Presentación en power point en inglés de la herramienta de la herramienta "The Inclusive Business Challenge: Identifying opportunities to engage low-income communities across the value chain // (El desafío de los negocios inclusivos: Identificando oportunidades para involucrar comunidades de bajos ingresos a través de la cadena de valor), desarrollada por el WBCSD. Para descargar la herramienta completa en http://www.wbcsd.org

1. The Inclusive Business Challenge: Identifying opportunities to engage low-income communities across the value chain December 2009

3. Challenge? Opportunity?

4. Charity? Business?

5. Local farmer? Global supplier?

6. Enabler? Barrier?

7. Aid? Talent?

8. Luxury? Necessity?

9. Developed? Developing?

10. Challenge? Opportunity?

13. Future Leaders Team 2009 Dynamic and diverse business leaders shaping the future of sustainable development thinking

15. What percentage of the global population is expected to live in today’s developing countries in 2050? The markets of the future are in the developing world What does this mean for business? 85% World Population 1950 - 2050 (billions) Source: United States Census Bureau, International Database, 2008 World 12 10 8 4 2 0 1950 1975 2000 2025 6 2050 Population growth in the developing world

16. What percent of the world’s population live on less than $10 a day? Opportunities for companies to develop affordable products and services that meet the needs of low-income communities What does this mean for business? 14 80% Source: World Bank Development Indicators, 2008 World population living above and below the stated income level (2005) 86 20 51 60 73 78 80 49 40 27 22 $1.00 $1.25 $1.45 $2.00 $2.50 $10.00 Below income level Above income level

17. Which areas of the world face the greatest income inequality? What does this mean for business? Exclusion from market opportunities can lead to barriers to business and resistance to globalization China and Latin America World income inequality Source: UNDP, Human Development Report 2007/2009; World Bank

18. How many people in the developing world do not have access to electricity? What does this mean for business? Access to energy is one of the key drivers of economic growth. Business has a key role to play in improving access. Source: IEA. World Energy Outlook 2006 1.6 billion

19. What is the proportion of population under 24 in developing countries? What does this mean for business? The growing number of young people in developing countries represents major new labor and consumer markets for business. 48% Global median age (2009) Source: CIA World Factbook 2009

20. How many people in the world still have no access to any sanitation facility? What does this mean for business? Business cannot thrive in societies where people do not have access to basic services such as sanitation, clean water and health. Access to Sanitation (2009) 1.2 billion Source: UNESCO, The United Nations World Water Development Report 2 (2006)

21. Inclusive business enables organizations to tackle these challenges and seize the opportunities they present “ Our political leaders aren’t the only ones who’ve been handed a mandate for change. Leaders of businesses and institutions everywhere confront a unique opportunity to transform the way the world works.” Samuel J. Palmisano, President & CEO of IBM Corporation

23. Business contribution to development Business “ Corporations are social institutions. If they don't serve society, they have no business existing.” Henry Mintzberg, Professor, McGill University Technology Innovation Services Training Jobs Taxes Goods Philanthropy Labour standards Environmental standards Infrastructure

24. Why now? Why change? Globalized economy and free movement of goods and services Political pressure to affect poverty through goals & targets Recognition of the drivers and impacts of SD Increased expectations of the role of business in society New information and communication technologies

25. So what? Business action... Microfinance Social Investment Base of the Pyramid Inclusive Business SME linkages Corporate Social Responsibility Social enterprise Philanthropy Microfinance Base of the Pyramid SME linkages Philanthropy Inclusive Business Social Investment Corporate Social Responsibility Social enterprise

28. It is not just the responsibility of business Government Business Society “ Public governance is a global issue. No longer can businesses, governments, or non-governmental organizations afford to act independently of each other - the stakes are just too high. Only through a combined effort can we achieve economic growth, sustainability, and create an opportunity for a better life for people everywhere.” John Connolly, Global Chairman, Deloitte

29. So what? Business action... Scale up Speed up Innovate up

31. In practice, it’s not easy ...core business? … our role? … profitable? … a growth opportunity? … too risky? … required ? … scalable? … viable to partner? … ethical? Is it…

32. The value chain Design Procurement Manufacturing Distribution

33. Design Design Procurement Manufacturing Distribution 1

37. Procurement 2 Design Procurement Manufacturing Distribution

39. Natura What? In 2000, Natura launched the EKOS product line, which uses Brazilian biodiversity as a business and innovation platform. Why? Company interest to enhance brand value and growth while fulfilling its commitments to environmental responsibility and social justice, including support of low-income communities in the Amazonian region. How? Reaching communities that supply raw materials and ensuring these materials are extracted or planted sustainably throughout the entire production chain demands specific knowledge and partnerships. A Relationship Quality System was designed to assess the links with communities based on seven criteria. Results… Currently, EKOS accounts for 10% of Natura’s sales and adds to its brand value. Natura has 56 natural asset supply agreements with companies, farms and communities in Brazil and throughout Latin America. Of these, 19 are with traditional communities and local providers of raw materials.

