The transformative power of sustainable and inclusive business models

Structural inequalities reached staggering heights well before the world got hit by the COVID-19 pandemic. Yet, as it lays bare and exacerbates the gap between rich and poor, between those with access to essential social services and protection and those without, they can no longer be ignored. There is no better time than the present to rethink and transform our social and economic models so they will deliver on what matters most: achieving wellbeing for all within the carrying capacity of our planet.

The private sector can make a real difference in this regard, for better or for worse. Companies have an impact on inequalities when deciding where they pay taxes, how they share profits between different stakeholders and whether they allow for trade unions and collective bargaining. They make a difference if they introduce policies to promote women’s rights, fight discrimination or gender-based violence at work or procure locally and sustainably.

States, as primary duty-bearers, can and should on one hand make sure businesses do no harm. They should close tax loopholes and adopt human rights due diligence and sustainable corporate governance legislation. Governments should also partner with those business actors that share their broader long-term economic, societal and environmental aspirations, to rebuild more resilient, fair, sustainable and inclusive economies worldwide.

While everyone is aware of the differences between small and multinational enterprises, size is not all that sets companies apart. Understanding how a business decides to share its benefits with employees, producers, suppliers and local communities, and include these various stakeholders in corporate decision-making, does too. This is why it is important to emphasise the transformative potential of sustainable and inclusive business models.

Firstly, sustainable and inclusive businesses are driven by a social and environmental mission underpinned by values incorporated into the constitution and bylaws of the company. This allows them to create, rather than capture, value. Secondly, they are directed by participatory decision-making and inclusive governance, shifting power to people who are often left out of business decisions affecting them, such as employees, producers, community groups or environmental and consumer organisations.

There are many ways in which sustainable and inclusive businesses help reduce inequalities. Creating high-quality jobs, they play a pivotal role in shifting from today’s increasingly precarious work towards achieving decent work for all. They can facilitate access to finance, resources, technology, support services and markets and negotiate better prices, thereby addressing the power asymmetries that exist in today’s markets.

Sustainable and inclusive businesses represent an opportunity for young entrepreneurs, increasingly aware and responsible in social and environmental terms, to access the labour market and start their own business. They can contribute to women’s economic empowerment by increasing access to employment and facilitating women’s participation in local economies, by enabling economic democracy and agency, and by boosting women’s leadership and management experience, across value chains. For example, fair trade fashion producer and brand Manos del Uruguay, set up and owned by 12 women’s producer cooperatives, as well as CORR – The Jute Works, a women’s non-profit handicraft marketing trust and exporter of quality handicrafts in Bangladesh, ensure women and artisan representatives take part in management and decision-making, including as members of the Board of Trustees.

Sustainable and inclusive businesses often reach out to those most marginalised. They engage people who typically cannot benefit from equal opportunities, including indigenous peoples, people with disabilities, migrants and refugees or people living in remote areas. Various sustainable and inclusive enterprises not only provide them with affordable services, they also allow them to cooperate with other partners in communities and engage in social and economic activities aimed at improving livelihoods. ELIO Social Laundries in Serbia for example provides employment opportunities to women from marginalised groups, such as women with partial physical or mental disabilities, and reinvests the funds it generates into targeted social services. The Zambian impact-driven social business Live Well on the other hand promotes health, provides access to health products and supports livelihoods in under-served communities, through a network of trained Community Health Entrepreneurs. By putting values at the centre of their business model, they help people and their communities increase their resilience.

The Indian worker-owned cooperative SWaCH enables more than 3,000 waste pickers in the informal economy, a majority of whom are women from socially disadvantaged groups, to improve their working conditions, receive training and participate in democratic decision-making, all while advocating for sustainable waste management and better labour practices. Indeed, sustainable and inclusive businesses also support the fair and green transition. Stripped of the all-consuming pursuit of profit maximisation, sustainable and inclusive businesses no longer seek to externalise social or environmental costs or incite overconsumption. Many of them instead constantly innovate their environmental practices to live up to their mission.

Within Europe, sustainable and inclusive businesses are increasingly gaining recognition and support. But also through external action, the EU and its Member States could enable such actors across the globe to reach their full potential. Through their international partnerships and development cooperation, the EU and its Member States could further support awareness-raising, information exchanges and participation in policy dialogue with partner countries. Trade and investment agreements could support sustainable and inclusive businesses. Strategic diplomatic relations could be built, enabling collaboration and peer learning between sustainable and inclusive businesses in Europe and partner countries. Sustainable and inclusive business models could be promoted at relevant multilateral fora. And monitoring reports could show us how the commitments have been translated into targeted action.

This would not only enable sustainable and inclusive businesses to help us ‘rebuild better’, but could equally inspire conventional businesses to follow their lead. So that hopefully, one day, in a not too distant future, they have become the new norm, mainstream.

Together with the Fair Trade Advocacy Office and Cooperatives Europe, CONCORD Europe released in June 2020, an initial paper entitled ‘Rebuilding better with sustainable and inclusive business models’. Over the past months, we have been learning from various inspiring businesses and researched more in-depth on how EU external policies could better enable sustainable and inclusive businesses to thrive. The findings and more concrete recommendations will be published in a report and presented during a webinar in early December. Check out the programme and register should you be interested to join.

In these worrying times, let’s unleash sustainable and inclusive businesses’ transformative power across the globe as a true force for good.