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Deriving the greatest good from exponential global growth


The global population hit the 8 Billion mark on November 15, with India poised to surpass China as the world’s most populous country shortly. A large population can be both a boon and a challenge. This is particularly true of India with its vast geography and many social divides – between the rich and the poor, the urban and rural, and the educated and uneducated.

In a country of such contrasts the demographic dividend needs to be managed carefully to create an equitable society and to ensure that the economic benefits of growth reach the maximum number of people, particularly those living in rural areas. Undoubtedly, this is not an easy task. India is one of the largest markets in Asia, which is the biggest driver of global economic growth. Yet, complex social challenges remain and large sections of the population do not enjoy the benefits of economic growth.

Leveraging the private sector to positively influence India’s demographic dividend

While governments at the Centre and states are striving to ensure they take everyone along on this growth journey, they cannot do this alone. Businesses must play a critical role in driving inclusive growth and ensuring that a large demographic dividend does not become a demographic curse. Companies not only have the ability to deploy greater capital for social good than non-profits and NGOs, their agility, talent pool, and innovation capacity are valuable assets that can accelerate social impact at greater scale.

However, since the Indian Companies Act, 2013 (which provides for Corporate Social Responsibility under section 135) does not permit the private sector to profit from their CSR activities, companies are reluctant to invest their best resources. In its current form, CSR is viewed by most companies merely as a compliance question, an acceptable cost of conducting business legitimately, with  CSR activities divorced (by law) from competitive strategy and profit-maximizing. 

Doing good can be good business, but needs collaboration to solve social issues

If shared value activities that benefit society while maximizing profits come under the ambit of CSR, business enterprises would be incentivized to commit their best resources to such efforts. 

However, given the complexity and scale of longstanding social challenges, it would be unrealistic to expect that a single enterprise could solve such a challenge entirely on its own. A more effective approach to achieving sustainable and large-scale social change is to leverage collaborative efforts by the private sector, enabled by the public sector. 

Shared value collaborative can play a major role in this process and help bring best resources and unique expertise from the private sector to bear in addressing unmet social needs. 

A great example of this is how the world’s leading cocoa and chocolate companies (Barry Callebaut, Blommer, Cargill, Ferrero, The Hershey Company, Mars, Incorporated, Mondelēz International, Nestlé, and Olam ) worked together on a non-competitive basis in Côte d’Ivoire and Ghana – the top cocoa-producing nations in the world – to rejuvenate and sustain the cocoa economy, while improving the lives of cocoa farmers. In 2016, while the global demand for chocolate was growing, cocoa production in West Africa (contributing two-thirds of the world’s coca production) was on the decline. 

At the time, cocoa farms in these countries had aging and vulnerable trees with low productivity. Cocoa farmers had to contend with declining soil fertility, and a lack of access to improved planting material and fertilizers. They also lacked knowledge of good agricultural practices. Younger farmers were switching over to other cash crops. The local cocoa-growing communities were operating at subsistence levels and could not afford to invest in innovative farming practices to increase yields. These communities also had limited access to basic education and health. Moreover, there were reports of child-labor in these communities.

CocoaAction deployed resources to raise awareness on child protection, and invested in education infrastructure, equipment and materials. It also trained relevant actors from community, implementers and supply chain partners on gender awareness, and supported women to participate in relevant organizations. Through sector-wide alignment of objectives, commitment of resources, and sharing of best practices, the chocolate industry improved the sustainability and resilience of its supply chain. Cocoa farmers were professionalized and productivity of cocoa farms increased. Farmer incomes increased, children stayed in school and women could participate and contribute to household income. Since cocoa farmers were now able to provide a sustainable livelihood for their families, the next generation of farmers were motivated to continue cocoa farming.

Another example of such shared value collaboration was the Southern Agricultural Growth Corridor of Tanzania (SAGCOT), a partnership that began in 2010 between agribusiness companies, the Tanzanian government, and NGOs. The initiative was spearheaded by fertilizer company Yara, and its aim was to transform smallholder agriculture into a sustainable commercial farming sector across a 300,000 sq km tract of arable but unproductive land. Access to fertilizer could increase crop yields in the famine-stricken country. Yara partnered with 58 other organizations in Tanzania to transfer knowledge and make fertilizer more accessible. It supported distributors and retailers to share agronomic advice with farmers. By increasing knowledge about crop nutrition, and by increasing access to fertilizers, SAGCOT was able to increase incomes of farmers through much higher yields in a sustainable manner. As a result of the project, Yara’s market share in Tanzania rose to 50%.

The scope for shared value collaboration in India

The same approach could well be applied in India. For example, agriculture accounts for 43% of India’s employment, and while farmer incomes have improved in some geographies, a lot more needs to be done. Indian farmers face increasing cost and margin pressures due to rising input and production costs, limited forward linkages, and stagnating or declining yields of most crops. 

These challenges mean that most farmers have limited savings, and any significant shock (such as health emergency, natural calamity, etc.) can push them into poverty and high indebtedness. 

These challenges could, for instance, be an opportunity for an agriculture company, a digital finance solutions player, and a health sector company to partner in a shared value collaborative. Such an initiative not only holds the potential to improve the lives of farmers, but can also drive profits for the participant enterprises and give them a competitive advantage in their respective industries.

How can such private sector collaboration begin?

While cross-sectoral partnerships might feel unnatural for companies and regulators, these are critical to addressing social issues at scale. 

First, companies should look for pre-competitive collaboration opportunities, aligning their business objectives with national development goals. This might mean, for instance, multiple Insulin marketers coming together and increasing affordable access to and awareness of diabetes testing.

Second, companies should take a long-term view and look to partner with ecosystem players. For instance, an insurance company could partner with a food processing company to offer price insurance products to farmers.

Finally, the companies should explore best practices from other developing countries or sectors, to identify potential opportunities. 

For collaborative efforts to be successful, it is vital that trust and transparency underpin such partnerships. Most importantly, collaboratives must engage stakeholders and local communities in planning and decision-making.  

For India to derive the true benefits of its demographic dividend, businesses should be persuaded to commit their best resources to large-scale and sustainable social impact initiatives. Shared value collaboratives are an excellent platform for companies to devise strategies that meet at the intersection of good business and good intent.



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Disclaimer

Views expressed above are the author’s own.



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