41. Manufacturing Design Procurement Manufacturing Distribution 3

43. Novartis What? In 2005, Novartis made a commitment to pay a living wage to associates across the globe. Why? In many cases, minimum wage levels are not adequate to fulfill the basic daily needs of workers and their families. The living wage policy is a key benchmark of the company’s commitment to the UN Global Compact and helps employees’ & their families meet basic needs. How? Novartis joined forces with Business for Social Responsibility to develop a methodology to determine Living Wage levels based on a basket of goods. Each year a living wage is calculated and proposed for each country based on the methodology. Once the figures are established, salaries for associates are reviewed and any associate found below the agreed level has their pay adjusted immediately. Results.. In the first year of the program 93 Living Wage cases were identified and adjusted to Living Wage levels. Living Wage cases have decreased steadily to zero in 2009, after only 3 cases were identified and adjusted in 2008.

45. Distribution Design Procurement Manufacturing Distribution 4

50. Ready? Source: Chris Toole & Jayne Barrett

53. Scoring Design Procurement Manufacturing Distribution Total Selected Option Inclusive Business Score REVENUES Initially 0 0 0 500m 500m Option change Newsflash change Total COSTS Initially 100m 100m 100m 100m 400m Option change Newsflash change Total Total Revenues - Total Costs = Profits Team Name

54. Product Design ROUND 1 Design Procurement Manufacturing Distribution

56. Your Options 1 3 2 4 You have 5 minutes to choose which option to take Do the design in conjunction with an international NGO partially financing training for low-income Indian artisans to become designers for the company Do the design in-house in the US employing a well-known Indian designer who will consult several people from low-income Indian communities Inclusive business points: 2 Revenue change: +20 Cost change: -20 Outsource the work to an Indian start up business with graduates from an Indian design school that won a prize for their designs Inclusive business points: 4 Revenue change: +40 Cost change: -10 Inclusive business points: 1 Revenue change: 0 Cost change: 0 Inclusive business points: 3 Revenue change: +30 Cost change: -30 Use the large Indian design company but encourage them to consult low-income communities in their design process Design Procurement Manufacturing Distribution

57. Product Design Training Bad Design Good Design Delivery Delay Management Problems Copy-right Violations Design Procurement Manufacturing Distribution

58. Scoring Design Procurement Manufacturing Distribution Design Procurement Manufacturing Distribution Total Selected Option Inclusive Business Score REVENUES Initially 0 0 0 500 500 Option change Newsflash change Total COSTS Initially 100 100 100 100 400 Option change Newsflash change Total Total Revenues - Total Costs = Profits Team Name

59. Procurement ROUND 2 Design Procurement Manufacturing Distribution

61. Your Options You have 5 minutes to choose which option to take Procure from a multinational company but one which is certified fair trade Procure materials from individual Indian farmers in one region , providing training in sustainable farming techniques Procure materials from a large Indian supplier with their own farms all over India that is working to become more inclusive Procure materials from a farming cooperative that is present in several different areas of India 1 3 2 4 Inclusive business points: 1 Revenue change: +10 Cost change: +10 Inclusive business points: 3 Revenue change: +20 Cost Change: +20 Inclusive business points: 2 Revenue change: +20 Cost change: +10 Inclusive business points : 3 Revenue change: +10 Cost change: -10 Design Procurement Manufacturing Distribution

62. Procurement Award Natural Disaster Fake Fair Trade Products Quality Problems Design Procurement Manufacturing Distribution

63. Scoring Design Procurement Manufacturing Distribution Design Procurement Manufacturing Distribution Total Selected Option Inclusive Business Score REVENUES Initially 0 0 0 500 500 Option change Newsflash change Total COSTS Initially 100 100 100 100 400 Option change Newsflash change Total Total Revenues - Total Costs = Profits Team Name

64. Manufacturing Design Procurement Manufacturing Distribution ROUND 3

66. Your Options You have 5 minutes to choose which option to take Use a US specialist but one with manufacturing facilities in India Contract a big Indian manufacturing company that offers access to basic healthcare to employees and their families Build up own manufacturing in India using local labor including training individuals from low-income communities to become employees Use a series of small but growing Indian businesses to manufacture your goods 1 3 2 4 Inclusive business points: 1 Revenue change: +10 Cost change: -10 Inclusive business points: 2 Revenue change: +10 Cost change: -20 Inclusive business points: 4 Revenue change: 0 Cost change: +20 Inclusive business points: 3 Revenue change: 0 Cost change: -30 Design Procurement Manufacturing Distribution

