Inclusive Business Challenge

The Inclusive Business Challenge: Identifying opportunities to engage low-income communities across the value chain December 2009

1. Getting started: Challenge to opportunity 2. Defining the issues: Debates and dilemmas 3. Learning from experience: Case study examples 4. Building inclusive business: Simulation 5. Making it happen: Aspirations and actions

Local farmer? Global supplier?

Coalition of 200+ leading companies Market capitalization: US$8 trillion Total member company employees: 13 million Supplies products and services to half of the world’s population The WBCSD

WBCSD Development Focus Area 2002 2004 2005 2007 2008 Business for Development Promoting Small and Medium Enterprises for Sustainable Development Doing Business with the World Investing in a low-carbon energy future Measuring Impact Framework 2009 Mobility for Development Inclusive Business blog & video with SNV Inclusive Business Alliance with SNV Video library Sustain magazine Creates awareness amongst business on risks and opportunities Defines & advocates the role of business in development to stakeholders Demonstrates leadership by promoting business-led action Key issue areas: Measuring Impact, Inclusive Business, Mobility and Energy for Development, Local Content Doing business with the poor: a Field Guide Finding capital for sustainable livelihoods businesses A business guide to development partners Investing for Sustainable Development Sustainable Livelihoods: the business connection

Future Leaders Team 2009 Dynamic and diverse business leaders shaping the future of sustainable development thinking

IB Challenge Objectives Raise awareness of the role of business in development Introduce the challenges, drivers and principles of inclusive business Present good practice examples along the value chain Identify risks and opportunities in building inclusive business through simulation Suggest ways to integrate inclusive business into company strategy

What percentage of the global population is expected to live in today’s developing countries in 2050? The markets of the future are in the developing world What does this mean for business? 85% World Population 1950 - 2050 (billions) Source: United States Census Bureau, International Database, 2008 World 12 10 8 4 2 0 1950 1975 2000 2025 6 2050 Population growth in the developing world

What percent of the world’s population live on less than $10 a day? Opportunities for companies to develop affordable products and services that meet the needs of low-income communities What does this mean for business? 14 80% Source: World Bank Development Indicators, 2008 World population living above and below the stated income level (2005) 86 20 51 60 73 78 80 49 40 27 22 $1.00 $1.25 $1.45 $2.00 $2.50 $10.00 Below income level Above income level

Which areas of the world face the greatest income inequality? What does this mean for business? Exclusion from market opportunities can lead to barriers to business and resistance to globalization China and Latin America World income inequality Source: UNDP, Human Development Report 2007/2009; World Bank

How many people in the developing world do not have access to electricity? What does this mean for business? Access to energy is one of the key drivers of economic growth. Business has a key role to play in improving access. Source: IEA. World Energy Outlook 2006 1.6 billion

What is the proportion of population under 24 in developing countries? What does this mean for business? The growing number of young people in developing countries represents major new labor and consumer markets for business. 48% Global median age (2009) Source: CIA World Factbook 2009

How many people in the world still have no access to any sanitation facility? What does this mean for business? Business cannot thrive in societies where people do not have access to basic services such as sanitation, clean water and health. Access to Sanitation (2009) 1.2 billion Source: UNESCO, The United Nations World Water Development Report 2 (2006)

Inclusive business enables organizations to tackle these challenges and seize the opportunities they present “ Our political leaders aren’t the only ones who’ve been handed a mandate for change. Leaders of businesses and institutions everywhere confront a unique opportunity to transform the way the world works.” Samuel J. Palmisano, President & CEO of IBM Corporation

Getting started: Challenge to opportunity Defining the issues : Debates and dilemmas Learning from experience: Case study examples Building inclusive business: Simulation Making it happen: Aspirations and actions

Business contribution to development Business “ Corporations are social institutions. If they don't serve society, they have no business existing.” Henry Mintzberg, Professor, McGill University Technology Innovation Services Training Jobs Taxes Goods Philanthropy Labour standards Environmental standards Infrastructure

