Sustainable and Inclusive Business Model

Question: Discuss about the Sustainable and Inclusive Business Model. Answer: Introduction With the turn of the 21st century, the focus on the sustainable and inclusive business model has drastically increased. The government, society and the business organizations have realized that they are required to adopt the sustainable practices as a precondition for business establishment due to climatic changes and the over-stretching of the natural resources. The trade barriers between the developing countries and the developed world must also be reduced to foster sustainable development and achieve poverty alleviation. The objective of sustainable growth and the poverty reduction can only be achieved by avoiding the commercial practices which destroy environment and the social capital (Raiiney, 2010). The inclusive business is considered as a significant practices which can positively impact on the current business organizations. It can enhance the profitability of the organization and fight poverty as well. The inclusive business refers to the companies wherein the goods or services are accessible, affordable and assist the poor in meeting their needs. It also includes the business practices wherein the poor are included in the supply chain as producers, suppliers, distributors in a mutually beneficial manner (Wells, 2013). The inclusive business practices are promising in the contemporary times as they enable economic growth, private sector development and reduce poverty in a positive and resource neutral manner. Additionally, it increases the fund for the public spending which can contribute to the poverty alleviation. The inclusive practices are important in the developing nations as the major economic source of these countries is agriculture. The agriculture sector of these countries is characterized by low yields, fragmented supply chain and use of harmful environmental practices. The subsistence farmers have limited knowledge of the latest technology and remains entrapped in the circle of limited output and earnings. With the adoption of an inclusive business approach, the agriculture sector can attain immense growth. The countries can invest in numerous methods such as supply-chain-agro-processors, seed companies, equipment leasing companies and financial assistance so that the poor farmers can p roduce efficiently and sustainably. The motivation of these approaches is not philanthropy or Corporate Social Responsibility (CSR) but creating a robust and inclusive business model which can generate financial returns and positively impact on the environmental and the social challenges (Beckwith, 2016). Along with it, the sustainable business practices are also important for the business organizations. Traditionally, it is considered that sustainability is not good for business organizations. The business firms also find it difficult to implement the sustainability practices due to the assumption that sustainability and the business are at the opposite end of the continuum. In business, the sustainability can be differentiated in two categories, namely, economic sustainability which refers to the long-term development of the trade relations while maintaining that they have less impact on the environment, whereas the corporate sustainability refers to the reduction of the environme mtal and the social impact of the business actions (Kopnina Blewitt, 2014). In this regard, this paper examines sustainable and the inclusive growth model of the organization. The paper explores the current trends in the global business environment, examines the changes which can be incorporated in the economic models which can foster sustainable practices in the business organizations. The paper has also investigated the concept of inclusive business, social business, CSR, social entreprenuership, green economy, circular economy, conscious economy and the new economic foundation. Current Trends in the Global Business In the recent years, the business organizations are facing diversified and critical challenges due to income inequality, high exploitation of the natural resources of the earth and climatic crisis. The income inequality is worsening in the developed as well as the developing countries. The rich people of the world are increasingly accumulating wealth whereas the middle class is struggling with the diminishing wealth. The unemployment is another major concern in the current economic growth (Aagaard, 2016). Although the economy of the countries is continually growing, the available jobs for the working generation is limited which is increasing the unemployment concerns. With the globalization and liberalization of trade, the security concerns for the countries and the organizations have also increased. It is due to the rising geo-strategic competition and nationalism which will continue to increase the security concerns in the upcoming years. The economic and environmental issues are t he major concerns in the present business scenario. The long-term economic growth and the environmental sustainability are interconnected. In the past years, the companies were recklessly using the planets resources which resulted in water disputes among the nations, extreme weather events, deforestation, acidifying ocean and eroding soil, the agriculture capacity and biodiversity crisis (Gore, 2015). Moreover, with globalization, the changes in the local economy of a nation is also starting to have serious impact on the global economy. The changes in the global economy are becoming increasingly complex and they are having implications for countries in different parts of the world. The economic shocks arising from different countries pose serious threat as the traditional policy methods have been used to combat them and financial resources have been depleted to assist the economies to recover from the shocks of the previous economic downturns (Jacobsen, 2011). The strategic decisions used to combat these impacts have become more consequential. There are mainly three factors, which can have a strong impact on the global economy, aggregate demand, structural challenges and the fluctuating growth rates of different countries. Most of