Innovations for Human Development in Global Value Chains

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					                                                               “Business and Environment”International Symposium 2006 Proceedings
                                                                                   Towards Sustainable Lifestyle and Business Model



 Keynote Speech 1

“Innovations for Human Development in Global Value Chains”

                                                                                                                 Michael Kuhndt
                                                                                                     Head of the Centre
                                                                       UNEP/Wuppertal Institute Collaborating Centre on
                                                                        Sustainable Consumption and Production (CSCP)


  Good afternoon, ladies and gentlemen. I’m hap-                                       Nations. He said that business, basically, can
py to be here on a very special day for all of us                                      contribute in many positive ways. They can look
in this room. I’m happy to present you with some                                       into philanthropy as one issue, but they can also
thoughts today about very vulnerable people out
there, and by this I mean poor people around the                                               Introducing the ‘HDtM approach’
                                                                                               The need for building new markets




      Human Development through the Market
      Contributing to the Millennium Development Goals                                                                                                   “There are many positive ways
                                                                                                                                                              for business to make a
                                                                                                                                                           difference in the lives of the
                                                                                                                                                        poor – not through philanthropy, sustainable lifestyles
                                                                                                                                                                           Role of business for enabling
             Innovations for Human Development                                                                                                                though that is also very
                                                                                                                                                        important, but through initiatives
             in Global Value Chains                                                                                                                     that, over time, will help to build
             Contributing to the Millennium Development Goals                                                                                                      new markets”.

              Michael Kuhndt
              Head, UNEP / Wuppertal Institute Collaborating                                                                                Kofi Annan, United Nations, former Secretary General.
                                                                                                                                            Address to the World Economic Forum (Feb 2002)
              Centre on Sustainable Consumption and
              Production


                                                                                               Michael Kuhndt   cscp | www.scp-centre.org                              IGES International Symposium, Kobe, 17th January 2007   2




                                                                                                                                                   Slide ②


                                                                                       actually look beyond this. You can look into what
                                    Slide ①
                                                                                       this symposium is about, and into new initiatives
world. I would like to look a bit into what busi-                                      that are also based on new business ideas. Hu-
ness can actually do to help poor people, to en-                                       man Development through the Market (HDtM)
able them to access products and services and to                                       is one of these new business ideas I would like to
fulfil their basic needs. My presentation is titled,                                   introduce you to today.
“Innovations for Human Development in Global
Value Chains.” “Global” means what we are pro-                                                 Human Development through the Market
ducing today, sourcing products quite globally.
                                                                                               Contributing to the Millennium Development Goals



If you look at our lifestyles, our consumption                                                         Drawing the map                                                                    Drawing the map
                                                                                                                                                                         How environment and poverty are
                                                                                                       How environment
patterns are also quite global today. I just had a
                                                                                                                                                                                                  linked
                                                                                                       and poverty are linked
                                                                                                                                                                                         Setting the course
                                                                                                                                                                           Introducing the ‘HDtM approach’

working lunch some minutes ago, and I had Ital-                                                                                                                                             Setting the Sails
                                                                                                                                                                                       CSR along value chains

ian food on the plate. You see also that on the                                                                                                                                            Getting on board
                                                                                                                                                                                                         Next steps


consumption side a lot of globalization has hap-
pened. Both of these themes are the issues I am
trying to address in my presentation.
  I would like to start with a quote, actually,
                                                                                                                                                   Slide ③
from the former Secretary General of the United



                                                                                   
                                            “Business and Environment”International Symposium 2006 Proceedings
                                            Towards Sustainable Lifestyle and Business Model




   My presentation has four major parts. I would                                                                                        lot, and we may need to reduce consumption or
like to start with looking at the linkages between                                                                                      perhaps we need to be more efficient. Here, the
the environment and poverty. After this, I would                                                                                        issue is that we need first of all to consume. Of
like to ask if we understand the nature of the                                                                                          course, we want to also look into this from the
linkages, how they might be overcome, what                                                                                              most efficient standpoint. If you look on this map,
both you and business can do, and also what gov-                                                                                        you will see Africa and several other areas, in-
ernment institutions can do. Then I would like                                                                                          cluding some countries in Asia, where there is a
to turn again to the issue of global value chains                                                                                       clear need for human development.
and ask how companies can incorporate this idea
of Human Development through the Market into
                                                                                                                                             How environment and poverty are linked
                                                                                                                                             Consumption – The poor pay more


their corporate social responsibility strategies. I
would like at the end of the presentation to out-                                                                                                                                            Ensure access to products
                                                                                                                                                                                             and services
line some next steps.
                                                                                                                                                                                                                                                     The poor do not have
                                                                                                                                                                                                                                             Role of business for enabling sustainable lifestyles
                                                                                                                                                                                                                                                    access to adequate
                                                                                                                                                                        Rice        1.2X                                                          products and services at
                                                                                                                                                                                                                                                     acceptable prices

  If we talk about human development, the first
                                                                                                                                                                                                               Cost in poor quarter /
                                                                                                                                                                   Phone call       2X                         Cost in rich quarter


                                                                                                                                                                   Diarrhea
                                                                                                                                                                                    10X
                                                                                                                                                                  medication


question, of course, is what we mean by human
                                                                                                                                                                                                                                                  Business can innovate
                                                                                                                                                              Municipal grade
                                                                                                                                                                                           37X                                                    more adequate products
                                                                                                                                                                        water
                                                                                                                                                                                                                                                    and services while


development. We relate it to the Human Devel-
                                                                                                                                                                       Credit                    60-57X                                              safeguarding the
                                                                                                                                                                                                                                                       environment
                                                                                                                                                                                0           20            40              60            80




opment Index, which means that you can at least                                                                                              Michael Kuhndt   cscp | www.scp-centre.org                                          IGES International Symposium, Kobe, 17th January 2007        5




access and serve your basic needs. The Human                                                                                                                                                          Slide ⑤
Development Index, of course, measures how
much people can access their basic needs and                                                                                               One basic problem of human development is
to what degree they can go beyond these basic                                                                                           enabling access to products and services. Here,
needs.                                                                                                                                  you see a slide where we look into the same city
                                                                                                                                        or the same region, and compare how much the
     Human Development
     The poverty challenge                                                                                                              poorest and richest portions of the population
                                                                                                                                        pay to access certain products and services. Let’
                      Need to inrease consumption                                                                                       s take water first. You can see that the poor are
                         In many
                                                    Priority countries for human development                                            paying much more for their water than the rich
                                                                                                                                        do. That means, for example, that a poor person
                         regions:                                           Role of business for enabling sustainable lifestyles


                           Need to
                          increase
                      consumption to
                      reach adequate
                                                                                                                                        is living in conditions where actually the water
                       level of human
                        development                                                                                                     quality is so poor that they can’t drink the avail-
                                                                                                                                        able water right away and need to get their
                                                                                                                                        water from other sources. For example, they
                                                                                            Source: UNDP 2004


     Michael Kuhndt     cscp | www.scp-centre.org               IGES International Symposium, Kobe, 17th January 2007        4




                                                    Slide ④
                                                                                                                                        may have to buy bottled drinking water. For
                                                                                                                                        this, they have to pay far more than the cost of
  If you look on this map of the earth, you can                                                                                         normal municipal water and may even pay extra
see there are a number of countries which are                                                                                           for the bottled water because they might be in a
presently very poor according to the Human De-                                                                                          remote area as well. If you look at financial ser-
velopment Index. These countries still need to                                                                                          vices, if the poor want to obtain access to credit,
increase consumption. Often we tend to discuss                                                                                          it’s also much more expensive for them than for
the issue of over-consumption -that we have a                                                                                           the rest of the population. If a bank looks at the



                                                                                                                                   0
                                                                                                      “Business and Environment”International Symposium 2006 Proceedings
                                                                                                                          Towards Sustainable Lifestyle and Business Model




poor they are seen as being of a much higher                                                                                                      capital upon which they base their livelihoods.
risk for a loan. They might be thinking that the
poor will be unable to repay their debts and will                                                                                                       How environment and poverty are linked
                                                                                                                                                        Burden shifting: Inequalities along global value chains

consequently charge an interest premium when
dealing with the poor.                                                                                                                                                                                        Industrialised countries
                                                                                                                                                                                                              ~ 20% of ecological backpack
                                                                                                                                                                                                              ~ 80% of value added

     How environment and poverty are linked                                                                                                                                                                                         Role of business for enabling sustainable lifestyles

     Environmental income according to income group                                                                                                            Resource                                                 End-of-life
                                                                                                                                                                               Producers        Retailers   Consumers
                                                                                                                                                               Extraction                                               Managers


                                                    100%                                                            Intangible Capital

        Secure                                      80%
                                                                                                                    Produced Capital
                                                                                                                    Natural Capital
                                                                                                                                                                                                              Developing countries
                                                              3991      14253
                                                                                                                                                                                                              ~ 80% of ecological backpack
        livelihoods                                 60%
                                                                                     45495
                                                                                                   353339                                                                                                     ~ 20% of value added

                                                    40%       1150                    Role of business for enabling sustainable lifestyles
                                                                         4962        16481
                                                    20%
                                                              2075                                                                                      Michael Kuhndt   cscp | www.scp-centre.org                                                                                   7
                                                                         4398                       76193                                                                                                               IGES International Symposium, Kobe, 17th January 2007
                                                                                     10921          9531
                                                     0%
                      Natural Capital =                    Low-income    Lower-       Upper-         High-

                       Agriculture land
                                                                         middle
                                                                        income
                                                                                      middle
                                                                                     income
                                                                                                   income
                                                                                                    OECD                                                                                                    Slide ⑦
                      + Sub-soil assets
                      + Forst resources
                      + Protected areas