Why now? Why change? Globalized economy and free movement of goods and services Political pressure to affect poverty through goals & targets Recognition of the drivers and impacts of SD Increased expectations of the role of business in society New information and communication technologies

So what? Business action... Microfinance Social Investment Base of the Pyramid Inclusive Business SME linkages Corporate Social Responsibility Social enterprise Philanthropy Microfinance Base of the Pyramid SME linkages Philanthropy Inclusive Business Social Investment Corporate Social Responsibility Social enterprise

Inclusive business Definition: profitably engaging low-income populations across companies’ value chains and developing affordable products and services that meet the needs of low-income populations. WBCSD believes multinational companies can support poverty alleviation and meet profitability goals through inclusive business. Design Procurement Manufacturing Distribution

What’s in it for business? “ As an engine of economic growth and employment and a source of technology and innovation, business has a key role to play in providing system solutions for a more sustainable world.” Björn Stigson, WBCSD President Protecting Reducing risk and stronger supply chains Strengthening the license to operate Increasing brand value and reputation Managing Reducing costs Enhancing productivity Raising the quality of people/new labor sources Growing Improving cost of capital Accessing new markets Stimulating innovation Promoting revenue growth

It is not just the responsibility of business Government Business Society “ Public governance is a global issue. No longer can businesses, governments, or non-governmental organizations afford to act independently of each other - the stakes are just too high. Only through a combined effort can we achieve economic growth, sustainability, and create an opportunity for a better life for people everywhere.” John Connolly, Global Chairman, Deloitte

So what? Business action... Scale up Speed up Innovate up

Getting started: Challenge to opportunity Defining the issues: Debates and dilemmas Learning from experience : Case study examples Building inclusive business: Simulation Making it happen: Aspirations and actions

In practice, it’s not easy ...core business? … our role? … profitable? … a growth opportunity? … too risky? … required ? … scalable? … viable to partner? … ethical? Is it…

The value chain Design Procurement Manufacturing Distribution

Design Design Procurement Manufacturing Distribution 1

Design explained Designing affordable and appropriate products and services that meet the needs of low-income populations Grundfos Vodafone Allianz Philips Reuters

Allianz What? Affordable life and non-life insurance products catered specifically to low-income populations. Why? Less than 80 million people in the 100 poorest countries have access to insurance (3% of the population). Without insurance, they risk losing everything. Developing micro-insurance products for the poor helps Allianz reach new markets. How? Allianz joined forces with NGOs to overcome the high administrative costs and lack of awareness about insurance to reach villages across southern India, Indonesia, Egypt and soon West Africa . Results… More than 1.8 million people in India, Indonesia and Egypt are now protected by Allianz microinsurance policies. Allianz aims to reach 3 million clients with microinsurance products by the end of 2009.

Keys to success Understand how people use products & services and individual/family needs & aspirations through research Adapt products to needs & incomes of low-income markets Be aware of cultural dynamics, including the influence of status symbols and gender roles Consider maintenance & packaging options for available infrastructure Engage stakeholders including NGOs and communities in design of products

Procurement 2 Design Procurement Manufacturing Distribution

Procurement explained Sourcing from local producers Building the skills of small-scale, often low-income producers to be part of a company and industry’s supply chain Natura Michelin Pronaca

Natura What? In 2000, Natura launched the EKOS product line, which uses Brazilian biodiversity as a business and innovation platform. Why? Company interest to enhance brand value and growth while fulfilling its commitments to environmental responsibility and social justice, including support of low-income communities in the Amazonian region. How? Reaching communities that supply raw materials and ensuring these materials are extracted or planted sustainably throughout the entire production chain demands specific knowledge and partnerships. A Relationship Quality System was designed to assess the links with communities based on seven criteria. Results… Currently, EKOS accounts for 10% of Natura’s sales and adds to its brand value. Natura has 56 natural asset supply agreements with companies, farms and communities in Brazil and throughout Latin America. Of these, 19 are with traditional communities and local providers of raw materials.

