Can business succeed where charity has fallen short?

Authors

Dan Gray

EY Global Corporate Responsibility Knowledge Leader

Purpose-driven strategist. Sustainability and social entrepreneurship advocate. Integrative thinker. Author. Storyteller. Rugby fanatic. Amateur chef. Giant.

Jessie Coates

EY Global Impact Entrepreneurship Leader

Passionate about using business as a force for good. Long-suffering Arsenal football fan. Activist. Feminist. Dreamer.

5 minute read 4 Jun 2019

We focus on working with impact entrepreneurs to help scale some of the best ideas and boldest actions for tackling inequality.

At EY, we believe a better working world is one where everyone can contribute to and share the benefits of economic growth.

With billions of people still excluded from the decent work, opportunities, goods and services that most of us take for granted, this may feel a long way from reality. That’s precisely why EY has put helping the very special breed of innovators we call “impact entrepreneurs” at the heart of how we seek to drive sustainable inclusive growth in our communities.

Put simply, impact entrepreneurs are people whose small and growing businesses are purposefully driving progress toward the United Nations Sustainable Development Goals (SDGs).

All over the world — and especially in poor and marginalized communities — they are at the forefront of innovating better answers to some of society’s toughest challenges. They are coming up with some of the best ideas and boldest actions for tackling inequality. And they are changing the narrative about business’ role in driving social progress.

Using business to change lives

Imagine the human race arranged in a pyramid, according to income. Now mark a line that represents a daily income of US$3. Globally, around 50% of people sit above that line and roughly 50% below it. While the positioning of that line will vary from country to country, wherever it sits, it marks a watershed.

Above that line, people are generally urban. They’re typically well-served by established market economies and have decent public infrastructure such as roads, transport, power, water and so on. Below the line, people are more likely to be rural. They’re much more likely to be excluded from the formal economy. And the further below the line they live, the more that’s true and the less they‘re able to cope with economic shocks or escape from poverty.

Nongovernmental organizations and governments play vital roles. But this is the majority of the world’s population we’re talking about. Inequality is becoming more entrenched, not less, and waiting for a trickle-down effect to create a global middle class won’t work.

Empowering underserved communities with the agency to move above the line means thinking beyond charitable aid. It means quality job creation. It means affordable credit, so people can invest in assets and technologies that can boost their incomes. It means affordable access to basic goods and services, from safe water and reliable energy to decent education, housing and health care. It means the chance to make choices and to have control of their lives. And it means thinking of them as customers, served by businesses designed to meet their needs.

Enter the impact entrepreneurs who are doing precisely that. While they may operate in the same industry sectors as our large corporate clients, they’re pioneering very different business models, reflecting the challenges of serving hard-to-reach customers with very little money.

Empowering underserved communities with the agency to move above the line means thinking beyond charitable aid.

Power and utilities: reaching out to new customers

Take the power and utilities sector as just one example. Above the line, that means grid electricity, piped water and sewered sanitation, which is fine if you’re connected to this infrastructure. But what if you’re not and it’s not coming to your neighborhood anytime soon?

What if you’re one of the 844m people who still lack access to safe water?

In East Africa, Jibu is scaling a network of locally owned franchise businesses, which it equips with solar-powered filtration technology to clean locally sourced water that can be sold at a fraction of the cost of other commercially bottled water. With EY support to put in place the robust financial and operational controls needed to support rapid expansion plans, Jibu now has 75 franchises across 6 countries that have distributed nearly 100m liters of safe water to their surrounding communities.

What if you’re one of the almost 1b people still without access to electricity?

Impact enterprises, such as M-KOPA in Kenya, are making it possible for low-income families to purchase home solar systems with micro-payments using mobile technology. With EY help to streamline its operations and lower the cost of supporting its growing customer base, it’s connected 700,000 homes and financed more than 1.1m assets and services. Its customers are receiving 87.5m hours of fume-free lighting each month and are projected to save more than US$525m over the next four years vs. buying kerosene.

What if you’re one of the roughly 4.5b people around the world who lack access to safely managed sanitation?

In India, Tiger Toilets has come up with an ingenious answer to the problems of poor safety, bad odor and groundwater contamination that blight traditional pit latrine design. Their toilets use tiger worms to digest solid waste and convert it into small amounts of safe “vermicompost.” With EY support to define unit economics and a model for scaling the business, they aim to increase sales 10-fold, helping to drive major improvements in sanitation and public health across rural communities.

Starting ripples that can grow into huge waves of change

In and of themselves, EY projects with these life-changing businesses — and others like them — are already making a huge difference. They’re helping drive greater scale and impact by improving enterprises’ resilience, productivity and capacity for sustainable growth. In fact, it’s not uncommon for individual projects to be projected to changing hundreds of thousands of lives, so small wonder that alumni of these experiences invariably rank them among the most inspirational and rewarding of their EY careers.

Yet we believe this could be just the beginning of an even more substantial ripple effect. For example, with reports on container-based sanitation, last-mile distribution and safe water enterprises, we’re increasingly consolidating lessons learned from individual projects and translating them into insights and guidance that can help stimulate investment and shape the long-term growth of entire sectors.

This, too, could be just the tip of the iceberg. Consider that the combined purchasing power of consumers at the base of the pyramid has been estimated at around US$5t annually and that many large corporations are in a race to unlock the potential of these markets. To do so, they will need to develop a much deeper understanding of these markets, the challenges of reaching low-income customers and the business model “hacks” required to serve them equitably and sustainably.

This is where impact entrepreneurs live. As compelling as their stories are, more impressive still is that they’re succeeding in spite of massive resource constraints. They’ve already figured out answers to these seemingly intractable problems and, if big business takes the time to observe, draw inspiration and reverse innovate from their approaches, who knows what more might be achieved.

Summary

Impact entrepreneurs are coming up with some of the best ideas and boldest actions for tackling inequality. Helping their small and growing businesses scale is a key focus of EY efforts to drive sustainable inclusive growth in our communities. 

About this article

Authors

Dan Gray

EY Global Corporate Responsibility Knowledge Leader

Purpose-driven strategist. Sustainability and social entrepreneurship advocate. Integrative thinker. Author. Storyteller. Rugby fanatic. Amateur chef. Giant.

Jessie Coates

EY Global Impact Entrepreneurship Leader

Passionate about using business as a force for good. Long-suffering Arsenal football fan. Activist. Feminist. Dreamer.