                                                                                                                                                    I would also like to show another slide that il-
                                                            The poor depend more on the
                                                              environment than the rich
                  Source: World Bank




     Michael Kuhndt     cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007        6
                                                                                                                                                  lustrates the global value chain. You may have
                                                           Slide ⑥                                                                                seen this figure before. If you look now at the dis-
                                                                                                                                                  tribution of environmental loads and value added
   If you actually look at the poor and compare                                                                                                   across the value chain starting from the resource
how much they rely on different forms of capital,                                                                                                 extraction up to the end of life or recycling, you
here you will see intangible capital play a com-                                                                                                  will see there is in fact an unequal distribution of
paratively smaller role for the poor. It can be                                                                                                   the environmental load and the value added. If
said that intangible capital is a lot about knowl-                                                                                                you look first at the developing countries, normal-
edge. I would say Japan, for example, depends                                                                                                     ly resources are tending to an increasing degree
very much on intangible capital. You’re produc-                                                                                                   to be sourced in developing countries. We have
ing a lot of products that need a lot of knowledge                                                                                                done many studies on this issue. You will see
to produce such as electronic products. You will                                                                                                  that 80 % of the total environmental load, which
see that Japan, like my own country, Germany,                                                                                                     we have expressed here in terms of “ecological
falls into this high income category. There again,                                                                                                backpack,”,is occurring in developing countries
knowledge is very important. On the other hand,                                                                                                   while these regions gain only 20% of the value
if you look at the poor income groups on the                                                                                                      added. In the industrialized world, it’s the oppo-
very left of the slide, you will see they rely far                                                                                                site way around. The question here is “how can
more heavily on natural capital. For example, the                                                                                                 you cope with 80% of the environmental problem
poor are not normally involved to a large degree                                                                                                  with only 20 % of the value added?” and “how
in the ICT business. They are involved perhaps                                                                                                    much responsibility is out there if you own 80%
in fishery and forestry. Again, here you see the                                                                                                  of the value added to help reduce the 80% of the
poor rely far more heavily on natural capital than                                                                                                environmental load?”
the rich. If we destroy natural capital such as for-
ests, or soil by erosion or by applying too many                                                                                                    This picture also shows statistical information.
pesticides, we are drawn into the problem that                                                                                                    This graph looks a bit more complex. I want
the poor become even poorer over time because                                                                                                     to explain it to you. Here we are looking at the
we are systematically destroying the natural                                                                                                      European Union. The study looked into resource



                                                                                                                                             
                                          “Business and Environment”International Symposium 2006 Proceedings
                                          Towards Sustainable Lifestyle and Business Model




                                                                                                                                countries. With this new model of resource use
     Avoid burden shifting
     Increasing evidence for burden shifting – an European Perspective
                                                                                                                                come new responsibilities.

               Our consumption – their burden                                                                                        Human Development through the Market
                                                                                                                                     Contributing to the Millennium Development Goals



                                                                    Role of business for enabling sustainable lifestyles
                                                                                                                                                                                                                    Drawing the map
            Global systems of                                                                                                                                                                      How environment and poverty are
             production and                                                                                                                                                                                                 linked
            consumption lead
            to rising resource                                                                                                               Setting the course                                                    Setting the course
                                                                                                                                                                                                     Introducing the ‘HDtM approach’
               extraction in                                                                                                                 Introducing the ‘HDtM
                developing                                                                                                                   approach’                                                                Setting the Sails
               countries....                                                                                                                                                                    Poverty reduction along value chains
                                                                                                                                                                                                                     Getting on board
                                                                                                                                                                                                                                   Next steps
                                                                       Source: Wuppertal Institute




     Michael Kuhndt   cscp | www.scp-centre.org         IGES International Symposium, Kobe, 17th January 2007        8




                                                  Slide ⑧


consumption in Europe. You will see this yellow                                                                                                                                       Slide ⑨
line. Europe has over time consumed more or
less a constant quantity of resources. We haven’                                                                                     Introducing the ‘HDtM approach’
                                                                                                                                     Overview

t become more resource-efficient over the years
                                                                                                                                             Introducing Human Development
but we also haven’t consumed substantially more                                                                                              through the Market
resources over the last few years either. This
is expressed as the total material requirement.
                                                                                                                                                  Create tangible                                    Address social and lifestyles
                                                                                                                                                                                                        Role of business for enabling sustainable

                                                                                                                                                benefits for the poor                               environmental issues

(TMR)
                                                                                                                                                                                  Function collectively
                                                                                                                                                                                  through the market
   This is not actually the message I want to de-
liver to you. The real message is that we looked                                                                                     Michael Kuhndt   cscp | www.scp-centre.org                  IGES International Symposium, Kobe, 17th January 2007   10



into where these resources are coming from
                                                                                                                                                                                      Slide ⑩
for Europe. If we look at the orange line, which
is declining over time, we see the domestic re-                                                                                   Having said this, I would like to look at how
source consumption. Europe is consuming less                                                                                    to change this, how to actually express and as-
and less from domestic sources, as you can see                                                                                  sume our responsibility for countries from which
it’s going down, of natural resources like oil, alu-                                                                            we source resources, that is, the countries which
minium, gold and different kinds of metals from                                                                                 actually suffer the high environmental load. Pro-
Europe. If you consider the red line, which repre-                                                                              duction processes still impose a large environ-
sents foreign material consumption, we can see                                                                                  mental impact globally. I would like to introduce
that resources coming from foreign sources are                                                                                  the concept of “Human Development through the
increasing. It means that we are using more and                                                                                 Market”, which is now heavily discussed within
more foreign resources in order to fulfil our ba-                                                                               the United Nations Environment Program. We
sic needs and our lifestyles. Again, I think there                                                                              just held a seminar where we introduced the
is a responsibility based on this. If you look at                                                                               concept in Africa in November last year and we
this picture, you see the gap is getting bigger                                                                                 are at present working with different institutions
and bigger. I assume that the situation for Japan                                                                               on the concept. Human Development through the
would be very similar. Japan is also sourcing                                                                                   Market has the basic idea of delivering tangible
an increasing share of its resources from other                                                                                 benefits for the poor. That means to help them



                                                                                                                           
                                                                                                   “Business and Environment”International Symposium 2006 Proceedings
                                                                                                                       Towards Sustainable Lifestyle and Business Model




gain access to necessary products and services.
We would also like to address social and environ-                                                                                                   Introducing the ‘HDtM approach’
                                                                                                                                                    Relationship to other approaches

mental issues at the same time. We say that it
                                                                                                                                                            An integrative perspective
is to provide access to products and services to                                                                                                                                           Intermediary / NGO approaches


the poor, but at the same time, we pay attention
                                                                                                                                                                                                                  Organic
                                                                                                                                                                Private sector                    Fair-Trade                                  Public policy
                                                                                                                                                                 approaches                                      production                   approaches


to environmental and social issues. As you can
                                                                                                                                                               Environmental                                                                 Environmental
                                                                                                                                                                                                                                 Role of business for enabling sustainable lifestyles
                                                                                                                                                               Improvements                                                                  improvements
                                                                                                                                                                                                        Human
imagine, “through the market” also means the
                                                                                                                                                             Worker rights and                       Development                                 Pro-poor
                                                                                                                                                                conditions                                                                     development
                                                                                                                                                                                                      through the

concept is intended to function primarily through
                                                                                                                                                                Supply Chain                            Market                                Private sector
                                                                                                                                                                Management                                                                    development


the market. It aims to create new business op-                                                                                                                       Social Entrepreneurship
                                                                                                                                                                      (focus on small businesses)
                                                                                                                                                                                                               CSR       Bottom of the Pyramid
                                                                                                                                                                                                                         (focus on large businesses)


portunities in developing countries and help them
                                                                                                                                                                                                         Concepts
                                                                                                                                                    Michael Kuhndt    cscp | www.scp-centre.org                      IGES International Symposium, Kobe, 17th January 2007       12




to actually also access new business models.                                                                                                                                                           Slide ⑫

     Introducing the ‘HDtM approach’
     In what areas does the approach work?
                                                                                                                                               work with the private sector. You need to work
                                                                                                                                               with public policy institutions, but also with in-
                                                                                                                                               termediate organizations or NGOs. NGOs can, for
                       Providing access to                             Developing innovative
                      products and services                            products and services



                                                   health
                                                                  energy                                                                       example, help to make production more efficient.
                               food                                                 finance
                                    construction
                                                              sanitation           Role of business for enabling sustainable lifestyles

                                                                            textile & apparel                                                  In environmentally friendly terms, they can also
                                                            footwear

                                                                                                                                               help to bring to developing countries the con-
                          Knowledge and                                    Infrastructure and
                            education                                      good governance
                                                                                                                                               cepts of organic production or Fair Trade. Fair
                                                                                                                                               Trade looks very much into social issues as well.
                                                  Create local income

     Michael Kuhndt   cscp | www.scp-centre.org                        IGES International Symposium, Kobe, 17th January 2007       11
                                                                                                                                               NGOs are also trying to bring socially sound pro-
                                                                                                                                               duction patterns to developing countries.
                                                      Slide ⑪