67. Manufacturing Quality Problems Media Child Labor Productivity Problems Design Procurement Manufacturing Distribution

68. Scoring Design Procurement Manufacturing Distribution Design Procurement Manufacturing Distribution Total Selected Option Inclusive Business Score REVENUES Initially 0 0 0 500 500 Option change Newsflash change Total COSTS Initially 100 100 100 100 400 Option change Newsflash change Total Total Revenues - Total Costs = Profits Team Name

69. Distribution ROUND 4 Design Procurement Manufacturing Distribution

71. Your Options 1 3 2 4 You have 5 minutes to choose which option to take Use a different existing Indian brand retail store that has stores all over the country including in low-income areas Work with a local NGO to distribute your product via direct selling by individual low- income women all over India Use several existing unbranded independent local stores in low-income communities all over India Build up your own stores in India together with an NGO employing low-income people from local communities Inclusive business points : 1 Revenue change : 0 Cost change: 0 Inclusive business points : 4 Revenue change: +30 Cost change : +20 Inclusive business points: 2 Revenue change: +10 Cost change : +10 Inclusive business points : 4 Revenue change : +40 Cost change: +20 Design Procurement Manufacturing Distribution

72. Distribution Tax NGO SME Grant Employee Engagement Bad Debt Design Procurement Manufacturing Distribution

73. Scoring Design Procurement Manufacturing Distribution Design Procurement Manufacturing Distribution Total Selected Option Inclusive Business Score REVENUES Initially 0 0 0 500 500 Option change Newsflash change Total COSTS Initially 100 100 100 100 400 Option change Newsflash change Total Total Revenues - Total Costs = Profits Team Name

74. The winner is ... Team 1 Team 2 Team 3 Team 4 Profit Inclusive Business Score

76. Source: Ferran, Flickr Back to reality

80. Understanding societal and company context Adapt to your customers’ needs "The needs of people in developing and emerging markets can provide significant potential for business…It’s about business growth and value creation that truly enhances the quality of people’s lives through social, environmental and financial returns." Gerard Kleisterlee, President and CEO, Royal Philips Electronics Meet global and local requirements Localize goods and services Stay dynamic and adapt to changing context Think small but apply big Consider business as unusual Others...

81. Consulting & influencing stakeholders Listen, learn and share Manage community expectations Build local capacity where appropriate Initiate partnerships Draw on knowledge of experts Influence government policy where appropriate Others... "There is a need to step up dialogue between the main actors, between the public and private sectors and to ensure that the poor are part of the market. They need to be part of globalization – an inclusive globalization ." Ad Melkert, UN Special Representative

82. Making it part of the business Ensure your CEO is on board Explore opportunities along value chain Build governance structures Build skills and understanding Understand and direct innovation Others… “ Business cannot succeed in a society that fails.” Björn Stigson, WBCSD President

83. Understanding & communicating impact Monitor progress over time Identify KPIs Gather data Identify what works and what doesn’t Celebrate success Share with stakeholders Others... “ Companies do not normally measure their social, economic and environmental footprint in the markets in which they operate and, as we all know, communication without facts is tough.” Patrick Cescau, former Group CEO, Unilever

85. Business integration Ref: Five Winds International Future vision: Identify the ideal state – what the processes should look like in the future Required actions: Develop the actions necessary to realize the goal Goal: Select one business activity and explain how it can incorporate inclusive business principles Current reality: Explain the current reality – how are decisions currently made around this business activity?

87. References, Resources & Case Studies

89. Grundfos What? Grundfos LIFELINK aims to provide rural communities in Africa, Asia and Latin America with a sustainable supply of safe drinking water at affordable prices. It uses solar powered pumps and mobile banking techniques to make clean water affordable and accessible. Why? Commitment to supporting the MDGs and an interest in being an industry leaders in providing sustainable water systems and other infrastructural platforms. How? LIFELINK uses a single-point water supply with a solar powered submersible pump. It has the capacity to pump 8-16 m3 of water per day. Through a mobile banking platform, communities are able to pay back their investment over 5-7 years. Results… LIFELINK has reduced the waiting time for water, made it easier to cultivate and sell crops, and improved health standards among the population who used to fetch water from polluted sources. By 2015, LIFELINK aims to touch the lives of more than 1.5 million people.

90. Vodafone What? Launched in Kenya in 2007, M-PESA is a mobile payment solution that enables customers, many of whom do not have a bank account, to complete simple financial transactions by mobile phone. Why? Many people in remote, poor regions of the world are not able to open a bank account because they do not have access to a bank or because they do not have sufficient income to justify a bank account. This lack of access to basic financial services prohibits many from opening a business. The company saw an opportunity to develop a new business model that supports access to financial services and responds to the way people use mobile phones. How? Vodafone worked with its subsidary in Kenya, Safaricom, and a microfinance institution partner, Faulu, to develop a payment gateway allows mobile talk time to be converted into currency and vice versa. Results… M-PESA currently has about 7.5 million users and over US$ 3 billion has been transferred peer-to-peer using mobile phone. The company is also testing new services such as international money transfer between the UK and Kenya and bill pay for electricity, water and television services.