Keys to success Identify local skills and find ways to leverage them Build new skills and capacities among producers Support primary and secondary education Act as guarantors for micro-medium loans for suppliers Advocate for regulatory environments that support SMEs

Manufacturing Design Procurement Manufacturing Distribution 3

Manufacturing explained Mitigating negative impacts of operations on communities surrounding sites and supporting access to basic services for employees and communities Support local employment as well as fair and healthy working conditions ArcelorMittal Novartis InterfaceFLOR

Novartis What? In 2005, Novartis made a commitment to pay a living wage to associates across the globe. Why? In many cases, minimum wage levels are not adequate to fulfill the basic daily needs of workers and their families. The living wage policy is a key benchmark of the company’s commitment to the UN Global Compact and helps employees’ & their families meet basic needs. How? Novartis joined forces with Business for Social Responsibility to develop a methodology to determine Living Wage levels based on a basket of goods. Each year a living wage is calculated and proposed for each country based on the methodology. Once the figures are established, salaries for associates are reviewed and any associate found below the agreed level has their pay adjusted immediately. Results.. In the first year of the program 93 Living Wage cases were identified and adjusted to Living Wage levels. Living Wage cases have decreased steadily to zero in 2009, after only 3 cases were identified and adjusted in 2008.

Keys to success Work with communities to manage negative impacts of operations Comply with & enhance labor and environmental standards Increase direct local employment Support community access to basic services Promote the empowerment of women

Distribution Design Procurement Manufacturing Distribution 4

Distribution explained Developing distribution networks for products and services among small-scale businesses and improving access to products and services Coca-Cola Holcim Unilever

Coca-Cola What? Manual Distribution Centers (MDCs) are independently owned, low-cost manual operations created to service mainly emerging urban and peri-urban retail markets where classic distribution models are not effective or efficient Why? Crowded urban settings as well as peri-urban settings with poor road infrastructure are hard to reach by large trucks. There is also a lack of support for entrepreneurship, particularly for women in many parts of the world How? Coca-Cola Sabco first developed the MDC model as a pilot in Ethiopia in 1999. By 2002 is had implemented the model on a broad scale throughout East Africa. Results… Across Africa, Coca-Cola has supported the creation of over 2,800 MDCs and other similar small independent distributors, generating over 13,000 jobs and more than USD 550 million in annual revenues. MDCs account for over 80% of Coca – Cola’s sales in East Africa and its use is growing in West Africa. The system has created new economic opportunities for women, who own about 30% of the MDCs across Africa. .

Keys to success Consider low-and high-tech modes of distribution Understand the barriers to access to markets and basic services for communities Use local knowledge of the market Consider educational campaigns with distribution

Getting started: Challenge to opportunity Defining the issues: Debates and dilemmas Learning from experience: Case study examples Building inclusive business: Simulation Making it happen: Aspirations and actions

Ready? Source: Chris Toole & Jayne Barrett

Player’s brief HQ: Background: Client needs: Washington DC, USA Produces and sells clothing in the USA Has no experience in developing markets Diversify into Indian market with a long-term perspective Develop a clothing line for low-income sector Search for opportunities to support socio-economic development in country while remaining economically viable You are a group of competing consultancies helping YOUR COMPANY © build an inclusive business plan in India. YOUR COMPANY © profile:

Instructions Design: YOUR COMPANY © intends to use a large Indian design company that normally designs for the middle class Procurement: YOUR COMPANY © intends to source standard materials from a multinational company Manufacturing: YOUR COMPANY © intends to use a US specialist that is looking to expand its operations into India in a sustainable way Distribution: YOUR COMPANY © intends to use an existing Indian brand that has stores all over the country to distribute the product Across the value chain: Discuss alternative options Choose one Justify your choice Record your scores (Inclusive business points, costs and revenues) Note: Reality and risks: Newsflashes (They might change your scores) The team with the highest profit is the champion

