Hello!
I am Rebeca. I work on topics of strategy, operations and impact investing. I am currently working as a consultant for UN/ ILO. Before, I worked at McKinsey, the Inter-American Development Bank and Angel Ventures MX, an impact investing firm. Happy to participate in this discussion!
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Hi, I am Davide Fiedler, Manager Social Impact at WBCSD, where I lead our projects on Business & Human Rights and on The Future of Work
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Our first question today:
Q1. What are some good examples of business models that create commercial value for lead firms while driving better job security, equality, health and well-being for workers?
Hello, I am Sabine Becker, working for German GIZ on international cooperation especially in the field of ‘employment promotion in developing countries’, on behalf of our Ministry BMZ
This Challenge with ILO is all about identifying and learning from examples of lead companies which have either changed an existing business model or created a new one to drive profitable returns and quality jobs for workers. From my reading to date, examples of the former are more plentiful than the latter. It would be interesting to get views on that.
One of the challenges to identifying good “business models” for lead firms is the diversity of businesses and the absence of any “one-size fits all” approach. This said, someone like H&M offers a good example of a large, multinational, retailer, involved in an industry often associated with waste, labour abuse and environmental damage, which seeks to do things the right way*.
Other examples include food and drink brands such as Pact (coffee), Tony’s Chocolonely (chocolate), and even smaller food providers such as Mindful Chef (food delivery boxes) who make their responsibility as the lead firm in a chain wholly transparent, and their belief / commitment to a fairer world, a core part of their brand identity.
Recognising people’s need to express their identity through consumption choices enables companies to thrive from doing well in a market in which there is growing dissatisfaction with “the way things are”.
(* I caveat this by highlighting that I’ve not gone “under the hood myself” but say this based on the guidance of Ethisphere and other organisations dedicated to accrediting and monitoring ethical behavior)
Hello, Elisa Mandelli, Technical officer working with the Lab team at the International Labour Organization. Anthropologist by background
A1: Examples
- Example 1
- Focus: Increasing equity in accessing quality jobs: right-sizing skills & education (India/Global)
- Lead company: iMerit:
- Business Model: Delivering highly technical, skilled technology support services in India for global firms advancing Artificial Intelligence based technologies (e.g., self-driving cars)
- Workforce: Largely female workforce, low-educated from deprived peri-urban locations who are trained to train artificial intelligence software (e.g., by undertaking detailed (pixel-level) analysis and data tweaking)
- Shared value & Impact: Enables iMerit to provide competitively priced services whilst creating access to quality, technical work typically excluded to those without higher education qualifications.
- More info: https://imerit.net/
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A1: We believe that business models that have a transparent and traceable supply chain, where every step is known, can add not only commercial value to the business but also support improved livelihoods and resilience for the different actors involved.
We conducted a survey in July this year to understand how cotton farmers have been impacted by COVID-19. 63% of farmers said that links to the cotton market are important in order to manage the changes in market demands and respond to climate change; financial resilience and agricultural resilience were seen as key areas for support.
Here’s more on our survey from Hardeep Desai Head of Farm Operations on the BFP blog.
BFP Article Hardeep Desai.
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A1: Eighty percent of workers in rural sub-Saharan Africa are informal. That’s why Hand in Hand focuses so much of our efforts on improving decent work in rural areas, specifically in agriculture. We see lots of positive business models emerging here, often with local producers supporting stronger value chains. In Kenya, Hand in Hand is working with African Beekeepers Ltd. (ABL), who provide training, materials and a steady source of demand – which is to say, sustainability – for farmers who wish to produce honey. In return, ABL receives commercial benefit and a consistent, quality supply.
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A1: Examples
- Example 2
- Focus: Improving work/life balance for all professional employees, men and women (Spain)
- Lead company: BBVA Group
- Business model/workforce: Enforcing shorter, more goal-orientated day (end by 7pm) with a partial teleworking model of 40% across all staff (pre-COVID!) to tackle a long-hours culture and office presenteeism deemed essential for career advancement that favoured men over women (where men come in later, take longer lunches, and work later vs women who come in early, take fewer, shorter breaks and leave earlier).
- Shared value/impact = 61 % of employees feel their work-life balance has improved since the new measures were adopted.
- More info: https://www.weps.org/sites/default/files/2020-06/CASE%20STUDY%20•%20BBVA%20(FINAL).pdf
- Example 3
- Focus: Increasing access to affordable healthcare and quality employment from home (Pakistan)
- Lead company: DoctHers
- Business Model: Lean online clinic where doctors are connected via a virtual platform to patients unable to afford healthcare.
- Workforce: Female clinicans who can work from home after marriage or pregnancy (as they are no longer able to continue to practice outside of the home), plus local sales personnel to promote the service
- Shared value & impact: Returns female talent back into the workforce whilst the lower costs of operations via digital enable affordable access (saving up to $78M/annum in costs)
- More info: https://www.docthers.com/
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- · At a very pragmatic level, businesses that build respect for human rights into their business model can lead to transformative impacts on peoples’ lives as well as creating value for the business.