the major economies of the world are struglling to become self-sustainable with the aggregated demand. Secondly, the major economies of the world are fa cing structural challenges such as high debts, increase in the average population age, and the old infrastructure. The prospect of more economic convergence seems unlikely as the global economies have integrated to a high extent. Due to the outcomes of the traditional economic growth measures, the government and the trade agencies have started looking for policies and methods for stronger and long term growth (Enriquez, Smit and Ablett, 2015). Growth Towards Inclusive Economic System It could be examined that the present economic system based on capitalism has become unsuccessful in the long-term economic development of the world. In the capitalist economy, all the business organizations are privately owned and operated for profit. The underlying notion behind this economic system is that all the humans are selfish and competitive and the best manner to increase the economic activity and increase innovation is to make the economic activity appealing to the self-interest of the humans. In the capitalist market, this theory is realized by the incorporation of various for-profit firms wherein the owners and the shareholders tend to maximize the return on their investment. However, these profit firms require constantly require growing economy. However, the physical resources from which the profits are accumulated are limited; therefore, there are limits to economic growth and if the economy grows on the present track it will collapse in the upcoming years (Sanders Wo od, 2014). The capitalist way of conducting business has also increased the socioeconomic inequality. The capital gains and the dividends have increased the economic inequality; therefore, it is important that the governments to implement economic models which emphasize the long term business development of the organizations. At the other end of the spectrum of the capitalist market is state-run economy or the socialist state. However, by far from the experience, the government is too large, centralized and bureaucratic to allocate resources more efficiently than the privately-run organizations. The present situation calls for voluntarily efforts from the business organizations to consider more aspects than the profit while running their business operations. These ideas pertain to the conscious capitalism and the triple bottom line wherein the business adopts a vision of profit maximization with increased concern for the social and the ecological well-being (Hinton Maclurcan, 2017). The green economy is another initiative which is focused on reducing the environmental risks and scarcities and focuses on the sustainable development. The green economy concept associates with the low carbon emissions, resource efficiency and the social inclusion. According to this theory, the economy is considered as a part of the ecosystem wherein it resides. In the green economy, the economic growth and the environmental responsibility work together to support social and the economic development (Herriott, 2016). It emphasizes on the use of the green energy or the renewable energy in place o f fossil fuels. It focuses on energy conservation and the efficient energy use. The green economy is considered to have immense potential to support the sustainable development. It is the primary theme of the UN Conference on Sustainable Development and considered to be capable to address the financial crisis issue. Moreover, the realization that the human activities oppose the geophysical processes has moved the attention of the governments, think tanks and the international agencies towards the green economy (Shmelev, 2016). The green economy or the green growth is commonly used to refer low-carbon development, environmentally friendly production or to the regeneration of the regionss entire economy. The green economy is associated with the relationship between the human and the nature and relates to the socioeconomic progress (Bina, 2013). However, the operations of the green economy are only limited to the companies with the manufacturing process or geophysical processes. In this regard, the renerative economy has become a uniqure approach which can result in the establishment of inclusive economic model. In the recent years, several social enterprises have also emerged to address the need of the society. The primary aim of the companies in this sector is not profit but creating the social impact of their own. Currently, the sector of the social enterprises is well recognized and attracts high attention from the public and the investors. The social enterprises have also obtained supporting infrastructure from the public, investors and the government. It has high importance to the communities, institutions and the industries. A large number of traditional organizations are focusing on positive social impact; however, they are different from the social enterprises as the main objective of these organizations is to create a positive social impact rather than making profits for their owners. The social enterprises have received attention after the 2008 financial crisis. In the recent years, their appeal has grown due to the media attention, revenue and the increase in the number of such e nterprises (Keizer et al., 2016). The social enterprises are characteristically different from the for-profit organizations. It is widely accepted that the businesses which operates in these markets aims to fulfill their social or environmental purpose and re-invests the majority of the profits to achieve their social and the environmental mission. These businesses are transparent and open in their action and often involve different stakeholders in the ownership and governance of these institutions. The social enterprises are socially and environmentally sustainable model which do good for the society. They are viable business model as to be able to good for the society, they need to be self-sustained. The social enterprises is not a legal form of a business, but a concept which has arisen due to the incapability of the capitalist economy for the long-term sustainable economic