Six transitions for entrepreneurs to take the "Green Leap" to an inclusive economy
Over the past twenty years, two more billion people have joined the global population. Trends point out that by 2030, the global “middle class” is expected to grow from the current three billion to more than five billion people. Such population growth will intensify the ecological footprint on the planet, enhancing the unsustainable trajectory of the global economy.
On the good side, green economic growth has not only finally been accepted as a crucial need to address global challenges, its concept is also expected to include social cohesion. As stated on UNEP’s green economy report, in order to be green, an economy must not only be efficient, but also fair, particularly in assuring a just transition to being low-carbon, resource efficient, and socially inclusive.
In this sense, inclusive green growth should be oriented toward alleviating poverty by delivering a high level of human development in all countries and creating an inclusive and participatory economy. Such an economy would aim to provide equal opportunities for all, and advocate further for the rights of the young and old, women, poor, low-skilled workers, indigenous peoples, ethnic minorities, and local communities. In order to enable such progress, a “green leap” that enables a trickle-up towards an inclusive economy is required.
In our last book, The Green Leap to an Inclusive Economy, Professor Stuart Hart and I present a compendium of cases and tools that aim to document how business models are accelerating the transformation to fairer societies, healthier environments, and more inclusive markets. The book presents six transitions that entrepreneurs need to take into account to succeed in developing an inclusive business ecosystem (see Figure).
Transition One: Towards a new framework for inclusive and sustainable design thinking
Are you using ‘design thinking’ to improve the social and environmental impacts of your product through its value chain?
Design thinking is a human-centered approach that suggests focusing first on the community and the people that will be using the product or service. Thus, it is important to truly engage those users to jointly understand their challenges, needs, and wants. The process recommends building prototypes early on instead of taking too much time in theoretical planning and adopting a continuous improvement approach that learns quickly from early mistakes, rather than aiming to avoid them.
Cookbook for Sustainability Innovation: Recipes for Co-Creation Sustainability in Business Research Group, Aalto School of Business, Finland.
Transition Two: Towards a new model of sustainable production
Are you integrating economic, social, and environmental dimensions for more efficient and effective production?
Sustainable production frameworks have the potential to address global challenges by developing economically viable product systems that minimise negative environmental and social impacts, while ultimately conserving, or even restoring, natural capital and improving human well-being and social equity. The transition towards a new concept of sustainable production must take into consideration the environmental and social externalities of the complete product life cycle and integrate its three sustainability dimensions (economic, social, and environmental) into a single management approach.
BoP Toolbox for SMEs, School of Management of the Universidad Externado de Colombia.
Transition Three: Towards new models of inclusive distribution
Are you considering the most appropriate ways to ensure your product is accessible to last-mile markets?
Inclusive distribution focuses on using “the power of downstream” to enable microenterprises to access last-mile markets. Inclusive distribution networks (IDN) are made of micro-distributors of goods and services that are part of a brand’s distribution chain and its synergies and interactions can reach customers at the base of the pyramid. If you are seeking to provide products and services to the last mile, consider adapting products and processes to BoP needs and investing in removing market constraints; integrate low-income communities in product development and delivery and aim to engage key stakeholders in policy dialogue, thereby generating enabling environments to enhance access.
See: Marketing for the BoP, Hystra.
Transition Four: Towards new innovative recycling systems
Have you established a proper closed-loop system to improve the eco-efficiency of your product?
An essential part of a sustainable and inclusive economy is a closed-loop approach to resource management, which offers inclusive, economic opportunities for people involved in “end-of-life activities” (EoL) in the circular economy of goods. A circular perspective on EoL activities refers to activities directed towards recollection of spent products and materials, systems and processes for reusing materials, and the avoidance of product disposal.
See: So+ma vantegens: Rewards program for underserved communities of Brazil.
Transition Five: Towards new models of empowerment through access to opportunities
Are you developing business models that are empowering communities through access to opportunities?
Enhancing empowerment by developing access to opportunities for low-income communities requires several important steps: properly identifying and fully understanding the needs of low-income communities; clearly defining economic opportunities and identifying where profit lies in the life cycle and value chain of products; enabling low-income communities with resources and capabilities for co-developing solutions for improvements; and, understanding the local context to create strategic partnerships that maximize the profitability, as well as the social impact, of the production process.
- The Online Knowledge Platform for SMEs, GlobalCAD;
- Mandala Tool, University EAFIT in Colombia;
- or I3 Latam: Empowering Social Entrepreneurs, New Ventures in Mexico.
Transition Six: Towards enabling ecosystems for inclusive local economies
Are you developing business models that create more effective ecosystems for local economies?
BoP business models, taken alone, are not usually sufficient to foster a successful and sustainable business over time. To increase the prospects for success, it is necessary to engage the next level of the ecosystem. Some ways to do this include: facilitating access to financing; creating a favourable regulatory framework for inclusive businesses; enhancing capacity development for the implementation of inclusive business models; promoting knowledge management through the ecosystem; and, developing strategic partnerships for inclusive business models.
- Inclusive Business Community Korea (IBCK) tool, from the Merry Year Social Company (MYSC);
- Inclusive Business Accelerator Toolkit, Inclusive Business Accelerator (IBA) of the Netherlands;
- or the “seed stage” Social Venture Cultivation program, Alterna in Guatemala.
Taking the green leap to an inclusive economy is more important than ever to overcome the vicious cycles of poverty, social inequality, and environmental degradation. Business models and strategies need to be crafted to incorporate, on one hand, innovative management schemes to streamline value chains, manage resources more efficiently and strengthen relationships among local ecosystem actors, and on the other, strong commitments to meet sustainability goals that ensure positive social and environmental impact.
Note: all tools mentioned in this article can be found in the new book from the BoP Global Network: The Green Leap to an Inclusive Economy published by Taylor & Francis Ltd , Routledge.