Scoring Design Procurement Manufacturing Distribution Total Selected Option Inclusive Business Score REVENUES Initially 0 0 0 500m 500m Option change Newsflash change Total COSTS Initially 100m 100m 100m 100m 400m Option change Newsflash change Total Total Revenues - Total Costs = Profits Team Name

Product Design ROUND 1 Design Procurement Manufacturing Distribution

The Brief Your goal: Design your product range for the Indian market Develop cost-effective products for low-income groups Current situation: YOUR COMPANY © intends to use a large Indian design company that normally designs for the middle class Design Procurement Manufacturing Distribution

Your Options 1 3 2 4 You have 5 minutes to choose which option to take Do the design in conjunction with an international NGO partially financing training for low-income Indian artisans to become designers for the company Do the design in-house in the US employing a well-known Indian designer who will consult several people from low-income Indian communities Inclusive business points: 2 Revenue change: +20 Cost change: -20 Outsource the work to an Indian start up business with graduates from an Indian design school that won a prize for their designs Inclusive business points: 4 Revenue change: +40 Cost change: -10 Inclusive business points: 1 Revenue change: 0 Cost change: 0 Inclusive business points: 3 Revenue change: +30 Cost change: -30 Use the large Indian design company but encourage them to consult low-income communities in their design process Design Procurement Manufacturing Distribution

Product Design Training Bad Design Good Design Delivery Delay Management Problems Copy-right Violations Design Procurement Manufacturing Distribution

Scoring Design Procurement Manufacturing Distribution Design Procurement Manufacturing Distribution Total Selected Option Inclusive Business Score REVENUES Initially 0 0 0 500 500 Option change Newsflash change Total COSTS Initially 100 100 100 100 400 Option change Newsflash change Total Total Revenues - Total Costs = Profits Team Name

Procurement ROUND 2 Design Procurement Manufacturing Distribution

The Brief Your goal: Procure materials and parts for your product Current situation: YOUR COMPANY © intends to source standard materials from a multinational company Design Procurement Manufacturing Distribution

Your Options You have 5 minutes to choose which option to take Procure from a multinational company but one which is certified fair trade Procure materials from individual Indian farmers in one region , providing training in sustainable farming techniques Procure materials from a large Indian supplier with their own farms all over India that is working to become more inclusive Procure materials from a farming cooperative that is present in several different areas of India 1 3 2 4 Inclusive business points: 1 Revenue change: +10 Cost change: +10 Inclusive business points: 3 Revenue change: +20 Cost Change: +20 Inclusive business points: 2 Revenue change: +20 Cost change: +10 Inclusive business points : 3 Revenue change: +10 Cost change: -10 Design Procurement Manufacturing Distribution

Procurement Award Natural Disaster Fake Fair Trade Products Quality Problems Design Procurement Manufacturing Distribution

Manufacturing Design Procurement Manufacturing Distribution ROUND 3

The brief Your goal: Choose the most appropriate operations and manufacturing option Current situation: YOUR COMPANY © intends to use a US specialist that is looking to expand its operations into India in a sustainable way Design Procurement Manufacturing Distribution

Your Options You have 5 minutes to choose which option to take Use a US specialist but one with manufacturing facilities in India Contract a big Indian manufacturing company that offers access to basic healthcare to employees and their families Build up own manufacturing in India using local labor including training individuals from low-income communities to become employees Use a series of small but growing Indian businesses to manufacture your goods 1 3 2 4 Inclusive business points: 1 Revenue change: +10 Cost change: -10 Inclusive business points: 2 Revenue change: +10 Cost change: -20 Inclusive business points: 4 Revenue change: 0 Cost change: +20 Inclusive business points: 3 Revenue change: 0 Cost change: -30 Design Procurement Manufacturing Distribution

