Business models that improve lives while protecting the environment: Lessons from the Philippines
14 Aug 2017 by Sahba Sobhani, UNDP Private Sector Programme Advisor and Markus Dietrich, Director, Asian Social Enterprise Incubator
To date, many business actors involved in poverty alleviation and environmental protection have operated in silos, largely disconnected from each other. Both sectors follow ecosystem approaches, but in poverty reduction circles, impact is seen as positive and desirable, while environmentalists see impact as negative and to be minimized. However, the Sustainable Development Goals (SDGs) now provide a common and holistic language, integrating frameworks and related policies that development and environmental protection actors can unite under.
A new report from UNDP, the Istanbul International Center for Private Sector in Development and Business Call to Action examines inclusive business models at the nexus of poverty and environment. The report focuses on three inclusive businesses that challenge our understanding of business impact by integrating social and environmental frameworks. It highlights that scaling up inclusive business models leads to both positive social and environmental impact.
One example is that of smallholder farmers, whose dependence on natural ecosystems makes protecting natural resources fundamental for tackling poverty. As the global community embarks on the path to achieving the SDGs, the private sector will play a crucial role in this effort.
The 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 three 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 main keys to success not only for the companies but also for 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 standards for quality and sustainability through product and process certification. These standards not only ensure the sustainability of value chains but also protect the natural environment and foster fair trade and safe labour practices.
This in-depth analysis highlights 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. Underscoring the potential of inclusive business models to achieve positive social and environmental impacts, it uncovers lessons that can be useful beyond the agroforestry sector and for countries around the globe.