This report examines the concept of inclusive business to address social inequality and enhance the participation of disadvantaged members of society in the economy. It was commissioned by the OECD for ‘Business for Inclusive Growth’, a global coalition of corporations committing to overcome inequality of income and opportunity. In this respect, over the past three decades, the benefits of economic globalisation have been unevenly distributed both between and within OECD member countries. This has resulted in higher-income households benefitting disproportionately from economic growth, while lower-income populations have seen their living standards stagnate or even decline.

To enable the largest possible portion of society to actively participate in economic life and truly benefit from the economic value created, the report argues that the business community needs to shift from a ‘grow first, distribute later’ model to one of inclusive growth. In that way, inclusive business is an important factor in reconciling economic development with the ideal of social justice. As such, it is crucial to sustainable development.

The report finds that the great potential of inclusive business initiatives has to date been widely untapped, with needed investment not matching that potential. This is due to ambiguity in defining the concept of inclusive business and the failure to collect and document successful examples in practice. The report addresses both of these problems, the first part of the report being dedicated to setting down a clear definition of inclusive business and the second part of the report showcasing a sample of inclusive business initiatives carried out in OECD countries in recent years.

In terms of defining inclusive business, the report first discusses economic inclusion as a person’s ability to contribute to and benefit from economic activity, the benefits being sufficient to cover important needs. This is central to that person’s well-being as it impacts on their social and political inclusion. It comprises three interlinked dimensions, being access to work and income, goods and services and credit and loans. The report then discusses the barriers to economic inclusion, namely, structural, informational and socio psychological, noting that they can co-exist and need to be assessed in devising an inclusive business initiative.

The report advances a definition of inclusive business as having certain characteristics. It specifically targets people who are excluded from ordinary economic participation. It aims at lifting the barriers those people face to economic inclusion. It aims to create shared economic value as opposed to value appropriation in which social justice is subordinated to profit and competitive advantage. In doing so, inclusive business still seeks to generate some level of financial return. Such initiatives will require a shift in mindset in terms of how businesses think about their role and engage with stakeholders and partner organisations.

Based on this definition of inclusive business and along with the sample case studies in the report, it is hoped that more businesses will be motivated to undertake such initiatives. This will be enhanced through guidance to be issued in the future on how inclusive business initiatives can be managed successfully.

1. Inclusive business initiatives can help address rising inequality in income and opportunity through enabling disadvantaged populations to participate in economic life and benefit from economic value created.
2. The great potential of Inclusive business initiatives to address increasing inequality in income and opportunity remains untapped. This is due to a lack of clarity around what inclusive business actually is and the absence of documenting examples of such initiatives in practice.
3. Economic inclusion is a person’s ability to contribute to, and benefit from, economic activity. It comprises access to decent work and a fair income, essential goods and services and valuable and carefully granted credit and loans. These dimensions are linked and must all be considered in inclusive business initiatives.
4. A substantial proportion of the population finds itself excluded from economic activities and at risk of becoming socially relegated due to barriers to their economic inclusion. Those barriers are structural, informational and socio- psychological.
5. Inclusive business initiatives need to identify and evaluate the most prevalent barriers to economic inclusion in a given case. This is because these barriers can coexist and work together to exclude people from economic participation.
6. Inclusive business initiatives aim to generate economic value in the spirit of value sharing as opposed to the current prevailing method of value appropriation in which profit and competitive advantage prevail over justice related considerations.
7. Inclusive business initiatives complement government led support to disadvantaged populations such as social welfare or philanthropic aid. This is because these initiatives address needs that are both underserved by the market and insufficiently addressed by welfare state services and social organisations.
8. Although inclusive business pursues a social purpose, it is still expected to generate some level of financial return. While that level will vary from one initiative to another, all forms of inclusive business play an important role in rendering economies to be more inclusive.
9. Engaging with inclusive business requires a shift in mindset by traditional for-profit organisations to thinking about how they include impoverished populations in economic value creation and lift barriers to their economic inclusion. They have to interact with other sectors including civil society and hold a longer investment time horizon.
10. This report contains a number of case studies showing a spectrum of inclusive business initiatives and the various social challenges they address including unequal access to suitable jobs, reliable mobility, quality nutrition, adequate insurance and affordable accommodation.