As stakeholders expect more accountability and transparency on environmental, social and governance (ESG) issues, businesses are increasingly recognizing that a sole focus on profitability is not enough for long-term sustainability and competitiveness.
The COVID-19 pandemic has turned the spotlight on the social aspect of ESG like never before, while the proliferation of digital technologies has enabled businesses to address concerns. These include reimagining new ways of engaging customers and the workforce, as well as expanding access to products and services for underserved communities. Together, these factors underpin an imperative for companies — regardless of their size, sector or market — to seriously consider how a shift toward an inclusive business (IB) model can enable them to achieve a greater ESG impact.
Southeast Asia’s huge population of more than 600 million holds much potential for more businesses to adopt the IB model, particularly in countries with higher rural populations. However, many companies may not fully grasp what IBs are and how to build or shift toward such a business model.
To be clear, IBs are organizations that provide livelihood opportunities and close access gaps for people living at the base of the economic pyramid. They do this in commercially and financially self-sustaining ways by focusing on poor and underserved individuals across their value chain as suppliers, service providers, distributors, retailers or customers.
Large organizations are particularly well-positioned to play a leading role in driving inclusiveness in business, given their extensive resources and supply chains. For example, Tony’s Chocolonely, a global chocolate producer in the Netherlands, is committed to operating with a supply chain that is free from illegal child labor and modern slavery. It also uses a transparent BeanTracker system to determine the precise location and quantity of purchased cocoa beans in real time to help maintain supply chain integrity.
It can be more challenging for smaller firms with limited resources, whether in terms of know-how or budget, to shift the needle on inclusiveness. Yet, some smaller companies are “IB natives”, or entrepreneurial businesses that have put inclusiveness at the heart of their value proposition. In Southeast Asia, three winners of the EY Entrepreneur Of The Year awards come to mind as good examples: eFishery, QL Resources Berhad and Hybrid Social Solutions.
QL Resources Berhad is an integrated agribusiness group that extends financial assistance to help fishermen own or modernize their fishing boats. In turn, QL has the right of first refusal for their catch. This arrangement provides QL with a stable source of fish supply for production, while fishermen can be confident of having an established buyer at a fair price. It is a sustainable lifeline for many fishing families.
Hybrid Social Solutions is a social enterprise that provides rural and off-grid communities as well as the underserved remote, on-grid communities in the Philippines with sustainable access to high-quality, affordable solar technologies.
Finally, eFishery is an Indonesian aquaculture intelligence company that leverages Internet of Things technology to offer an end-to-end platform. The platform provides fish and shrimp cultivators with access to feed, funds and customers, while enabling more Indonesians to buy high-quality fish at affordable prices.
In many ways, digital technology has enabled IBs to emerge, serve and thrive. Having said that, in the less developed regions, the risk of a widening digital divide between the haves and have-nots is also real. This in itself is an opportunity for technology-related companies to explore a key issue: how can they create a business that leaves no one behind — and leaves no one offline?