Inclusive Growth: How Business Leads

Authors

• Susan Winterberg

  Former Associate Director, Inclusive Economy, BSR

Turn on the news on any given day and the lineup of stories is often the same: an economic report of flat wages and rising financial insecurity combined with tales of social unrest and political instability around the world. Beneath all these seemingly disconnected events lies one common thread—inclusive growth.

The Organization for Economic Cooperation and Development (OECD) defines inclusive growth as “economic growth that creates opportunity for all segments of the population and distributes the dividends of increased prosperity, both in monetary and non-monetary terms, fairly across society.” A lack of inclusive growth has been tied to everything from higher rates of cancer and crime to voting for populist leaders to joining terrorist groups.

Creating more inclusive forms of economic growth has long been seen as the responsibility of governments and civil society. Yet in the last few years, it is increasingly being taken up by the private sector as a central pillar of company sustainability platforms. According to the 2017 BSR/Globe Scan State of Sustainable Business report, which will be published later this month, the number of companies that say they consider inclusive growth a "high priority" for sustainability efforts has increased almost 10 percent since last year.

Companies are taking action on promoting inclusive growth through three main mechanisms: creating good jobs, expanding access to products, and engaging with society.

Creating Good Jobs

A 2016 survey by JUST Capital found that the U.S. public considers providing good jobs as the most critical sustainability issue facing companies today. Some companies are rising to this challenge. IKEA, for instance, made a commitment in 2014 to pay its U.S. retail workforce a living wage. Other areas where companies are beginning to think about good jobs include treating contingent workers more fairly, investing in training and career paths, creating predictable scheduling, increasing benefits coverage, and developing profit-sharing programs.  

Companies are also starting to develop ways to expand their diversity and inclusion efforts to include more groups who face challenges in employment. Member companies of the Global Impact Sourcing Coalition are focusing on ways to improve inclusion in their supply chains through encouraging their suppliers to offer job opportunities to neglected groups, such as long-term unemployed persons, informal sector workers, and “neurodiverse” workers. Some companies are exploring how to bridge geographic divides through “rural sourcing” programs, which hire people from high unemployment rural communities in the United States. There’s even a small group of companies focusing efforts on preventing violent extremism by offering economic opportunities to youth in communities that are targeted by terrorist recruiters.

Expanding Access to Products

Access to affordable and high-quality products in housing, basic infrastructure, healthcare, food, and financial services is a critical component to inclusive growth. Many companies now have access policies and programs for their products. One example is MasterCard’s Center for Inclusive Growth, which uses proprietary technology platforms and big-data capabilities to connect microentrepreneurs, refugees, and other excluded groups to affordable financial services products. The United Nations’ Business Call to Action has secured inclusive business commitments from more than 190 companies to expand access to critical goods and services to the poor in developing countries. Chobani’s founder and CEO Hamdi Ulukaya formed Tent Partnership for Refugees which has organized commitments from companies to improve critical product access to refugees. Doug Rauch, a former president of the grocery store Trader Joe’s, started the The Daily Table, which has organized more than 40 grocery chains and food brands to tackle the challenges of food deserts and malnutrition in U.S. inner cities.

Engaging with Society

Community and government engagement for inclusive growth has long been a focus in the extractives industry, where maintaining a ‘social license to operate’ has been a central focus. Yet the range of industries, geographies and policy issue areas in which business is engaging is expanding.

The last few years have seen a growing tide of "CEO Activism." Earlier this year more than 150 CEOs signed an amicus brief on the U.S. executive order on immigration. This trend could continue in the coming years as businesses weigh in on other critical inclusion policy issues such as U.S. universal access to health care. Other dialogues are also forming at the multilateral level such as the OECD’s Business Leaders for Inclusive Growth and at the “B20,” which is the business platform at the G20. These platforms can provide ways for business’ collective voice to promote fairer and more inclusive policy frameworks for global trade, immigration policy, digitalization and skills, and other global economic challenges.

Inclusive growth is one of the great challenges of our time. Yet through commitment, collaboration, and action, business is showing that it can move from being a central source of the problem to a central driver of the solution.