Manufacturing Quality Problems Media Child Labor Productivity Problems Design Procurement Manufacturing Distribution

Distribution ROUND 4 Design Procurement Manufacturing Distribution

The brief Your goal: Choose how to distribute your product Current situation: YOUR COMPANY © intends to use an existing Indian brand that has stores all over the country to distribute the product. Design Procurement Manufacturing Distribution

Your Options 1 3 2 4 You have 5 minutes to choose which option to take Use a different existing Indian brand retail store that has stores all over the country including in low-income areas Work with a local NGO to distribute your product via direct selling by individual low- income women all over India Use several existing unbranded independent local stores in low-income communities all over India Build up your own stores in India together with an NGO employing low-income people from local communities Inclusive business points : 1 Revenue change : 0 Cost change: 0 Inclusive business points : 4 Revenue change: +30 Cost change : +20 Inclusive business points: 2 Revenue change: +10 Cost change : +10 Inclusive business points : 4 Revenue change : +40 Cost change: +20 Design Procurement Manufacturing Distribution

Distribution Tax NGO SME Grant Employee Engagement Bad Debt Design Procurement Manufacturing Distribution

The winner is ... Team 1 Team 2 Team 3 Team 4 Profit Inclusive Business Score

Your feedback In the simulation: What were some of the challenges you faced when making decisions? Is the ideal option always feasible? To what degree did you consider risks in your decision-making? What actions might provide building blocks in the future? Was it easier to identify opportunities at particular stages of the value chain and why? What surprised you about inclusive business in practice? What dilemmas did you face? How would your choices have differed in a different timeframe? Or in a different country or sector?

Source: Ferran, Flickr Back to reality

Inclusive business is difficult. Looking back at the case study examples, the simulation and real life experience… From simulation to reality What are the barriers to building inclusive business?

From barriers to solutions Understanding societal and company context e.g. market fluctuations / local conditions Making it part of the business e.g. company buy in Consulting and influencing stakeholders e.g. building capacity Understanding and communicating impacts e.g. s calability How can business overcome these barriers?

Understanding societal and company context Adapt to your customers’ needs "The needs of people in developing and emerging markets can provide significant potential for business…It’s about business growth and value creation that truly enhances the quality of people’s lives through social, environmental and financial returns." Gerard Kleisterlee, President and CEO, Royal Philips Electronics Meet global and local requirements Localize goods and services Stay dynamic and adapt to changing context Think small but apply big Consider business as unusual Others...

Consulting & influencing stakeholders Listen, learn and share Manage community expectations Build local capacity where appropriate Initiate partnerships Draw on knowledge of experts Influence government policy where appropriate Others... "There is a need to step up dialogue between the main actors, between the public and private sectors and to ensure that the poor are part of the market. They need to be part of globalization – an inclusive globalization ." Ad Melkert, UN Special Representative

Making it part of the business Ensure your CEO is on board Explore opportunities along value chain Build governance structures Build skills and understanding Understand and direct innovation Others… “ Business cannot succeed in a society that fails.” Björn Stigson, WBCSD President

Understanding & communicating impact Monitor progress over time Identify KPIs Gather data Identify what works and what doesn’t Celebrate success Share with stakeholders Others... “ Companies do not normally measure their social, economic and environmental footprint in the markets in which they operate and, as we all know, communication without facts is tough.” Patrick Cescau, former Group CEO, Unilever

Where are the challenges and opportunities for your business along the different parts of the value chain? Where and how can you build inclusive businesses along your value chain? Identifying opportunities Design Procurement Manufacturing Distribution

Business integration Ref: Five Winds International Future vision: Identify the ideal state – what the processes should look like in the future Required actions: Develop the actions necessary to realize the goal Goal: Select one business activity and explain how it can incorporate inclusive business principles Current reality: Explain the current reality – how are decisions currently made around this business activity?

