Embedding Inclusive Growth in Business Decisions: A Framework for Companies and Investors

October 26, 2017
  • Laura Gitman portrait

    Laura Gitman

    Chief Impact Officer, BSR

  • Susan Winterberg

    Former Associate Director, Inclusive Economy, BSR

  • Michaela Lee

    Former Manager, BSR

Decades of globalization and technological innovation have produced tremendous economic growth, but the distribution of benefits has been skewed toward a few. This inequality has given rise to economic and social instability, which is now further exacerbated by global challenges of rapid urbanization, extreme weather events, and advancing automation.

While governments will play an important role in making progress on these issues, the private sector will be a key player in contributing to the sustainable development agenda and achieving a more inclusive economy. Those companies who understand that growing responsibly does not mean sacrificing efficiency or profits are likely to succeed in this new era: Inclusive growth is good business. 

In fact, broad, inclusive growth creates an external environment more conducive to business growth, namely through an improved operating environment and enhanced consumer purchasing power. It can also provide internal benefits, such as improved retention, productivity, and ethics; a culture that encourages innovation; and enhanced relationships with suppliers.

How do companies help foster this? First, they must understand how the current lack of inclusive growth impacts their businesses. Then, they need to examine how they might impact inclusion via their employees, operations, products and services, and overall management.

In collaboration with BSR, Morgan Stanley has developed a framework to explore the relationship between inclusive growth and business performance. A new paper, “Inclusive Growth Drivers: The Anatomy of a Corporation,” lays out how corporations can positively influence inclusive growth through decisions across all functional areas of their businesses. This work breaks down the “anatomy of a corporation” into four key areas through which company actions can achieve societal and business benefits. Further, investors can use this framework to evaluate risks and opportunities related to inclusive growth.

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For each functional area represented in the “anatomy of a corporation,” we focus on the levers that companies can use to integrate inclusive growth into their business decisions.

Human Resources

Choices about diversity, hiring and staffing practices, labor relations, and training and professional development affect employee financial and physical well-being, innovation, and the overall success of businesses. Companies can build inclusive workplaces with job security, good working conditions, and/or profit sharing, either directly in their own operations or through their value chains.

Products and Services    

Decisions here can consider the needs of more and newer consumer segments; products can be marketed and sold in fair ways, and customer needs can be more broadly considered from concept and design through the life of the product. By creating accessible and affordable products that meet critical needs in healthcare, infrastructure, education, and other sectors, companies can contribute to a more inclusive consumer economy.

Operations Management

Operational decisions affect how goods and services reach end customers, and how workers are treated throughout the supply chain. They also give small and diverse suppliers an opportunity to participate in economic growth. By monitoring working conditions and working with suppliers to build capabilities, companies can deepen relationships and create a more reliable supplier base.

Firm Governance and Management    

Sound governance and transparent management practices promote corporate ethics, long-term thinking, and consideration of all stakeholders—including but not limited to shareholders. Companies can also use their political and social capital to influence the policy environment in ways that promote inclusive policies for labor, trade, taxes, and fair market competition.

Inclusive growth can provide a mutually beneficial environment for both companies and society. For businesses and investors, developing an inclusive growth mindset provides direct benefits like greater talent attraction, access to new markets, improved product innovation, and enhanced reputation. By taking a thoughtful look at inclusive growth levers in business decisions, companies can realize business benefits while also contributing to a more prosperous, inclusive, and stable society.

Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.

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