   All in all, Human Development through the                                                                                                      On the other side, it is also necessary to have
Market aims to help to create local income for                                                                                                 academia looking into the issue in terms of ex-
poor people. It has been seen that the poor still                                                                                              amining different concepts. How do the poor and
suffer in terms of income, and only if their income                                                                                            relationships with the poor fit into concepts of
exists, can they also gain access to the other                                                                                                 corporate social responsibility? How much social
points shown here. They still require knowledge                                                                                                entrepreneurship is required in developing coun-
and education. They still require infrastructure                                                                                               tries? How can small and medium-sized compa-
and good governance in order to come to the                                                                                                    nies initiate and take advantage of new business
point where basic needs can be fulfilled; needs                                                                                                opportunities, but also what about large compa-
like sanitation, construction, food and health. Hu-                                                                                            nies? One often hears the term “bottom of the
man Development through the Market, again, is                                                                                                  pyramid.” What can multinational companies do
asking what the role of business and government                                                                                                in order to also serve the poor?
should be in order to organize the addressing of
the needs of the poor and to help fulfil these ba-                                                                                                The benefits for the poor can be very diverse.
sic needs.                                                                                                                                     They could be access to products and services
   In order to fulfil these basic needs, as I said                                                                                             but also can centre on issues of business opportu-
earlier, it is necessary for a broad array of stake-                                                                                           nities and creating jobs. They can also be simply
holders to looking into the issue. You need to                                                                                                 about realizing cost savings. Many companies in



                                                                                                                                          
                                              “Business and Environment”International Symposium 2006 Proceedings
                                              Towards Sustainable Lifestyle and Business Model




                                                                                                                                                  How can we in fact support Human Develop-
         Setting the stage: Introducing the “HDtM approach”
         Pro-poor and public benefits
                                                                                                                                                  ment through the Market in the end? You could
                                                        Access to locally                                                                         look at local entrepreneurs, at multinational com-
                                                         adapted and
                                                                                                                                                  panies, at community groups, NGOs, and other
                                 Develop                                                  Improve
                                                          sustainable
                                 or refine                                               distribution
                                                         products and

                                                                                                                                                  political actors. You can also, of course, have the
                                                           services

                                   Local
                                                                                         Realise cost
                                                          Pro-poor
                                                                                                                                                  other supporting actors who might be active in a
                                economic
                                                                                           savings
                                                                                      Role of business for enabling sustainable lifestyles
                                 linkages
                                                          Benefits
                                         Job opportunities                 Preserve                                                               region.
                                               and                    environmental and
                                         entrepreneurship               social capital


                       HDtM seeks to inspire entrepreneurship in and for local communities, and                                                        Introducing the ‘HDtM approach’
                     seeks to guide energy and resources mobilised by its environmental and social                                                     Action strategies for some core actors
                                     principles to help the poor in local communities

         Michael Kuhndt   cscp | www.scp-centre.org                      IGES International Symposium, Kobe, 17th January 2007        13
                                                                                                                                                                                    Human Development through the Market


                                                          Slide ⑬
                                                                                                                                                                          New                             Alternative                            Long-term
                                                                                                                                                                    Business Models                   development models                      financial viable
                                                                                                                                                                                                                                                  business
                                                                                                                                                                        Pro-poor                            Good                                   Set up
                                                                                                                                                                  product and service                    governance                         strategic networks
                                                                                                                                                                      innovations
developing countries often face the problem re-                                                                                                                                                             Sound                               Improve
                                                                                                                                                                                                                                    Role of business for enabling sustainable lifestyles

                                                                                                                                                                   Process & Product                  environmental and                     management skills
                                                                                                                                                                                                        social policies
                                                                                                                                                                      Stewardship

maining viable because they are comparatively
                                                                                                                                                                                                                                                 Develop
                                                                                                                                                                                                           Facilitate                        financially viable
                                                                                                                                                                        Sustainable                    partnerships and                       business model
                                                                                                                                                                         Marketing                         networks

resource-inefficient. There can also be the notion                                                                                                                      Supply Chain
                                                                                                                                                                        Management
                                                                                                                                                                                                          Information
                                                                                                                                                                                                             broker
                                                                                                                                                                                                                                             Compile your
                                                                                                                                                                                                                                           knowledge on local
                                                                                                                                                                                                                                              customers

of transferring our knowledge in the developed                                                                                                                     Multinational
                                                                                                                                                                    companies                          Government
                                                                                                                                                                                                                                               Local
                                                                                                                                                                                                                                           entrepreneurs

countries about resource efficiency to the orga-                                                                                                       Michael Kuhndt     cscp | www.scp-centre.org                     IGES International Symposium, Kobe, 17th January 2007       15




nizations and companies in the developing coun-
                                                                                                                                                                                                       Slide ⑮
tries.
                                                                                                                                                     In terms of Human Development through the
         Introducing the ‘HDtM approach’
         Actors and their roles in HDtM
                                                                                                                                                  Market, I would like to look into the possibilities
                Core actors:                                                                                                                      for action by three groups: multinational com-
                                  Find locally feasible innovative
                                              solutions
                                                                              Pool contacts and facilitate larger
                                                                              projects with economies of scale                                    panies, governments and local entrepreneurs.
                             Proximity to user groups, more trusted        Access to entrepreneurial knowledge,
                                     person than outsiders

                                          Local entrepreneurs
                                                                                  technology, finance...

                                                                          Multinational companies
                                                                                                                                                  Multinational companies could very easily look
                                                                                                                                                  into supply chain management and that is some-
                                                                                      Role of business for enabling sustainable lifestyles
                                     Community groups, NGOs                      Political actors


                                                                                                                                                  thing that many multinational companies are
                                                                               Set framework conditions: good
                              Knowledge on local conditions, needs              governance, low corruption,
                                        and resources                                   infrastructure
                                  Constant partner on the ground                       Facilitate networks


                 Supporting actors:                                                                                                               already doing. They might say, “In our supply
                               Chambers of Commerce

                              Banks (esp. Microfinance)
                                                               Insurance companies

                                                                 Consumer groups
                                                                                                           ...
                                                                                                                                                  chain management, for example, we also pay at-
         Michael Kuhndt   cscp | www.scp-centre.org                       IGES International Symposium, Kobe, 17th January 2007        14
                                                                                                                                                  tention to the fair trade issue” or “resources from
                                                                                                                                                  companies which are producing environmentally-
                                                          Slide ⑭
                                                                                                                                                  friendly products and services.” This, of course,
   Again, I would like to make the point that Hu-                                                                                                 will also help to strengthen those entrepreneurs
man Development through the Market has a                                                                                                          who are acting responsibly up to the point that
multi-actor approach. We say often it is a place-                                                                                                 multinational companies can create new business
based approach. You are going into a local situ-                                                                                                  models. I will show you soon what this could
ation. You are trying to understand the local                                                                                                     mean.
situation. Based on this, you are looking at the
strengths and weaknesses of the local situation.                                                                                                    On the governmental side, they could start
You are looking at what kinds of resources are                                                                                                    just with managing information. They can help
available and the strengths of the region, but                                                                                                    provide access to some companies in developing
also at which actors in the region are strong.                                                                                                    countries that may be in the organic products



                                                                                                                                             4
                                    “Business and Environment”International Symposium 2006 Proceedings
                                                        Towards Sustainable Lifestyle and Business Model




or the fair trade business. Also they could help
through supporting alternative development                          Having a close look: HDtM in practice
                                                                    Lessons from successful HDtM businesses

models. Just after this symposium I will travel                        HDtM Case studies: Four key sectors
to China. We are working with the Chinese gov-                                   Energy
                                                                        • Drying fruit using
                                                                                                       Food & Agriculture

                                                                                                      • Growing organic
                                                                                                                                        Tourism
                                                                                                                                 • Vacation, wine
                                                                                                                                                                          Waste

                                                                                                                                                            • Converting e-

ernment on this alternative development model
                                                                          Solar Power -                 cotton -LOCP               and local
                                                                          USISS (Mali)                                             communities –                waste into
                                                                                                        (Uganda)                                                income - Desco
                                                                        • Providing Energy            • Marketing the              Spier (South
                                                                          to the Poor -                                            Africa)                      (South Africa)

for a region in south-western China. This region
                                                                                                        Açaí berry -                                        • for enabling sustainable lifestyles
                                                                                                                                               Role of business Decentralised
                                                                          Eskom (South                  Sambazon                 • Eco-tourism in
                                                                          Africa)                                                                               composting -
                                                                                                        (Brazil)                   Africa-CC Africa             Waste Concern

currently relies extensively on an industrial and
                                                                                                                                   (throughout                  (Bangladesh)
                                                                                                                                   Africa)



heavy industry-based economy, with heavy pollu-
tion at the moment. The government in that re-
gion is trying to understand what the strengths                     Michael Kuhndt   cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007   16



of the region are; for example, in tourism or
                                                                                                                    Slide ⑯
in herbal medicine. There is a lot of intangible
knowledge in traditional medicine. How can we                   I cannot go through all of the cases. Later on
achieve a mixture of heavy industry plus alterna-            today, you will see a specific case example for
tive development models? How can we also bring               waste management. We will talk about this in a
the poor into these development models? This                 later presentation about waste pickers. There,
region is suffering and has a lot of poor people as          you will also see how collection of waste can help
well. That could be our contribution.                        local people to earn an income.