Make it happen! Seize the opportunity! “ Companies that master inclusive business will be those that realize great success in the coming decades.” Sam DiPiazza, PriceWaterhouseCoopers

References, Resources & Case Studies

WBCSD Others WBCSD-SNV Alliance blog Case Study library Business for development Doing business with the poor Sustainable Livelihoods Video - Measuring Impact Framework UNDP Growing Inclusive Markets WRI Next 4 billion Harvard CSR Initiative Reports Business Call to Action IFC Business Linkages programs Monitor Inclusive Markets Additional resources

Grundfos What? Grundfos LIFELINK aims to provide rural communities in Africa, Asia and Latin America with a sustainable supply of safe drinking water at affordable prices. It uses solar powered pumps and mobile banking techniques to make clean water affordable and accessible. Why? Commitment to supporting the MDGs and an interest in being an industry leaders in providing sustainable water systems and other infrastructural platforms. How? LIFELINK uses a single-point water supply with a solar powered submersible pump. It has the capacity to pump 8-16 m3 of water per day. Through a mobile banking platform, communities are able to pay back their investment over 5-7 years. Results… LIFELINK has reduced the waiting time for water, made it easier to cultivate and sell crops, and improved health standards among the population who used to fetch water from polluted sources. By 2015, LIFELINK aims to touch the lives of more than 1.5 million people.

Vodafone What? Launched in Kenya in 2007, M-PESA is a mobile payment solution that enables customers, many of whom do not have a bank account, to complete simple financial transactions by mobile phone. Why? Many people in remote, poor regions of the world are not able to open a bank account because they do not have access to a bank or because they do not have sufficient income to justify a bank account. This lack of access to basic financial services prohibits many from opening a business. The company saw an opportunity to develop a new business model that supports access to financial services and responds to the way people use mobile phones. How? Vodafone worked with its subsidary in Kenya, Safaricom, and a microfinance institution partner, Faulu, to develop a payment gateway allows mobile talk time to be converted into currency and vice versa. Results… M-PESA currently has about 7.5 million users and over US$ 3 billion has been transferred peer-to-peer using mobile phone. The company is also testing new services such as international money transfer between the UK and Kenya and bill pay for electricity, water and television services.

Philips What? Philips woodstove project addresses issues of indoor air pollution for families relying on biomass for daily cooking needs through both philanthropic and commercial channels. The company’s philanthropic design program developed the Chulha, a built-in woodstove which is now being offered to local entrepreneurs. At the same time, a range of portable woodstoves have been developed and integrated into a sustainable business model for the BOP. Why? 1.6 million people die annually due to smoke inhalation from indoor wood burning stoves. Company interest in exploring new markets, particularly in India and building Philips health and well-being brand. How? Originally started as part of Philips “Philanthropy by Design“ program, t he company is now exploring new distribution channels and social networks, building marketing campaigns, engaging with government, and investigating the potential of using carbon finance Results… Allows efficient use of wood and reduces health risks of indoor air pollution; up to 90% reduction in carbon monoxide. The company is currently establishing the distribution route after successful product development and promotion.

Reuters What? Reuters Market Light (RML) is a fee-based mobile information service for farmers in India. It brings commodity prices, crop and weather data to farmers via mobile phone. Why? Reuters aims to help customers succeed by providing indispensable information-based products and services. Nearly two-thirds of India's billion-plus population depend on agriculture for a living, and with only 40 % of its farmland irrigated and markets often distant, farmers are vulnerable to shifts in prices or weather conditions. How? RML makes available weather reports over a 50-mile radius and local crop prices within a 5-hour journey in the subscriber’s local language for a small fee. RML has built an extensive system of hundreds of full-time dedicated content professionals, product delivery network, and distribution partners to cover news and data on over 250 crops, 1000 markets, and 2,000 weather locations across 11 states in India. Results… In 2 years, RML has sold some 300,000 quarterly subscriptions to nearly 135,000 farmers in over 15,000 villages across Maharashtra, Punjab & Haryana in India. Some farmers have made as much as US$ 8,000 using the service that costs only US$5 per quarter. Farmers indicated that RML has facilitated greater transparency in the Indian agricultural markets, allowing them to increase productivity, maximize revenue and open up new distribution channels.

