative for business. Achieving gender equality makes positive impacts on organizational performance, innovation, and sustainability. According to the 2021 Gender Inequality Index (GII) of the UN (which focuses on reproductive health, empowerment, and economic status), global GII has improved only marginally from 0.581 in 1990 to 0.465 as of 2021.

How can inclusive business models help?

The empowerment of rural women and girls through education, skills training, and awareness-raising campaigns can help break the cycle of gender disparities and promote more inclusive and equitable rural communities. Inclusive business models can play a significant role in addressing gender inequalities. They can promote gender equity by creating economic opportunities, supporting women’s empowerment, and challenging traditional gender roles and biases. The models can demonstrate that businesses can be powerful agents of change and contribute to a more equitable society where women have equal access to opportunities and the ability to fulfil their potential.

Inclusive Business & Sustainability#

The synergy between inclusive business and sustainability is evident in the shared commitment to addressing social, environmental, and economic challenges. By integrating sustainability principles into their business models, inclusive businesses create a positive impact on people, the planet, and profit in their shared commitment to creating positive and lasting impacts. By aligning economic success with social and environmental responsibility, businesses can contribute to a more equitable, resilient, and sustainable future.

Mitigating Environmental Challenges

Since the Industrial Revolution, environmental problems have become increasingly widespread globally and currently constitute an existential threat to mankind. These challenges are manifested either as climate change, pollution, or loss of habitats, and collectively responsible for global warming, severe storms, increased draughts, more poverty, and displacement. About half of the world’s population, approximately 3.3 billion people, lives in rural areas, and 90% of those people live in developing countries. Rural areas in developing countries are characterized by a dependence on agriculture and natural resources; high prevalence of poverty, isolation, and marginality; neglect by policymakers; and lower human development.

How can Inclusive Business Models Help to Promote Environmental Sustainability?

Inclusive business models can play a significant role in addressing climate change issues in rural communities by promoting sustainable and environmentally responsible practices while also supporting economic development and social inclusion.

Lessons for Business Leaders and Policy Makers

The synergy between inclusive business and social impact is a dynamic force for positive change. As businesses increasingly recognize the interconnectedness of economic success and societal well-being, the inclusive business model serves as a beacon of inspiration. By aligning financial success with a commitment to addressing societal challenges, inclusive business models provide a roadmap for businesses seeking to make a lasting and meaningful contribution to the well-being of individuals and communities around the world. By integrating sustainability principles into their business models, inclusive businesses create a positive impact on people, the planet, and profit in their shared commitment to creating positive and lasting impacts. It is essential for businesses, policymakers, and society at large to continue fostering an environment that encourages and supports enterprises committed to both profit and positive social impact.
It is logical to conclude from the above that inclusive business models demonstrate that profitability, social impact, and sustainability can go hand in hand. They hold the promise of making the concept vital for the modern era. Business leaders and policymakers can draw valuable lessons from this concept to drive positive change. Inclusive businesses create win-win scenarios by fostering economic growth, social inclusion, and environmental responsibility. By partnering with local communities and embracing sustainability, these models not only address societal challenges but also benefit from resilient, long-term business opportunities.