   Then, in terms of local entrepreneurs, they                      Putting it into action: The HDtM toolbox
                                                                    Scoping and defining HDtM businesses

are very important because they have the local
knowledge. What we saw from the case studies                                           ‘Solar-powered Rural Business Centres’

we looked into was that joint ventures between                                   • Considered the needs of the poor:
                                                                                   its objective is to reduce the “digital gap” between

government, local entrepreneurs and multina-
                                                                                   urban and rural areas                               Role of business for enabling sustainable lifestyles

                                                                                 • Involving the poor: supports entrepreneurship
                                                                                   by the poor in its very structure – set up, running

tional companies are often quite helpful. Mul-                                     and maintaining the Rural Business Centers is
                                                                                   done by the locals
                                                                                 • Fosters local capacities: the programme

tinational companies might have the access to                                      includes trainings and support materials
                                                                                 • Awareness of local limitations:
                                                                                   the RBCs are powered by solar panels

certain funding sources. Local government might                                                         e-Care in Ghana


build or support the right framework conditions                     Michael Kuhndt   cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007   17



in those countries. Local entrepreneurs might
                                                                                                                    Slide ⑰
have intangible knowledge on what the consumer
needs actually are in the region.                               I would like to address three of the case stud-
                                                             ies very briefly given that time is short and pro-
   We have thus far looked at four case studies              vide you with some ideas. For example, a good
in very different areas in terms of Human De-                case study we found was e-Care in Ghana where
velopment through the Market. We looked into                 there was a solar powered rural business centre.
different key sectors like energy, food & agricul-           The centre was a joint venture between a mul-
ture, tourism and waste management. There are                tinational company and local entrepreneurs. The
already a lot of good examples out there of how              issue there was to fill a service gap between the
you can combine economic profitability and envi-             urban and rural areas. Particularly in rural areas,
ronmental issues.                                            ICT communication was previously not possible.
                                                             They set up this business centre together with



                                                        
                                            “Business and Environment”International Symposium 2006 Proceedings
                                            Towards Sustainable Lifestyle and Business Model




some larger companies. They involved local peo-                                                                                                tries as second hand or waste goods. There is
ple right away in the set-up, running and main-                                                                                                an opportunity to establish centres that extract
taining of the centre. Here is a good example of                                                                                               valuable materials from this e-waste, which are
where you can create local income in a manner                                                                                                  then collecting these materials from electronic
that provides further development and income                                                                                                   scrap and selling it to other organizations. Again,
potential to the region.                                                                                                                       here you find an example of cooperation between
                                                                                                                                               multinational companies, local entrepreneurs and
     Putting it into action: The HDtM toolbox
     Scoping and defining HDtM businesses
                                                                                                                                               government institutions.


                          ‘Eco-tourism to African wilderness‘
                                                                                                                                                    Human Development through the Market
                                                                                                                                                    Contributing to the Millennium Development Goals
         • Uses an “umbrella” organisation concept: CC Africa owns and
           manages lodges and camps across six African countries
                                                                                   Role of business for enabling sustainable lifestyles
         • Used its expertise to broaden the operations:                                                                                                                                                                                               Drawing the map
           Four divisions:                                                                                                                                                                                                            How environment and poverty are
                 •    one that maintains the logdes;                                                                                                                                                                                                           linked
                 •    one that offers guided camping safaris;
                 •    one that oversees its tour operators;
                                                                                                                                                                                                                                                      Setting the course
                 •    One that provides all-inclusive conference tours                                                                                                                                                                  Introducing the ‘HDtM approach’

         • Uses its extensive network to ensure success:                                                                                                           Setting the Sails                                                                     Setting the Sails
                                                                                                                                                                                                                                                    CSR along value chains
            maintains strong partnerships with the property operators,                                                                                             CSR along value chains
            transporters, service providers, local government and communities                                                                                                                                                                           Getting on board
                                                                                                                                                                                                                                                                       Next steps
                                             CC Africa

     Michael Kuhndt     cscp | www.scp-centre.org                      IGES International Symposium, Kobe, 17th January 2007       18




                                                     Slide ⑱


  Another example is eco-tourism in the Afri-
                                                                                                                                                                                                                        Slide ⑳
can wilderness. Here, multinational companies
worked together with African organizations
looking for quality tourist destinations in Africa.                                                                                                 CSR along value chains
                                                                                                                                                    Opportunities in value chains

They looked at how you can build lodges or pro-                                                                                                                       Sustainability impact along value chains
vide camping safaris, train tour operators on en-                                                                                                                                   high
                                                                                                                                                        Potential contribution to




vironmental issues, and help create local income.
                                                                                                                                                             sustainability




                                                                                                                                                                                                                                                Role of business for enabling sustainable lifestyles




     Putting it into action: The HDtM toolbox
     Scoping and defining HDtM businesses
                                                                                                                                                                                    low

                                                                                                                                                                                      Raw material                 Supplier     In-house                                           End-
                                                                                                                                                                                                                                          Distribution              Usage
                                                                                                                                                                                       extraction                production    production                                         of-life
                                  ‘Converting e-waste into income‘
                                                                                                                                                                                                                              Value Chain
                      • Identified a clear need: accumulation of ever
                        greater amounts of e-waste                                                                                                  Michael Kuhndt                   cscp | www.scp-centre.org                      IGES International Symposium, Kobe, 17th January 2007       21
                            • It now processes 400 tons of PC boards
                            • And 2000 tons of other e-waste                       Role of business for enabling sustainable lifestyles



                      • Developed a unique solution: created an                                                                                                                                                         Slide ㉑
                        incineration-free process to extract valuable
                        materials


                                                                                                                                                  Having said this, I would like to look at the
                      • Understands the resources of its customers:
                        collects electronic scrap from customers and
                        purchases boards from scrap dealers

                                           Desco in South Africa                                                                               broader scheme of Corporate Social Responsi-
     Michael Kuhndt     cscp | www.scp-centre.org                      IGES International Symposium, Kobe, 17th January 2007       19          bility in global value chains and ask where our
                                                     Slide ⑲
                                                                                                                                               priorities are. Where should we set priorities in
                                                                                                                                               multinational companies? If you look at multina-
  Another example is converting e-waste into in-                                                                                               tional companies you usually ask about their sus-
come. We find more and more e-waste out there                                                                                                  tainability issues in terms of, for example, envi-
from PCs and other electronic products. These                                                                                                  ronmental load. You take the case of a European
products are often shipped to developing coun-                                                                                                 company, for example, Siemens, or a Japanese



                                                                                                                                          6
                                                                                                               “Business and Environment”International Symposium 2006 Proceedings
                                                                                                                                   Towards Sustainable Lifestyle and Business Model




company to look over the whole lifecycle. We
have done many LCAs now. I think we can sum-                                                                                                                    CSR along value chains
                                                                                                                                                                Classic mismatch between opportunities and efforts

marize it like this: You will see that in compari-
                                                                                                                                                                                  Mismatch between the two
son to the whole supply chain the manufacturing                                                                                                                                                 high

in countries like Japan or Germany scores very




                                                                                                                                                                    Potential contribution to
                                                                                                                                                                                                                                          Policy, performance




                                                                                                                                                                     Resource Efficiency
                                                                                                                                                                                                                                            and reputation
                                                                                                                                                                                                                                              opportunities


low in terms of overall environmental footprint
                                                                                                                                                                                                                                                                Role of business for enabling sustainable lifestyles




and environmental load. Most of the high impact                                                                                                                                                                                             80% of overall
                                                                                                                                                                                                                                           efforts focus on

activities have been outsourced. A lot of heavy
                                                                                                                                                                                                low                                        20% of the total
                                                                                                                                                                                                                                                  risk
                                                                                                                                                                                                  Raw material                 Supplier          In-house                                          End-

polluting stuff in all kinds of different sectors,
                                                                                                                                                                                                                                                            Distribution            Usage
                                                                                                                                                                                                   extraction                production        production                                         of-life

                                                                                                                                                                                                                                             Value Chain

such as the textiles or electronics sectors has                                                                                                                 Michael Kuhndt                   cscp | www.scp-centre.org                          IGES International Symposium, Kobe, 17th January 2007       23



been outsourced to the supply chain. The supply
                                                                                                                                                                                                                                    Slide ㉓
chain is often happening in developing countries.
                                                                                                                                                           of the companies are focusing on 20% of the risk.
     CSR along value chains
     Management focus in value chains                                                                                                                      This is actually unusual for business. Normally
                       Current management efforts
                                                                                                                                                           they tend to focus on the larger risk. The larger
                                 high                                       Focus of current
                                                                                                                                                           risk might lie in the supply chain on the left side
           Management Response




                                                                                                                                                           and also on the right side on the consumption
                                                                           management effort




                                                                                                                                                           side.
                                                                                               Role of business for enabling sustainable lifestyles




                                                                              only ad hoc
                                                                             and sporadic
                                                                             management
                                 low
                                                                                                                                                                CSR along value chains
                                   Raw material                 Supplier        In-house                                          End-
                                                                                                                                                                Classic mismatch between opportunities and efforts
                                                                                          Distribution             Usage
                                    extraction                production       production                                        of-life

                                                                             Value Chain


     Michael Kuhndt               cscp | www.scp-centre.org                        IGES International Symposium, Kobe, 17th January 2007       22                                                     Build long-term trade                        Include small producers on
                                                                                                                                                                                                          relationships                                  fair conditions
                                                                                                                                                                                                Engage in fair trade regimes                              Promote good
                                                                     Slide ㉒                                                                                                                    Source organically produced
                                                                                                                                                                                                                                                     environmental and social
                                                                                                                                                                                                                                                             conduct
                                                                                                                                                                                                       raw materials                                        Role of business for enabling sustainable lifestyles



                                                                                                                                                                                                          Raw material                          Supplier
   On the other side, you find consumption. Here,                                                                                                                                                          extraction                          production

you also find a lot of improvement opportunities.
                                                                                                                                                                                                  Raw material                 Supplier         In-house                                           End-

For example, how are consumers using electron-
                                                                                                                                                                                                                                                          Distribution              Usage
                                                                                                                                                                                                   extraction                production        production                                         of-life

                                                                                                                                                                                                                                             Value Chain

ic products? How are they using food products?                                                                                                                  Michael Kuhndt                   cscp | www.scp-centre.org                          IGES International Symposium, Kobe, 17th January 2007       24