Pronaca What? Program to integrate small-scale maize producers into the company’s supply chain. Why? Pronaca, one of the largest companies in Ecuador, is a leading buyer of maize. Pronaca wanted to improve the stability of its supply of maize, to source locally and lower production costs. How? Farmers receive training, access to credit and new technology to increase productivity and develop an extra crop rotation. Results… The pilot began with 80 small maize producers and has now grown to 200, with plans to increase to over 650 producers. Productivity increased by 20%, which has helped raise producer income from US$ 0.63 to US$ 2 per capita per day. The initiative created 234 new jobs.

Michelin What? Acquired by Michelin in 1984, the Bahia plantation in Brazil is comprised of very small and uneven plots, which are difficult to farm on an industrial scale. The plantation is nonetheless a major source of income for the local communities of Igrapiúna and Ituberá, home to more than 40,000 people. In a context of insufficient productivity and profitability (due to the South American Microcyclus Uleï fungus), Michelin, conscious of its responsibilities, sought to preserve local jobs and safeguard the primary forest. Why? Respect the values of the company: the need to assume responsibility for environment and people living from these jobs. How? In 2003, the Group launched the Ouro Verde project, which entailed selling 400-hectare plots of land to twelve Brazilian managers of the plantation, helping them obtain reduced-rate loans and providing them with a commitment to purchase their latex production. The on-site Michelin latex transformation plant remains in operation, as does the research unit that supplies the regional producers and smallholders in more resistant and productive seedlings at cost price. In parallel, Michelin is creating a 3,000-hectare ecological reserve and is pursuing its research on Microcyclus Uleï. In 2007, the creation of a college of agriculture for rural young people enabled 16 to 21 year-old youths to attend lessons, alternating with work on the plantation. Results Thanks to this project, jobs on the plantation have increased from 568 in 2003 to 1,005 in 2008. An independent review of the project, carried out by the International Labor Office in 2007, concluded that the project had made it possible to maintain existing jobs, create new ones and preserve the workers’ benefits and rights.

Interface What? FairWorks is about producing beautiful products with social integrity. It grew out of a collaboration between InterfaceFLOR in Europe, a division of the US based Interface Inc., and Industree, an Indian social enterprise working to contemporise and market traditional Indian handicraft skills. Why? FairWorks is an extension of Interface’s Mission Zero – a commitment to eliminate any negative environmental impact of the business by 2020 – this time focusing on the social aspect of sustainability. Through InterfaceFLOR’s partnership with Industree, FairWorks supports rapidly disappearing traditional skills and plays a part in providing sustainable livelihoods to people around the world living on less than $2 USD/day. How? FairWorks sources locally available materials and works with local skilled artisans (primarily women in rural India) to produce flooring tiles for consumers in developed markets. FairWorks fuses the best of the company’s textile and market knowledge with traditional textile design. Industree and InterfaceFLOR also help the artisans access microfinance and build capacity to manage their own businesses. Results… Just TM , the first product in the FairWorks category was launched in 2008 and was co-designed by Industree, InterfaceFLOR, and EXDL – a sustainable design practice. Over 150 families in six villages are involved in FairWorks and many artisans who work with Industree have tripled their income over a 3 year period .

ArcelorMittal What? Since 2004, ArcelorMittal Brazil’s supplier engagement program has focused particularly on sustainability. The success of the scheme inspired Instituto Ethos to work with the Inter-American Development Bank to create their own scheme to strengthen the links between large companies, such as ArcelorMittal Brazil, and small and medium sized enterprises in their supply chains to help them improve their sustainability performance, develop better commercial relationships, reduce costs, and open up new markets and new product opportunities. Why? Opportunity and necessity to support the adoption of sustainability principles of SMEs and especially those in the company’s supply chain. How? Over the last two years, ArcelorMittal Brazil, as the sector champion for steel, has been working with 15 companies in their supply chain, helping them to incorporate social and environmental standards into their business practices. Results… All 15 companies in the group developed their own codes of ethics and 11 created new initiatives to save energy, water and paper. Likewise all 15 companies made real improvements in their production or management processes, and they all gained new clients.

