Emerging
Markets
Why sustainability is not just for rich companies in developed
nations. |
|
|
The role of business
in sustainable development was a key element in the recent World
Summit on Sustainable Development in Johannesburg. A new report
released just a few weeks before the summit overturns conventional
wisdom by showing that it does pay for businesses in emerging markets
to pursue a wider role on environmental and social issues.
Developing Value: The Business Case for Sustainability in Emerging
Markets challenges the myth that sustainability is only for
rich companies in developed nations, and does not apply to the private
sector in the emerging markets. Based on more than 240 real-life
examples in over 60 countries, the study analyzes the “business
case” for sustainability in emerging markets—the opportunity
for businesses to achieve benefits such as higher sales, reduced
costs, lower risks and enhanced reputation from better corporate
governance, improved environmental practices, and investments in
social and economic development. It is the result of a unique collaboration
between the International Finance Corp. (IFC), the private sector
arm of the World Bank Group; the strategy consultancy SustainAbility;
and the Ethos Institute in Brazil.
Highlighting examples from businesses in Africa, Asia, Central and
Eastern Europe, the Middle East and Latin America, the report refutes
the argument that the business case holds only in developed markets
and pinpoints many opportunities available to diverse businesses.
Examining six business success factors and seven sustainability
factors, the report finds the greatest evidence for business benefits
in emerging markets in the areas of cost reductions, productivity,
revenue growth and market access. On the sustainability side, environmental
process improvements and human resource management represent some
of the most significant opportunities for creating value.
“The report makes clear that sustainability is not an all-or-nothing,
one-size-fits-all proposition,” says Peter Woicke, executive
vice president of IFC, adding that Developing Value shows
that sustainability is a pragmatic pursuit, not just an ideological
exercise.
Developing Value aims to help business people in emerging
markets identify opportunities to increase profits by making progress
on sustainability, particularly owners and managers who are relatively
new to sustainability. The report finds that every kind of company
can find benefits, but the best opportunities depend on the particular
drivers, circumstances and priorities of a business. It also calls
on other stakeholders like government, NGOs, business customers
and investors to strengthen the business case by putting pressure
on companies with poor performance and rewarding those which make
improvements in their sustainability activities.
A searchable database of case studies and further information
can be accessed at www.sustainability.com/developing-value. Copies
are available for sale at www.sustainability.com or at www.worldbank.
org/publications.
|
SERVING THE WORLD'S
POOR
|
In an article that
appeared in the September issue of the Harvard Business Review,
noted business scholar Dr. C.K. Prahalad and Dr. Allen Hammond,
the World Resources Institute’s (WRI) vice president for
innovation, argue that poor communities in developing countries
represent fundamental new sources of growth for multinational
corporations. They said that improving the lives of billions
of the world’s people could also bring about a more
stable, less dangerous world.
The article, “Serving the World’s Poor, Profitably,”
outlines the opportunity of reaching the four billion-person
market at the bottom of the world’s economic pyramid. The
authors said that companies can turn a fair profit while improving
the quality—and often, lowering the costs— of goods
and services that poor communities receive.
Poor communities today pay high prices for food, clean water,
credit and other services—often far higher than middle
class consumers in the same country—as a result of inefficient
supply chains. “The collateral social benefits of providing
poor consumers with real market choices can be enormous,”
says Prahalad, the Harvey C. Fruehauf Professor of Corporate
Strategy at the University of Michigan Business School. “The
current downturn of the world’s markets and increasing
globalization makes this approach very timely.”
The authors document strategies and business models already
being applied in these new markets by a number of multinational
companies and entrepreneurial start-ups, and show that these
can lead to top-line growth, cost-saving economies and access
to innovation. Moreover, they show how digital networks are
providing low-cost distribution channels for these markets.
“It’s already clear that wireless networks are going
to be the killer app for rural communities—creating a very
low cost infrastructure that links them to markets and provides
access to information,” says Hammond.
The authors cited numerous examples to support their arguments,
case studies taken from the WRI’s Digital Dividend Clearinghouse,
an interactive on-line knowledgebase tracking nearly 700 such
projects in developing countries around the world. |
|