There are a lot of improvement possibilities on
                                                                                                                                                                                                                                    Slide ㉔
the consumption side as well, and there is also
a large environmental load. If you look at most                                                                                                              Quite a few companies are already aware of
companies, especially in developed countries,                                                                                                              this, and that is why they are starting to look
they are still more concerned and taking action                                                                                                            into the supply chain side. In the supply chain,
on managing their in-house affairs. That’s what                                                                                                            they will find many small and medium-sized com-
they know, where they are located. They look                                                                                                               panies, once again often located in developing
first at the in-house manufacturing sites before                                                                                                           countries, which they can work with. Also, they
they tend to go to the supply chain and the con-                                                                                                           are looking at the consumption side. In terms of
sumption side.                                                                                                                                             the supply chain side, you could look into how
                                                                                                                                                           and from where raw materials are sourced. How
   If you put both curves together, actually you                                                                                                           can you actually build towards also looking at
find a funny situation. 80 % of the overall efforts                                                                                                        poor countries? How can you build long-term



                                                                                                                                                      
                                          “Business and Environment”International Symposium 2006 Proceedings
                                          Towards Sustainable Lifestyle and Business Model




trade relationships as well? How can you engage                                                                                            well known and growing fast in Europe.
yourself and your supply chain in fair trade re-
gimes? On the other side, you can look at your                                                                                                  CSR along value chains
                                                                                                                                                SME in developing countries

direct suppliers. How can they produce products
and services from an environmentally and social-                                                                                                         SME in developing countries
ly sound perspective?                                                                                                                                    Cost structure of                            10%
                                                                                                                                                                                                            Expenditures including merchandise
                                                                                                                                                                                                                7%
                                                                                                                                                        micro-enterprises in
                                                                                                                                                              Mexico:                                                               Role of business for enabling sustainable lifestyles
                                                                                                                                                                                                                                                    Premises
                                                                                                                                                       Costs for material &                                                                         Machinery maintenance
                                                                                                                                                        energy 3.6 as high                                                                         Materials
                                                                                                                                                                                                                                                  26%
     CSR along value chains                                                                                                                              as salaries paid.                                                 36%                     Merchandise for sale

     Consumer responsibility works: Fair Trade                                                                                                                                                                                                      Salary
                                                                                                                                                                                             42%                                                   Water, Electricity
                                                                                                                                                                                                                                                  10%
                                                                                                                                                                                                                                                   Other
                                                                                                                                                        Resource efficiency
                                                                                                                                                        can strengthen local                                      4%
        Fair Trade – more than a ‘niche’ market!                                                                                                            enterprises                                         1%




                                      All Fair Trade
                                         products                                                                                               Michael Kuhndt   cscp | www.scp-centre.org                              IGES International Symposium, Kobe, 17th January 2007       26
              International
               Fair Trade                                                      Role of business for enabling sustainable lifestyles
                                   All World Shops
               sales have
             been growing
               more than                                                     % Change in last five
                                                                                                                                                                                                      Slide ㉖
                                           Paid staff
               20% every                                                     years
             year since the
              beginning of

                                                                                                                                             There is also another reason to work with
                                      Sales Outlets
                 the 21st
                 century.
                                        Importing


                                                                                                                                           small and medium-sized companies in supply
                                      organisations

                                                        0%   50%            100%               150%               200%


                                                                                                                                           chains. Now they face very similar problems as
                                                                                Source: FLO; Fair Trade in Europe; 2005


     Michael Kuhndt   cscp | www.scp-centre.org                    IGES International Symposium, Kobe, 17th January 2007       25




                                                                                                                                           many developed countries face. If you look at the
                                                         Slide ㉕
                                                                                                                                           cost structure of small and medium-sized compa-
   I discussed fair trade this afternoon. I actually                                                                                       nies, you will also find that material and energy
think it is not such a big concern at the moment                                                                                           costs are now already higher than salaries. With
here in Japan. In Europe, Fair Trade is a suc-                                                                                             the knowledge of developed countries, we work
cess story at the moment. They have seen sales                                                                                             together with them and help them to save costs
growth of 20 % year upon year. At the moment                                                                                               for material and energy. We might also make
it is the market segment with the greatest sales                                                                                           them more competitive, so the whole supply
growth. “Fair Trade” means that the products                                                                                               chain can become more competitive. In the end,
are produced according to socially sound cri-                                                                                              the product also might become more competitive
teria. Normally fair trade products are slightly                                                                                           on the market.
more expensive than the mainstream products.
This premium charge that is paid on products is                                                                                                 CSR along value chains
                                                                                                                                                Classic mismatch between opportunities and efforts

earmarked for going back to the local commu-
                                                                                                                                                          Build decentralised                        Innovate products and                      Set up take-back,

nity from which products are sourced. Earlier I                                                                                                               distribution
                                                                                                                                                           systems to reach
                                                                                                                                                                                                   services for basic needs of
                                                                                                                                                                                                            the poor
                                                                                                                                                                                                                                                    reuse and
                                                                                                                                                                                                                                                     recycling
                                                                                                                                                              the poor as                                                                         schemes that
presented this picture of the global value chain.
                                                                                                                                                                                                Revolutionise relationship                      offer employment
                                                                                                                                                            customers and
                                                                                                                                                                                                     between price,                              opportunities for
                                                                                                                                                           create income in
                                                                                                                                                                                               performance, environmental                            the poor
                                                                                                                                                          poor communities
I said 80% of the value added remains in devel-
                                                                                                                                                                                                         impact          Role of business for enabling sustainable lifestyles



                                                                                                                                                                                                                                               End-
                                                                                                                                                                        Distribution                                     Usage
oped countries. More of this 80 % is actually go-                                                                                                                                                                                              of-life

ing back to the developing country in the case of
                                                                                                                                                                  Raw material                 Supplier            In-house                                            End-

Fair Trade products. Let’s say only 50% is stay-
                                                                                                                                                                                                                             Distribution               Usage
                                                                                                                                                                   extraction                production           production                                          of-life

                                                                                                                                                                                                               Value Chain

ing in the developed countries and 50% of the                                                                                                   Michael Kuhndt   cscp | www.scp-centre.org                              IGES International Symposium, Kobe, 17th January 2007       27




value added activity is going back to the develop-                                                                                                                                                    Slide ㉗
ing countries. With this, of course, the developing
country also has the necessary resources to de-                                                                                               On the other side, on the consumption side,
velop. Again, at the moment this scheme is quite                                                                                           if you have poor people in mind, the question



                                                                                                                                      8
                                                                                       “Business and Environment”International Symposium 2006 Proceedings
                                                                                                           Towards Sustainable Lifestyle and Business Model




would be how to actually build a decentralized
distribution system. The problem with poor                                                                                          CSR along value chains
                                                                                                                                    Fostering new markets

people is they often do not necessarily live in big                                                                                           Overlooked consumers
cities. They live in remote areas. How can they                                                                                                         Wealth
                                                                                                                                         Purchasing power parity (ppp) in US$
                                                                                                                                                                                                                                         Population
                                                                                                                                                                                                                                            in Millions




access products and services like the health sys-
                                                                                                                                                      > $20.000                              Tier 1                                        75 - 100

                                                                                                                                               $1.500 - $20.000                                                                       1.500 – 1.750
tem? There is a good example from the Philips
                                                                                                                                                                                           Tier 2-3
                                                                                                                                                                                                                           Role of business for enabling sustainable lifestyles


                                                                                                                                                        $1.500                               Tier 4

company. Philips worked in India. They built a                                                                                                         < $1.500                              Tier 5
                                                                                                                                                                                                                                            4.000



concept together with local NGOs and local com-                                                                                                             The BOP market potential is enormous: 4 to 5 billion underserved


panies on developing a bus. This bus travels to
                                                                                                                                                                 people with a potential of more than $13 trillion PPP




remote areas to deliver health services. Phillips is
                                                                                                                                                                                    Source: C.K. Prahalad and Stuart Hart, 2002. The Fortune at the Bottom of the Pyramid

                                                                                                                                    Michael Kuhndt      cscp | www.scp-centre.org                            IGES International Symposium, Kobe, 17th January 2007          29




involved in putting the technology there. Another                                                                                                                                    Slide ㉙
company is involved in putting the bus there. It’s
a profitable business model as well. It is also dis-                                                                              This is the base of the pyramid. If you look
tributing the business to remote areas.                                                                                        into what the base of the pyramid might include
                                                                                                                               in terms of population, on the top you have the
  Then of course you can look into product and                                                                                 high income class. There is a large part of the
service innovation for the poor and how to look                                                                                population which is still based in this low income
into a new relationship between price, perfor-                                                                                 group. In Japan, you will also find people in the
mance and environmental impact. You could set                                                                                  low income group. Of course, while it is not a sit-
up reuse schemes. Later on in a further presenta-                                                                              uation comparable to developing countries, there
tion from my colleague, he will look into how the                                                                              are still a number of people are also to be consid-
benefits might be delivered to the poor.                                                                                       ered in the low income group.

     CSR along value chains                                                                                                         Introducing the ‘HDtM approach’
     Fostering new markets                                                                                                          What business functions are concerned?