growth. The income inequality has increased a number of social ills such as worker abuse, social discrimination and gender inequality in the workplace. In this regard, the business organizations are focusing on the development of the regenerative economy wherein it is identified that the economic growth is correlated with the proper functioning of the complex wholes and in order to foster economic growth, the dynamic relationships among the different entities have to be considered (Confino, 2015). The circular economy is based on this concept. The United Nations 2030 agenda for the sustainable development consists of 17 sustainable Development Goals (SDGs) which emphasizes on seventeen key areas of development including poverty, hunger, gender equality and health education. The twelfth goal of this agenda tries to ensure sustainable consumption and production patterns. This goal requires that the current economic system of linear production is changed into a restorative or regenerative system wherein all the products are designed and marketed by keeping reuse or recycling in consideration. In the traditional linear economic system, the production was based on take-make-waste system which increased the wastage pattern of the countries. The circular economy is the direct response to the growing concern over the resource scarcity and the awareness that the business are dependent on the resources for their sutainance (Lacy Rutqvist, 2016). There are numerous benefits of circular economic models such as drop in the use of the virgin materials, reduction in the use of material waste and use of the by-products of the manufacturing process. In addition to it, the circular economy also have other benefits such as creation of new jobs, increase in the revenue if the companies manufacture circular supply chains with focus on recycling, reuse and remanufacturing process. In the circular economy shift, the companies need to focus on the production, consumption, waste management and the market for the secondary job materials. In the circular economy, the products and the materials are used for as long as possible and the w aste of the resources is minimized (European Commision, 2017). It is an inclusive business model which can be used by the government to create sustainable and inclusive economy. Conclusion In the current economic state, the sustainable development is the need of the hour. The sustainable development refers to the concept in which the consumption of the economic resources in limited so that the future generations can also access the natural resources. The concept of the sustainable development has received attention due to the recent economic crisis of 2008 and the rising income inequality. It is the result of the capitalist markets and the private economy. The underlying notion behind the capitalist economy is that the humans are the selfish person and they can economic growth can only be realized when it is associated with the selfish gains. However, the capitalist economy has created adverse social and economic impacts. In this regard, the concept of conscious capitalism has rose wherein the business leaders become aware of the social and the environmental impacts of the business actions and try to control the negative impact on the society and the ecosystem. The gre en economy is also pursued by the government, international agencies and the think tanks to control the negative impact of the business organizations on the environment. They are associated with the low carbon foot print, changes in the production and the supply chain process to reduce the negative implications of the business operations on the environment. The circular economy is another concept which focuses on the recycling and the regeneration of the products to reduce the wastage. It has immense potential to increase the job and the revenue of the manufacturing organizations. It is a sustainable and inclusive economic model which can be used by the governments to establish an inclusive economy. References Aagaard, A. 2016. Sustainable Business. River Publishers. Beckwith, N. 2016. Inclusive business can help solve the sustainability equation. OECD. Retrieved 24 March 2017 from https://www.oecd.org/greengrowth/inclusive-business-sustainability-equation.htm Bina, O. 2013. The green economy and sustainable development: anuneasy balance? Environment and Planning C: Government and Policy 31, pp. 1023-1047. Confino, J. 2015. Beyond capitalism and socialism: could a new economic approach save the planet? Guardian. Retrieved 24 March 2017 from https://www.theguardian.com/sustainable-business/2015/apr/21/regenerative-economy-holism-economy-climate-change-inequality Enriquez, L., Smit, S. and Ablett, J. 2015. Shifting tides: Global economic scenarios for 201525. Mckinsey. Retrieved 24 March 2017 from https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/shifting-tides-global-economic-scenarios-for-2015-25 European Commision. 2017. Sustainability and circular economy. Retrieved 24 March 2017 from https://ec.europa.eu/growth/industry/sustainability_en Herriott, S.R. 2016. Metrics for Sustainable Business: Measures and Standards for the Assessment of Organizations. Routledge. Hinton, J., Maclurcan, D. 2017. A not-for-profit world beyond capitalism and economic growth? Ephemera 17(1), 147-166. Jacobsen, J. 2011. Sustainable Business and Industry: Designing and Operating for Social and Environmental Responsibility. ASQ Quality Press. Keizer et al. 2016. Scaling the impact of the social enterprise sector. McKinsey and Company. Kopnina, H., Blewitt, J. 2014. Sustainable Business: Key Issues. Routledge. Lacy, P., Rutqvist, J. 2016. Waste to Wealth: The Circular Economy Advantage. Springer. Raiiney, D.L. 2010. Sustainable Business Development: Inventing the Future Through Strategy, Innovation, and Leadership. Cambridge University Press. Sanders, N.R., Wood, J.D. 2014. Foundations of Sustainable Business: Theory, Function, and Strategy. John Wiley Sons. Shmelev, S. 2016. Green Economy Reader: Lectures in Ecological Economics and Sustainability. Springer. Wells, G. 2013. Sustainable Business: Theory and Practice of Business Under Sustainability Principles. Edward Elgar Publishing.