By Sahba Sobhani, UNDP Private Sector Programme Advisor, and Markus Dietrich, Asian Social Enterprise Incubator Director, with Grace Santos, Jun Perez, Jay-R Cordova, Asian Social Enterprise Incubator Consultants
To date, many actors involved in poverty alleviation and environmental protection have operated in silos. Although both sectors follow ecosystem approaches, in the first, impact is seen as positive and desirable, and in the latter, impact is seen as negative and to be minimized. However, the Sustainable Development Goals now provide a common and holistic language integrating frameworks and related policies that development and environmental protection actors can unite under. A new report published as a joint collaboration between UNDP, the Istanbul International Center for Private Sector in Development, Business Call to Action, examines inclusive business models at the nexus of poverty and the environment, noting that scaling up inclusive business models leads to positive social and environmental impact . The report, Scaling Inclusive Business Models at the Nexus of Poverty And Environment: Case Studies from the Philippines, focuses on three inclusive businesses in the Philippines that challenge our understanding of business impact by integrating social and environmental frameworks.
Smallholder farmers’ dependence on natural ecosystems makes protecting natural resources fundamental for tackling poverty. As the global community embarks on the path to achieving the Sustainable Development Goals (SDGs), the private sector will play a crucial role in this effort. This report takes a close look at the business models – and ecosystems – of three agroforestry companies in the Philippines to shed light on the challenges and opportunities inclusive businesses encounter when seeking positive social and environmental impacts. Kennemer Foods International (KFI) is a major producer, buyer and processor of cacao beans. Rocky Mountain Arabica Coffee Corporation (RMACC) produces and distributes high-grade Arabica coffee. Glatfelter Gernsbach GmbH sources and processes abaca, which is used to produce specialty paper for tea bags and coffee filters.
All three companies showcase the enormous potential for inclusive businesses focused on the environment, as demonstrated by their business models, technologies, and development strategies. They are all committed to long-term engagement in the lands where they operate and to building capacity among the farmers who produce their raw materials. The companies have also forged innovative partnerships with landowners, traders, middlemen, local government units, national government agencies, rural banks, farmers’ cooperatives and other stakeholders. Further investigation into these companies’ business models illustrates the fundamental components of success for inclusive companies, farmers, local value-chain actors and the natural environment where production takes place. Key elements include:
Fair labour practices and international market prices for farm produce, which provide farmers with sustainable and secure incomes;
Capacity building, knowledge sharing, skill building and open access for farmers to quality inputs, facilities and technical assistance;
Alignment of agricultural operations with existing land-use and development plans, and use of eco-friendly agricultural practices to reduce negative environmental impacts and support the sustainability of ecosystems;
Innovative management and convergence schemes to streamline value chains, manage resources more efficiently and strengthen relationships among local ecosystem actors; and;
Commitments to meet global quality and sustainability standards through product and process certification. These standards not only ensure the sustainability of value chains, but protect the natural environment and foster fair trade and safe labour practices.
In order to cultivate partnerships and understand potential social and environmental impacts, it is important to identify all stakeholders – and their roles. Since inclusive companies are often pioneers in their fields, the business ecosystems where they work tends to be poorly developed and other actors may lack capacity for collaboration in inclusive initiatives. Companies should continuously engage local governments and other local players in dialogue, and offer innovative products and services with clear value for local partners. Inclusive business partnerships can also be supported by enhanced government procurement policies to facilitate public-private partnerships.
Investments are needed in research on natural ecosystem dynamics and ecosystem services to
understand their impacts on inclusive business. While most rural development frameworks have provisions for private-sector involvement, few enable companies to utilize existing resources to realize the benefits of inclusive business. Companies require access to technology, financing, markets and human resources.
Underscoring the potential of inclusive agroforestry models to achieve positive social and environmental impacts, this in-depth analysis of highlighted the systemic barriers, challenges and opportunities for inclusive business models and ecosystem actors in the Philippines. The research indicated that inclusive models have significant potential to contribute to SDG targets. Since the dialogue on inclusive business and its array of potential impacts is still new, further research is required to support the scaling up of inclusive models.