                                                                                                                                            HDtM will affect all business functions
                                                     Base of the Pyramid
                                                                                                                                                Human Resources                                                                           Marketing

                                                                 Traditional
                                                                                                                                                                                                                                             Sales
                                                                     Role focus
                                                               business of business for enabling sustainable lifestyles                          Market Research                                                           Role of business for enabling sustainable lifestyles
                                                                                                 High
                                                                                               income                                                                                 Inclusive
                                                                                                                                                                                                                                   Customer Support
                                                                                                                                              Product and Service
                                                                                                                                                 Development                         Business
                                                                                             Middle class                                                                                                                       Distribution & logistics
                                                                                                                                                                                         Models
                                                         Neglected markets                                                                            Procurement
                   Anwara Begum,                                                                                                                                                                                                      Administration
              a Grameen 'telephone lady'
                      (Credit: Nurjahan Chaklader)        Go for inclusive
                                                                                         Poor / extreme poor
                                                          consumption?                   Base of the Pyramid                                         Public relations                                                              Legal Department
                                                                                         = 4 billion customers


     Michael Kuhndt      cscp | www.scp-centre.org         IGES International Symposium, Kobe, 17th January 2007    28              Michael Kuhndt      cscp | www.scp-centre.org                            IGES International Symposium, Kobe, 17th January 2007          30




                                                     Slide ㉘                                                                                                                         Slide ㉚


  You will often find that this whole discussion is                                                                               If you want to go for HDtM, that will mean
based on the term “Base of the Pyramid.” Again,                                                                                you have to think through this issue in all of
what we are talking about here is not only to                                                                                  your business units. You have to start in terms
look at the high income group and the middle                                                                                   of looking into product and service development.
income class but also to look at the poor and the                                                                              You have to go into the market research from a
extreme poor.                                                                                                                  different point of view. You have to go and pos-
                                                                                                                               sibly hire local experts in developing countries.



                                                                                                                          
                                           “Business and Environment”International Symposium 2006 Proceedings
                                           Towards Sustainable Lifestyle and Business Model




You have to go and look into the distribution sys-                                                                                         there be to create new products and services for
tem, like Philips did, to work together with the                                                                                           HDtM? Which companies have already created
bus company to access remote areas. There is                                                                                               successful business models? How does HDtM fit
a large opportunity out there to create and look                                                                                           into the conventional business strategy? We are
into new business functions throughout the com-                                                                                            aware that the conventional strategy is not to
                                                                                                                                           serve the poor. If you have the idea of addressing
                                                                                                                                           the poor, how can you address at the same time
     Human Development through the Market
     Contributing to the Millennium Development Goals

                                                                                                                                           the social and environmental issues which might
                                                                                      Drawing the map
                                                                     How environment and poverty are
                                                                                              linked                                       be related? Another question is the kind of net-
                                                                                                                                           works that are needed? Like I showed at the be-
                                                                                     Setting the course
                                                                       Introducing the ‘HDtM approach’
                                                                                        Setting the Sails
                                                                                   CSR along value chains
                                                                                                                                           ginning, if you want to serve the poor it is very
             Getting on board                                                          Getting on board
             Next steps
                                                                                                      Next steps
                                                                                                                                           advisable to work with the local government,
                                                                                                                                           local NGOs, and other stakeholders together in

                                                                                                                                                The link between human development and environment
                                                                                                                                                What kind of development?

                                                      Slide ㉛
                                                                                                                                                                                                                 High demand on biosphere per person
                                                                                                                                                                                                                                                              leap Sustainable
                                                                                                                                                                                                                                                                    Development
     Getting on board
                                                                                                                                                                                       ‚Developed Countries‘                                                frogging
     Next steps                                                                                                                                                                                                                        tra
                                                                                                                                                                                            Minimum acceptable level of Human Development

                                                                                                                                                                                                                                             d
                                                                                                                                                                                                                                           i t io
                                                                                                                                                                                                                                        ‚Developing
                                                                                                                                                                                                                                                            Role of business for enabling sustainable lifestyles




                  Key questions                                                                                                                                                                                                                  n
                                                                                                                                                                                                                                         Countries‘
                                                                                                                                                                                                                                                       al




                                                                                                                                                                                                                                                                 World average biocapacity
                                                                                                                                                           Human Development Index




                                                                                                                                                                                                                                                                   available per person
                                                   Innovations:
                                                                                                                                                                                                    High demand on biosphere per person
                                                      What role businesses can take to
                  Business Strategy:                                                                                                                                                                       Low human development
                                                      create product and service-                                                                                                                                                                                                            Within carrying
                    How does HDtM fit                                                                                                                                                                                                                                                           capacity
                                                      innovations for HDtM?
                    into business                                                                                                                                                                                                                                                              Low human
                    strategy?                                                  Role of business for enabling sustainable lifestyles                                                                                                                                                           development

                                                       How to implement                                                                                                                                                                                 Ecological Footprint per person
      Business Models:                                Human Development
        How to address social and                      through the Market
        environmental issues and                                                                                                                Michael Kuhndt                       cscp | www.scp-centre.org                               IGES International Symposium, Kobe, 17th January 2007             33
        improve profitability?

                      Networks:
                        How can business help to build strong networks?
                                                                                                                                                                                                                         Slide ㉝
                        What role will different actors play in these?



     Michael Kuhndt    cscp | www.scp-centre.org                   IGES International Symposium, Kobe, 17th January 2007       32
                                                                                                                                           order to really address the needs of the poor.
                                                                                                                                              We still have quite a large task in front of us.
                                                      Slide ㉜
                                                                                                                                           I would like to show this as the last slide in my
pany.                                                                                                                                      presentation. Actually, this looks into the situa-
   With this, I would like to come to the last part                                                                                        tion we are going to move toward. If you look
of my presentation and briefly outline some key                                                                                            at this slide, you have this small corner on the
questions. We are still in the beginning of Human                                                                                          top right which is called “sustainable develop-
Development through the Market movement.                                                                                                   ment.” You will see almost no country is yet in
We haven’t solved all the problems there. We’re                                                                                            the area of sustainable development. That is ac-
still trying to understand how the poor can really                                                                                         tually the bad news. If, for example, we take the
benefit, but also how large companies can benefit                                                                                          ecological footprint as a measure most countries,
at the same time. We still need to look further                                                                                            especially the developed countries, have a high
into it. The United Nations is now working on a                                                                                            human development index. They score very high
program on Human Development through the                                                                                                   on human development, however, they also use
Market – HDtM – and is exploring some core                                                                                                 quite a lot from nature to come to this point. De-
questions. For example, what business roles can                                                                                            veloping countries still use a small part of nature,



                                                                                                                                      0
                                    “Business and Environment”International Symposium 2006 Proceedings
                                                        Towards Sustainable Lifestyle and Business Model




but some of these countries still have a very low
                                                                    Human Development through the Market
achievement in terms of human development.                          Contributing to the Millennium Development Goals




                                                                            Thank you for your attention !!!
                                                                                               Michael Kuhndt
                                                                                                   CSCP

                                                                                         Michael.kuhndt@scp-centre.org
                                                                                         Fon + 49 - 202 . 45 95 8 - 20
                                                                                         Fax + 49 - 202 . 45 95 8 - 30
                                                                                             www.scp-centre.org




                                                                                                Slide ㉞




  The question now is to where we are brining
the developing countries? Is it more the tradition-
al model where we actually bring those countries
into the direction of the developed countries? In
that case, they don’t end up in the sustainable de-
velopment area. Or, are we trying to help them
leapfrog with new business models to jump right
away into this area of sustainable development? I
think the whole research program of IGES is also
looking into that issue. I’m looking forward today
to discussing further business ideas on how to
jump right away through leapfrogging like a frog
jumping into the area of sustainable development.
Thank you very much for your attention.




                                                        
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




Human Development through the Market
Contributing to the Millennium Development Goals



                 Innovations for Human Development
                 in Global Value Chains
                 Contributing to the Millennium Development Goals

                 Michael Kuhndt
                 Head, UNEP / Wuppertal Institute Collaborating
                 Centre on Sustainable Consumption and
                 Production




                                                           Slide ①




Introducing the ‘HDtM approach’
The need for building new markets




                                                            “There are many positive ways
                                                                 for business to make a
                                                              difference in the lives of the
                                                           poor – not through philanthropy, sustainable lifestyles
                                                                              Role of business for enabling
                                                                 though that is also very
                                                           important, but through initiatives
                                                           that, over time, will help to build
                                                                      new markets”.


                                               Kofi Annan, United Nations, former Secretary General.
                                               Address to the World Economic Forum (Feb 2002)




Michael Kuhndt     cscp | www.scp-centre.org                              IGES International Symposium, Kobe, 17th January 2007   2




                                                           Slide ②




                                                               
                                    “Business and Environment”International Symposium 2006 Proceedings
                                                        Towards Sustainable Lifestyle and Business Model




Human Development through the Market
Contributing to the Millennium Development Goals



        Drawing the map                                                            Drawing the map
                                                                  How environment and poverty are
        How environment                                                                    linked
        and poverty are linked
                                                                                  Setting the course
                                                                    Introducing the ‘HDtM approach’
                                                                                     Setting the Sails
                                                                                CSR along value chains
                                                                                    Getting on board
                                                                                                   Next steps




                                                     Slide ③




Human Development
The poverty challenge




                 Need to inrease consumption
                                                   Priority countries for human development
                    In many
                    regions:                                                Role of business for enabling sustainable lifestyles


                      Need to
                     increase
                 consumption to
                 reach adequate
                  level of human
                   development




                                                                                            Source: UNDP 2004


Michael Kuhndt     cscp | www.scp-centre.org                    IGES International Symposium, Kobe, 17th January 2007        4




                                                     Slide ④




                                                        
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




How environment and poverty are linked
Consumption – The poor pay more




                                                  Ensure access to products
                                                  and services