What? Unilever‘s Lifebuoy hygiene education program, Swasthya Chetna (Health Awakening) is designed to promote basic hygiene habits, including hand washing with soap. Why? Hand washing with soap is one of the most effective and inexpensive ways to prevent diarrheal diseases. Nearly half of Lifebuoy soap sales are in rural Asia and Africa where many people live on less than US$1 a day. Lifebuoy’s social mission is to bring safety, security and health to 5 billion people through active promotion of hand washing with soap. How? One of the key elements of the Lifebuoy program is the “glowgerm” demonstration performed in schools. When held under ultra-violet light, glowgerm powder glows on the dirt left behind on hands washed only with water. Unilever works closely with NGOs, government and local authorities to adapt messages to specific audiences and educate children on the importance of hand washing. Results Since the campaign was originally launched in 2002 in India, it has reached 120 million people in nearly 51,000 villages. It has also provided commercial benefit with sales of soap up in districts where the campaign has run. Similar programs have been launched in other countries including Sri Lanka, Indonesia and South Africa. Unilever has also initiated a process to measure the impact of the program on hygiene habits, health and family welfare. Unilever

What? “Mi Casa” is a service and distribution scheme developed by Holcim Apasco to bring affordable and accessible housing solutions to communities in Mexico. Why? Company interest to explore developing markets. Large housing shortage in Mexico and little access to acceptable standard and affordable construction materials as well as professional advice. How? Focus on core product and competencies (cement) which is produced and sold locally. The company brought together trades people, local authorities, housing law experts and credit institutes to offer holistic housing solutions. Since 1996, the company has set up more than 1100 standardized “Mi Casa” centers (building materials depots) that allow resellers to have the full range of building materials and products available locally at reasonable prices. Results… Holcim Apasco has trained more than 400,000 self-builders and supported the construction or improvement of about 250,000 homes all over Mexico during the last eight years (2000 to 2008). Holcim

Information and disclaimer The Inclusive Business Challenge was developed on behalf of the WBCSD’s Future Leaders Team 2009 with participation from Allianz SE, ArcelorMittal S.A., CIMPOR, CLP Holdings Limited, ConocoPhillips, E.ON AG, EcoSecurities Ltd, KPMG, Michelin and Natura Cosméticos S.A. We would like to thank the Future Leaders and their companies for their commitment and contributions. The work was a joint initiative by the WBCSD’s Development and Business Role Focus Areas with project management by Jessica Davis and Katherine Madden. This material is released in the name of the WBCSD. Like other WBCSD publications, it is the result of a collaborative effort by members of the secretariat and member companies. A wide range of members reviewed drafts, thereby ensuring that the document broadly represents the majority view of the WBCSD membership. It does not mean, however, that every member company agrees with every word. Copyright © World Business Council for Sustainable Development, October 2009 Design: Futerra Sustainability Communications, www.futerra.co.uk Pictures: World Bank photograph collection, various photographers. Secretariat 4, chemin de Conches Tel: +41 (0)22 839 31 00 E-mail: [email_address] CH-1231 Conches-Geneva Fax: +41 (0)22 839 31 31 Web: www.wbcsd.org Switzerland WBCSD North America Office Tel: +1 202 420 77 45 E-mail: washington@wbcsd.org 1744 R Street NW Fax: +1 202 265 16 62 Washington, DC 20009 United States WBCSD Brussels Office E-mail: [email_address] c/o Umicore Broekstraat 31 B-1000 Brussels Belgium

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