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EXECUTIVE PERSPECTIVE: The Inclusion and Impact of Sustainable Development at the Base of the Economic Pyramid

Tânia Cosentino

06 Dec 2017

There is no way to imagine or lead a successful business without considering what real solution it delivers to the emerging issues of today’s world and what its impact is today and in the future.


With over 400 million inhabitants and a projected Gross Domestic Product (GDP) growth of 1.8% in 2018 according to the International Monetary Fund (IMF), South America is a developing region with great potential for growth. However, taking into account the state of the environment and the urgency of globally applying sustainable practices in order to preserve our planet for future generations, the region’s economic progress — if carried out with all its force — turns out to be a great threat.

When developed countries went through their evolution process, environmental and social issues were not matters of concern. Today, it is impossible to consider that the economy should continue to grow in a disorganized or unplanned way, especially without taking into account points of attention, such as the reduction of global warming, the decarbonization of the economy, the reduction of inequality and the irresponsible use of natural resources — not to mention ethics and the fight against corruption.

At present, it is essential that companies, governments and the population have sustainability in their agendas and routines. And thinking about sustainability far exceeds the welfare, the planting of trees, or the immediate compensation of damages done by each business. Sustainability and its possibilities today should and must be seen as business opportunities, especially for companies. And this goes through the transformation of their own models — the transformation of the business itself.

The investment to dismantle the business model in force today, in order to develop a better world — which considers the environment and conscious development in the economic and social spheres — is essential and urgent. Data from the United Nations Environment Programme (UNEP) have already shown that the destruction of nature causes annual losses of up to US$4.5 trillion. On the other hand, other United Nations (UN) data points out that companies that focus on innovation, while respecting the environment, grow at annual rates of 15%, while their unsustainable peers remain stationed.

Inconsequence is a bad deal.

The 17 Sustainable Development Goals (SDGs) and their 169 targets set by the UN and the UN Global Compact Ten Principles act as guides for companies to understand the urgency of developing a sustainable business and the impact that these actions, or their absence, can have on the short, medium and long terms.

Within this context, it is essential to associate the practice of sustainable development with the insertion of the base of the pyramid into the economy.

For this, we can consider three main points:

Access to clean energy and conscious consumption

Outside large capitals and large urban centers, 1.1 billion people still live without access to energy, which harms the economic and social development of people in these areas. This relationship is clear when it is seen that societies with better consumption (which goes through conscious use) of energy have higher HDIs (Human Development Index).

The recurrent energy supply allows the acceleration of economic activities and, consequently, the insertion of more people into the labour market. For example, in a rural area, the electric power allows the acceleration processes and contributes to the gradual increase of production. Or, in a small village, energy allows a commercial establishment, such as a store or a restaurant, to keep its products refrigerated, increasing its durability and valuing investments. All this without mentioning that the provision of energy is vital for access to health, education and security.

Education

Education is another fundamental factor in the insertion of the base of the pyramid into the economic activity of the region. Nowadays, on the one hand, there is a lack of trained professionals and, on the other, a large portion of unprepared labour demanding for work. Today, if we look only at Brazil, the unemployment rate is almost 13%, according to data from the Brazilian Institute of Geography and Statistics (IBGE) for the second quarter of 2017 (which represents more than 13 million Brazilians), but we also know that with the resumption of the economy, again we will suffer from the lack of qualified labour.

Education and the preparation of new professionals with technical expertise is the only way to reduce this gap. However, local schooling indexes are growing at a slow pace — between 2014 and 2015 the schooling rate has only increased by 0.1 percentage point.

Professionalization brings benefits to companies by offering a more specialized workforce and, by offering job opportunities to people who were not previously included in the market, which corroborates to the warming of the economy.

Gender equality

The third point is the more effective inclusion of women in the labour market. Today, women, by cultural factors, are still less considered in the labour market than men. Globally, according to the International Labour Organization (ILO), women’s participation in the labour market is lower (49% versus 76% for men). If the percentage of women and men in leadership positions were taken into account, this difference would be even greater among the S&P 500 companies (Standard & Poor’s 500) — in which only 5.2% have female CEOs.

And this difference has a measurable economic impact. An analysis by the McKinsey Global Institute (MGI) in 95 countries suggests that US$ 28 trillion would be added to the global economy by 2025 if all countries achieved full economic equality between men and women.

With all of this, it is impossible to think and practice sustainability without taking into account social inclusion. And, beyond the role of governments, companies need to understand that they play an important part in such an urgent transformation. I repeat, inconsistency and lack of awareness are not good deals. Numbers show that the environment and society react.

And finally, there is no way to imagine or lead a successful business without considering what real solution it delivers to the emerging issues of today’s world and what its impact is today and in the future.

In that sense, the question remains: What is your company doing to turn development into something sustainable to include the base of the pyramid in the economy?

Tânia Cosentino is a 2017 UN Global Compact SDG Pioneer for energy management and sustainability. She is President of Schneider Electric for South America. In these roles she focuses on developing differentiated and sustainable solutions while integrating the Global Goals at the core of the business’s strategy. Her dedication to sustainability includes work in energy efficiency, energy access, water, industrial development, smart cities, ethics, diversity and promoting women empowerment through inclusion. To further her vision for gender equality, Tânia leads Schneider Electric South America’s HeForShe Program, a UN Women initiative. She is also a member of the company’s Women Advisory Board.
Read more about Tânia’s work as a 2017 UN Global Compact SDG Pioneer
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