                                                                                                             The poor do not have
                                                                                                     Role of business for enabling sustainable lifestyles
                                                                                                            access to adequate
                             Rice        1.2X                                                             products and services at
                                                                     Cost in poor quarter /
                                                                                                             acceptable prices
                        Phone call       2X                          Cost in rich quarter


                        Diarrhea
                                         10X
                       medication
                                                                                                          Business can innovate
                   Municipal grade
                                                37X                                                       more adequate products
                             water
                                                                                                            and services while
                            Credit                    60-57X                                                 safeguarding the
                                                                                                               environment
                                     0           20             40              60             80




Michael Kuhndt     cscp | www.scp-centre.org                                           IGES International Symposium, Kobe, 17th January 2007          5




                                                                     Slide ⑤




How environment and poverty are linked
Environmental income according to income group



                                                      100%                                                                         Intangible Capital

   Secure                                             80%
                                                                                                                                   Produced Capital
                                                                                                                                   Natural Capital
                                                                     3991            14253
   livelihoods                                        60%
                                                                                                    45495
                                                                                                                  353339


                                                      40%            1150                            Role of business for enabling sustainable lifestyles
                                                                                      4962          16481
                                                      20%
                                                                     2075
                                                                                      4398                         76193
                                                                                                    10921          9531
                                                       0%
                 Natural Capital =                             Low-income             Lower-         Upper-         High-
                                                                                      middle         middle       income
                  Agriculture land                                                   income         income         OECD
                 + Sub-soil assets
                 + Forst resources
                 + Protected areas
                                                                The poor depend more on the
                                                                  environment than the rich
             Source: World Bank




Michael Kuhndt     cscp | www.scp-centre.org                                           IGES International Symposium, Kobe, 17th January 2007          6




                                                                     Slide ⑥




                                                                        4
                                  “Business and Environment”International Symposium 2006 Proceedings
                                                      Towards Sustainable Lifestyle and Business Model




How environment and poverty are linked
Burden shifting: Inequalities along global value chains



                                                      Industrialised countries
                                                      ~ 20% of ecological backpack
                                                      ~ 80% of value added

                                                                            Role of business for enabling sustainable lifestyles


       Resource                                                 End-of-life
                       Producers        Retailers   Consumers
       Extraction                                               Managers



                                                      Developing countries
                                                      ~ 80% of ecological backpack
                                                      ~ 20% of value added



Michael Kuhndt   cscp | www.scp-centre.org                      IGES International Symposium, Kobe, 17th January 2007        7




                                                     Slide ⑦




Avoid burden shifting
Increasing evidence for burden shifting – an European Perspective



          Our consumption – their burden


                                                                            Role of business for enabling sustainable lifestyles
       Global systems of
        production and
       consumption lead
       to rising resource
          extraction in
           developing
          countries....



                                                                               Source: Wuppertal Institute




Michael Kuhndt   cscp | www.scp-centre.org                      IGES International Symposium, Kobe, 17th January 2007        8




                                                     Slide ⑧




                                                       
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




Human Development through the Market
Contributing to the Millennium Development Goals



                                                                                  Drawing the map
                                                                 How environment and poverty are
                                                                                          linked

        Setting the course                                                       Setting the course
                                                                   Introducing the ‘HDtM approach’
        Introducing the ‘HDtM
        approach’                                                                   Setting the Sails
                                                              Poverty reduction along value chains
                                                                                   Getting on board
                                                                                                 Next steps




                                                    Slide ⑨




Introducing the ‘HDtM approach’
Overview



        Introducing Human Development
        through the Market

             Create tangible                                       Address social and lifestyles
                                                                      Role of business for enabling sustainable

           benefits for the poor                                  environmental issues




                                             Function collectively
                                             through the market


Michael Kuhndt   cscp | www.scp-centre.org                     IGES International Symposium, Kobe, 17th January 2007   10




                                                    Slide ⑩




                                                      6
                                   “Business and Environment”International Symposium 2006 Proceedings
                                                       Towards Sustainable Lifestyle and Business Model




Introducing the ‘HDtM approach’
In what areas does the approach work?


                  Providing access to                              Developing innovative
                 products and services                             products and services


                                                                energy
                           food                health                            finance
                                                           sanitation           Role of business for enabling sustainable lifestyles
                                construction                             textile & apparel
                                                        footwear


                      Knowledge and                                     Infrastructure and
                        education                                       good governance



                                              Create local income

Michael Kuhndt    cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007       11




                                                        Slide ⑪




Introducing the ‘HDtM approach’
Relationship to other approaches


        An integrative perspective
                                       Intermediary / NGO approaches
                                                                 Organic
            Private sector                    Fair-Trade                                     Public policy
             approaches                                         production                   approaches
           Environmental                                                                    Environmental
                                                                                Role of business for enabling sustainable lifestyles
           Improvements                                                                     improvements
                                                    Human
         Worker rights and                       Development                                    Pro-poor
            conditions                                                                        development
                                                  through the
            Supply Chain                            Market                                   Private sector
            Management                                                                       development

                 Social Entrepreneurship                   CSR           Bottom of the Pyramid
                  (focus on small businesses)                            (focus on large businesses)

                                                        Concepts
Michael Kuhndt    cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007       12




                                                        Slide ⑫




                                                           
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




Setting the stage: Introducing the “HDtM approach”
Pro-poor and public benefits

                                                Access to locally
                                                 adapted and
                        Develop                                                     Improve
                                                  sustainable
                        or refine                                                  distribution
                                                 products and
                                                   services

                          Local
                                                                                   Realise cost
                       economic
                        linkages
                                                  Pro-poor                           savings
                                                                                Role of business for enabling sustainable lifestyles


                                                  Benefits
                                Job opportunities                     Preserve
                                      and                        environmental and
                                entrepreneurship                   social capital


              HDtM seeks to inspire entrepreneurship in and for local communities, and
            seeks to guide energy and resources mobilised by its environmental and social
                            principles to help the poor in local communities

Michael Kuhndt   cscp | www.scp-centre.org                          IGES International Symposium, Kobe, 17th January 2007       13




                                                      Slide ⑬




Introducing the ‘HDtM approach’
Actors and their roles in HDtM

       Core actors:
                         Find locally feasible innovative               Pool contacts and facilitate larger
                                     solutions                          projects with economies of scale
                    Proximity to user groups, more trusted           Access to entrepreneurial knowledge,
                            person than outsiders                           technology, finance...

                                 Local entrepreneurs                Multinational companies
                                                                                Role of business for enabling sustainable lifestyles
                            Community groups, NGOs                         Political actors
                                                                         Set framework conditions: good
                    Knowledge on local conditions, needs                  governance, low corruption,
                              and resources                                       infrastructure
                        Constant partner on the ground                           Facilitate networks


        Supporting actors:
                     Chambers of Commerce             Insurance companies                            ...

                    Banks (esp. Microfinance)           Consumer groups


Michael Kuhndt   cscp | www.scp-centre.org                          IGES International Symposium, Kobe, 17th January 2007       14




                                                      Slide ⑭




                                                            8
                                    “Business and Environment”International Symposium 2006 Proceedings
                                                        Towards Sustainable Lifestyle and Business Model




Introducing the ‘HDtM approach’
Action strategies for some core actors


                             Human Development through the Market

                   New                             Alternative                                Long-term
             Business Models                   development models                          financial viable
                                                                                               business
                 Pro-poor                             Good                                      Set up
           product and service                     governance                            strategic networks
               innovations
                                                      Sound                                  Improve
                                                                                 Role of business for enabling sustainable lifestyles

            Process & Product                   environmental and                        management skills
                                                  social policies
               Stewardship
                                                                                              Develop
                                                     Facilitate                           financially viable
                 Sustainable                     partnerships and                          business model
                  Marketing                          networks
                                                                                          Compile your
                 Supply Chain                       Information                         knowledge on local
                 Management                            broker                              customers

            Multinational                                                                   Local
             companies                           Government                             entrepreneurs


Michael Kuhndt     cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007       15




                                                     Slide ⑮




Having a close look: HDtM in practice
Lessons from successful HDtM businesses

   HDtM Case studies: Four key sectors
             Energy                  Food & Agriculture               Tourism                            Waste
    • Drying fruit using            • Growing organic          • Vacation, wine
      Solar Power -                                              and local                • Converting e-
                                      cotton -LOCP                                            waste into
      USISS (Mali)                    (Uganda)                   communities –
    • Providing Energy                                           Spier (South                 income - Desco
                                    • Marketing the                                           (South Africa)
      to the Poor -                   Açaí berry -               Africa)
                                                                                          • for enabling sustainable lifestyles
                                                                             Role of business Decentralised
      Eskom (South                    Sambazon                 • Eco-tourism in
      Africa)                                                                                 composting -
                                      (Brazil)                   Africa-CC Africa             Waste Concern
                                                                 (throughout                  (Bangladesh)
                                                                 Africa)




Michael Kuhndt     cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007       16




                                                     Slide ⑯




                                                          
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




Putting it into action: The HDtM toolbox
Scoping and defining HDtM businesses




                      ‘Solar-powered Rural Business Centres’

                • Considered the needs of the poor:
                  its objective is to reduce the “digital gap” between
                  urban and rural areas                               Role of business for enabling sustainable lifestyles

                • Involving the poor: supports entrepreneurship
                  by the poor in its very structure – set up, running
                  and maintaining the Rural Business Centers is
                  done by the locals
                • Fosters local capacities: the programme
                  includes trainings and support materials
                • Awareness of local limitations:
                  the RBCs are powered by solar panels

                                       e-Care in Ghana


Michael Kuhndt      cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007       17