- · Examples of companies acting on their own to this end are rarer, but include for example Hermes Parcelnet’s agreement with GMB and introduction of self-employment plus model that was seen as “ground-breaking for the gig economy”.
- · The Farmer Income Lab, launched by Mars, with Dalberg and Wageningen universities and Oxfam USA, is a collaborative effort to identify ways to increase smallholder farmers’ incomes – beginning with Mars’ supply chains in developing countries - and to understand how to create positive outcomes for farmers at scale.
- · More frequently we see examples through industry-wide collaboration. ACT (Action, Collaboration, Transformation) is an “agreement between global brands and retailers and trade unions to transform garment, textile and footwear industry and achieve living wages for workers through collective bargaining at industry level linked to purchasing practices”. In September 2019, ACT adopted a joint due diligence framework including Global Purchasing Practices Commitments, a Responsible Exit Policy and Check List and a Purchasing Practices Self-Assessment tool (covering 64 different aspects of purchasing practices in 16 areas), including a commitment to “fair terms of payment” and “better planning and forecasting”. The ACT Accountability and Monitoring framework provides ACT member brands with an agreed set of indicators and monitoring instruments to implement their purchasing practices commitments.
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A1: We have seen examples of companies going over and beyond legal requirements of countries they are headquartered or operate in. For example by providing all their employees, no matter where they are located, the same employee benefit packages – they are, if you wish, “globalizing employee benefits”.
Examples:
A1: CDC’s approach is based on an understanding of how respect for workers builds business value by unlocking workers’ potential to contribute to business success.
There is ample evidence that demonstrates that employee satisfaction is positively correlated with firm performance . For example, this meta-analysis of independent studies shows employee satisfaction positively correlating with customer loyalty, employee productivity and even profitability, and a strong negative correlation with staff turnover https://voxeu.org/article/employee-wellbeing-productivity-and-firm-performance
CDC (the UK’s Development Finance Institution) invests in companies in some of the toughest places to do business on Earth including DR Congo, Sierra Leone, Myanmar and Nepal. The baseline labour conditions in many of these markets are extremely poor, therefore our approach is not to only invest in businesses that already have good working conditions, but to invest in businesses that are willing to change and to support them on that journey.
We’d love to hear about ‘outlier’ business models which could, one day, become a new normal in a build back better agenda.
For example, there are often significant labour risks with using a high share of contracted and agency workers. We did a case study on PanAust’s ‘'insourcing’ business model in Laos.
This means that they prefer not to use many layers of suppliers or contractors as far as possible, attempting to bring most functions in-house, even for tasks that might be considered low-skill. Unlike other mining companies, PanAust even employs its own housekeepers, cooks and cleaners rather than using an outsourcing company. The logic is that employees are easier to influence for process and procedure adherence. In a national context where there is a low level of health and safety awareness the company can better track whether safety and policies are really being put into practice.
Are there other ‘outlier’ business models or practices (in other companies, other sectors) that intrinsically lend themselves to better working conditions?
An example of a model in which companies are committed to social, ecological and economic sustainability is the “Alliance for Sustainable Textiles” (Link), founded in 2014. Consisting of private sector actors (companies, associations), NGOs, trade unions and the German Federal government, this multi-stakeholder initiative combines resources to achieve better employment situations in the textile industry. The companies exchange information regarding working conditions, work together on joint projects, and have set themselves the common goal, for example, to increase the proportion of sustainable cotton in textile production to 70% by 2025. Furthermore, the “Alliance for Sustainable Textiles” monitors, that no child labor is used in its supply chain. On the other hand, participating companies can position themselves as companies with a high level of responsibility for the environment and people. This enables members of the Alliance to meet the increased demand for textiles with minimum social and ecological standards.
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Two great examples of new business models for decent work relate to chocolate. Tony’s Chocolonely’s business model includes tracing where all its ingredients come from, paying higher prices to farmers, improving farmers’ productivity and encouraging them to adopt modern practices and diversify their crops, and investing in long-term commitment and farm cooperatives to empower farmers to work together. 6,624 farmers who produce cocoa for Tony’s earn a decent income. More than 9% of the retail price of our bars goes to the cocoa farmers. Tony’s retail sales are growing fast.
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More and more, we’re also seeing another type of business model from a new class of social actor gain traction. Here, larger companies invest in nurturing local ecosystems, recognising the long-term benefits that come from establishing a presence in and boosting emerging economies. Earlier this year – just weeks before coronavirus caused the country to shut down, in fact – Hand in Hand announced a partnership with Visa, a key objective of which is to support access to appropriate, affordable financial services – savings, insurance, and loans – for a large proportion of Hand in Hand entrepreneurs.
Long-term, the aim is to build a resilient financial system, which benefits everyone, including financial firms like Visa. Short-term, and as a direct consequence of the devastation wrought by coronavirus, the effect will be to help thousands of farmers get their businesses back up and running after a period of steep decline.
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Divine Chocolate is another example, which is co-owned by a co-operative of 100,000 cocoa farmers in Ghana, who receive a share of the profits of this first farmer-owned Fairtrade chocolate aimed at the mass market in the UK.
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