91. Philips What? Philips woodstove project addresses issues of indoor air pollution for families relying on biomass for daily cooking needs through both philanthropic and commercial channels. The company’s philanthropic design program developed the Chulha, a built-in woodstove which is now being offered to local entrepreneurs. At the same time, a range of portable woodstoves have been developed and integrated into a sustainable business model for the BOP. Why? 1.6 million people die annually due to smoke inhalation from indoor wood burning stoves. Company interest in exploring new markets, particularly in India and building Philips health and well-being brand. How? Originally started as part of Philips “Philanthropy by Design“ program, t he company is now exploring new distribution channels and social networks, building marketing campaigns, engaging with government, and investigating the potential of using carbon finance Results… Allows efficient use of wood and reduces health risks of indoor air pollution; up to 90% reduction in carbon monoxide. The company is currently establishing the distribution route after successful product development and promotion.

92. Reuters What? Reuters Market Light (RML) is a fee-based mobile information service for farmers in India. It brings commodity prices, crop and weather data to farmers via mobile phone. Why? Reuters aims to help customers succeed by providing indispensable information-based products and services. Nearly two-thirds of India's billion-plus population depend on agriculture for a living, and with only 40 % of its farmland irrigated and markets often distant, farmers are vulnerable to shifts in prices or weather conditions. How? RML makes available weather reports over a 50-mile radius and local crop prices within a 5-hour journey in the subscriber’s local language for a small fee. RML has built an extensive system of hundreds of full-time dedicated content professionals, product delivery network, and distribution partners to cover news and data on over 250 crops, 1000 markets, and 2,000 weather locations across 11 states in India. Results… In 2 years, RML has sold some 300,000 quarterly subscriptions to nearly 135,000 farmers in over 15,000 villages across Maharashtra, Punjab & Haryana in India. Some farmers have made as much as US$ 8,000 using the service that costs only US$5 per quarter. Farmers indicated that RML has facilitated greater transparency in the Indian agricultural markets, allowing them to increase productivity, maximize revenue and open up new distribution channels.

96. ArcelorMittal What? Since 2004, ArcelorMittal Brazil’s supplier engagement program has focused particularly on sustainability. The success of the scheme inspired Instituto Ethos to work with the Inter-American Development Bank to create their own scheme to strengthen the links between large companies, such as ArcelorMittal Brazil, and small and medium sized enterprises in their supply chains to help them improve their sustainability performance, develop better commercial relationships, reduce costs, and open up new markets and new product opportunities. Why? Opportunity and necessity to support the adoption of sustainability principles of SMEs and especially those in the company’s supply chain. How? Over the last two years, ArcelorMittal Brazil, as the sector champion for steel, has been working with 15 companies in their supply chain, helping them to incorporate social and environmental standards into their business practices. Results… All 15 companies in the group developed their own codes of ethics and 11 created new initiatives to save energy, water and paper. Likewise all 15 companies made real improvements in their production or management processes, and they all gained new clients.

99. Information and disclaimer The Inclusive Business Challenge was developed on behalf of the WBCSD’s Future Leaders Team 2009 with participation from Allianz SE, ArcelorMittal S.A., CIMPOR, CLP Holdings Limited, ConocoPhillips, E.ON AG, EcoSecurities Ltd, KPMG, Michelin and Natura Cosméticos S.A. We would like to thank the Future Leaders and their companies for their commitment and contributions. The work was a joint initiative by the WBCSD’s Development and Business Role Focus Areas with project management by Jessica Davis and Katherine Madden. This material is released in the name of the WBCSD. Like other WBCSD publications, it is the result of a collaborative effort by members of the secretariat and member companies. A wide range of members reviewed drafts, thereby ensuring that the document broadly represents the majority view of the WBCSD membership. It does not mean, however, that every member company agrees with every word. Copyright © World Business Council for Sustainable Development, October 2009 Design: Futerra Sustainability Communications, www.futerra.co.uk Pictures: World Bank photograph collection, various photographers. Secretariat 4, chemin de Conches Tel: +41 (0)22 839 31 00 E-mail: [email_address] CH-1231 Conches-Geneva Fax: +41 (0)22 839 31 31 Web: www.wbcsd.org Switzerland WBCSD North America Office Tel: +1 202 420 77 45 E-mail: washington@wbcsd.org 1744 R Street NW Fax: +1 202 265 16 62 Washington, DC 20009 United States WBCSD Brussels Office E-mail: [email_address] c/o Umicore Broekstraat 31 B-1000 Brussels Belgium

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