With emerging markets representing almost 70 percent of economic growth in coming years, can BoP markets be a key driver for both poverty alleviation and value creation for business?
By Stefan Crets, Executive Director, CSR Europe
Many multinational companies are seeking to create new business models and partnerships, which aim not only to produce economic results but also contribute to environmental sustainability, poverty alleviation and societal development at the Base of the Pyramid (BoP).
These BoP initiatives are about doing profitable business with significant social benefits like providing low income earners with access to products and services that address their basic needs for nutrition, education, mobility, communication, employment and hygiene.
However, a company’s action on its own has only limited impact.
Bringing about real societal impact requires active cooperation between companies and other players. Indeed, various stakeholder groups – such as public authorities, civil society organisations or investor coalitions – are playing an increasingly visible and pivotal role in the CSR debate today. Efficient synergies between public and private spheres are therefore fundamental to the success of these new business models.
Targeting this untapped market is not as straightforward as we might hope, however, and companies struggle with a lack of knowledge and understanding of local needs and market conditions in the BoP communities. Furthermore, innovation as well as local production and entrepreneurship potential is under-utilized making scaling up new projects and activities a critical concern.
Social Impact: A Partnership Model
To overcome these difficulties, companies will need to develop a new business model: a model that focuses on maximizing profit through new customer targeting and acts as an innovative and inclusive social model allowing for joint collaboration of market players.
It is against this background that CSR Europe, under the umbrella of Enterprise 2020, is working on a collaborative project entitled “Inclusive Business Models at the Base of the Pyramid.”
The project, led by GDF Suez, IMS Entreprendre pour la Cité (France) and Business in the Community (U.K.), aims to better understand, develop and maintain effective cross sector and multi-stakeholder approaches that partner with BoP groups in a mutually inclusive value chain. Project participants are working to achieve real-life social impact through the incubation of new ‘on the ground’ projects and initiatives. This private-private collaboration is the main characteristic of this approach: creating new markets can be done more efficiently by companies who collaborate.
The next incubation workshop will take place on September 26, 2012, with 20 business practitioners representing different sectors (energy, financial, food and information technology) coming together to uncover new partnerships in Africa and BRIC (Brazil, Russia, India and China). These new partnerships have been split into four potential clusters:
- Access to energy
- Food and nutrition
- Affordable housing
- Waste and recycling
During the workshop, companies will be split into clusters to discuss how this new project could potentially unfold.
Considering that emerging markets represent almost 70 percent of economic growth in the coming years, BoP markets will increasingly become a key driver for both poverty alleviation and value creation for business. Recognition of business’ ability to support international development efforts allows for the integration of different types of organisations – it is this collaborative innovation that may yet allow us to overcome the barriers to development of the past decades.
If you would like to find out more information on initiatives at the BoP, join the European Development Days event in Brussels on the 16-17 October. For more information on the Enterprise 2020 collaborative project on inclusive business models, click here.
To find out what our members are doing around BoP initiatives, visit our online solutions database.
Enterprise 2020: Don’t Stifle Your Corporate Social Entrepreneur