                                                        Slide ⑰




Putting it into action: The HDtM toolbox
Scoping and defining HDtM businesses




                      ‘Eco-tourism to African wilderness‘

    • Uses an “umbrella” organisation concept: CC Africa owns and
      manages lodges and camps across six African countries
                                                                                  Role of business for enabling sustainable lifestyles
    • Used its expertise to broaden the operations:
      Four divisions:
            •    one that maintains the logdes;
            •    one that offers guided camping safaris;
            •    one that oversees its tour operators;
            •    One that provides all-inclusive conference tours

    • Uses its extensive network to ensure success:
       maintains strong partnerships with the property operators,
       transporters, service providers, local government and communities

                                         CC Africa

Michael Kuhndt      cscp | www.scp-centre.org                         IGES International Symposium, Kobe, 17th January 2007       18




                                                        Slide ⑱




                                                           0
                                    “Business and Environment”International Symposium 2006 Proceedings
                                                        Towards Sustainable Lifestyle and Business Model




Putting it into action: The HDtM toolbox
Scoping and defining HDtM businesses




                             ‘Converting e-waste into income‘

                 • Identified a clear need: accumulation of ever
                   greater amounts of e-waste
                       • It now processes 400 tons of PC boards
                       • And 2000 tons of other e-waste                       Role of business for enabling sustainable lifestyles



                 • Developed a unique solution: created an
                   incineration-free process to extract valuable
                   materials

                 • Understands the resources of its customers:
                   collects electronic scrap from customers and
                   purchases boards from scrap dealers

                                      Desco in South Africa


Michael Kuhndt     cscp | www.scp-centre.org                      IGES International Symposium, Kobe, 17th January 2007       19




                                                     Slide ⑲




Human Development through the Market
Contributing to the Millennium Development Goals



                                                                                     Drawing the map
                                                                    How environment and poverty are
                                                                                             linked
                                                                                    Setting the course
                                                                      Introducing the ‘HDtM approach’

        Setting the Sails                                                              Setting the Sails
                                                                                  CSR along value chains
        CSR along value chains
                                                                                      Getting on board
                                                                                                     Next steps




                                                     Slide ⑳




                                                        
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




CSR along value chains
Opportunities in value chains


                     Sustainability impact along value chains

                                high
    Potential contribution to
         sustainability




                                                                                                 Role of business for enabling sustainable lifestyles




                                low

                                  Raw material                 Supplier           In-house                                          End-
                                                                                            Distribution             Usage
                                   extraction                production          production                                        of-life

                                                                             Value Chain


Michael Kuhndt                   cscp | www.scp-centre.org                           IGES International Symposium, Kobe, 17th January 2007       21




                                                                          Slide ㉑




CSR along value chains
Management focus in value chains


                     Current management efforts

                                high                                        Focus of current
         Management Response




                                                                           management effort



                                                                                                 Role of business for enabling sustainable lifestyles




                                                                              only ad hoc
                                                                             and sporadic
                                                                             management
                                low

                                  Raw material                 Supplier           In-house                                          End-
                                                                                            Distribution             Usage
                                   extraction                production          production                                        of-life

                                                                             Value Chain


Michael Kuhndt                   cscp | www.scp-centre.org                           IGES International Symposium, Kobe, 17th January 2007       22




                                                                          Slide ㉒




                                                                            
                                                  “Business and Environment”International Symposium 2006 Proceedings
                                                                      Towards Sustainable Lifestyle and Business Model




CSR along value chains
Classic mismatch between opportunities and efforts


                  Mismatch between the two

                                high
    Potential contribution to




                                                                          Policy, performance
     Resource Efficiency




                                                                            and reputation
                                                                              opportunities
                                                                                                 Role of business for enabling sustainable lifestyles




                                                                             80% of overall
                                                                            efforts focus on
                                low                                         20% of the total
                                                                                   risk
                                  Raw material                 Supplier           In-house                                          End-
                                                                                             Distribution            Usage
                                   extraction                production         production                                         of-life

                                                                             Value Chain


Michael Kuhndt                   cscp | www.scp-centre.org                           IGES International Symposium, Kobe, 17th January 2007       23




                                                                          Slide ㉓




CSR along value chains
Classic mismatch between opportunities and efforts




                                      Build long-term trade                          Include small producers on
                                          relationships                                    fair conditions
                                Engage in fair trade regimes                               Promote good
                                                                                      environmental and social
                                Source organically produced
                                                                                              conduct
                                       raw materials                                         Role of business for enabling sustainable lifestyles



                                          Raw material                            Supplier
                                           extraction                            production


                                  Raw material                 Supplier           In-house                                          End-
                                                                                            Distribution             Usage
                                   extraction                production          production                                        of-life

                                                                             Value Chain


Michael Kuhndt                   cscp | www.scp-centre.org                           IGES International Symposium, Kobe, 17th January 2007       24




                                                                          Slide ㉔




                                                                            
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




CSR along value chains
Consumer responsibility works: Fair Trade


   Fair Trade – more than a ‘niche’ market!

                                 All Fair Trade
                                    products
         International
          Fair Trade                                                              Role of business for enabling sustainable lifestyles
                              All World Shops
          sales have
        been growing
          more than                                                             % Change in last five
                                      Paid staff
          20% every                                                             years
        year since the
         beginning of            Sales Outlets
            the 21st
            century.
                                   Importing
                                 organisations

                                                   0%           50%            100%               150%               200%
                                                                                   Source: FLO; Fair Trade in Europe; 2005


Michael Kuhndt   cscp | www.scp-centre.org                            IGES International Symposium, Kobe, 17th January 2007       25




                                                         Slide ㉕




CSR along value chains
SME in developing countries



         SME in developing countries
                                                         Expenditures including merchandise
         Cost structure of                         10%      7%
        micro-enterprises in
              Mexico:                                                             Role of business for enabling sustainable lifestyles
                                                                                                  Premises
       Costs for material &                                                                       Machinery maintenance
        energy 3.6 as high                                                                       Materials
                                                                                                26%
         as salaries paid.                                               36%                     Merchandise for sale
                                                                                                  Salary
                                             42%                                                 Water, Electricity
                                                                                                10%
                                                                                                 Other
        Resource efficiency
        can strengthen local                                    4%
            enterprises                                      1%




Michael Kuhndt   cscp | www.scp-centre.org                            IGES International Symposium, Kobe, 17th January 2007       26




                                                         Slide ㉖




                                                           4
                                        “Business and Environment”International Symposium 2006 Proceedings
                                                            Towards Sustainable Lifestyle and Business Model




CSR along value chains
Classic mismatch between opportunities and efforts


          Build decentralised                        Innovate products and                        Set up take-back,
              distribution                         services for basic needs of                        reuse and
           systems to reach                                 the poor                                   recycling
              the poor as                                                                           schemes that
                                                   Revolutionise relationship                     offer employment
            customers and
                                                        between price,                             opportunities for
           create income in
                                                  performance, environmental                           the poor
          poor communities
                                                            impact          Role of business for enabling sustainable lifestyles



                                                                                                  End-
                            Distribution                                    Usage
                                                                                                  of-life


                      Raw material                Supplier            In-house                                          End-
                                                                                Distribution              Usage
                       extraction               production           production                                        of-life

                                                                  Value Chain


Michael Kuhndt      cscp | www.scp-centre.org                              IGES International Symposium, Kobe, 17th January 2007   27




                                                             Slide ㉗




CSR along value chains
Fostering new markets




                                                        Base of the Pyramid
                                                                                Traditional
                                                                                    Role focus
                                                                              business of business for enabling sustainable lifestyles
                                                                                                                 High
                                                                                                               income




                                                                                                             Middle class



              Anwara Begum,                                           Neglected markets
         a Grameen 'telephone lady'
                 (Credit: Nurjahan Chaklader)                           Go for inclusive
                                                                                                         Poor / extreme poor
                                                                        consumption?                     Base of the Pyramid
                                                                                                         = 4 billion customers


Michael Kuhndt      cscp | www.scp-centre.org                              IGES International Symposium, Kobe, 17th January 2007   28




                                                             Slide ㉘




                                                                
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




CSR along value chains
Fostering new markets

          Overlooked consumers
                    Wealth                                                                           Population
     Purchasing power parity (ppp) in US$                                                               in Millions


                  > $20.000                              Tier 1                                        75 - 100

           $1.500 - $20.000                            Tier 2-3                                   1.500 – 1.750
                                                                                       Role of business for enabling sustainable lifestyles


                    $1.500                               Tier 4
                                                                                                        4.000
                   < $1.500                              Tier 5


                        The BOP market potential is enormous: 4 to 5 billion underserved
                             people with a potential of more than $13 trillion PPP



                                                Source: C.K. Prahalad and Stuart Hart, 2002. The Fortune at the Bottom of the Pyramid

Michael Kuhndt      cscp | www.scp-centre.org                            IGES International Symposium, Kobe, 17th January 2007          29




                                                       Slide ㉙




Introducing the ‘HDtM approach’
What business functions are concerned?


        HDtM will affect all business functions

            Human Resources                                                                           Marketing


                                                                                                         Sales
             Market Research                                                           Role of business for enabling sustainable lifestyles


                                                  Inclusive
                                                                                               Customer Support
          Product and Service
             Development                         Business
                                                                                            Distribution & logistics
                                                     Models
                  Procurement
                                                                                                  Administration


                 Public relations                                                              Legal Department


Michael Kuhndt      cscp | www.scp-centre.org                            IGES International Symposium, Kobe, 17th January 2007          30




                                                       Slide ㉚




                                                           6
                                   “Business and Environment”International Symposium 2006 Proceedings
                                                       Towards Sustainable Lifestyle and Business Model




Human Development through the Market
Contributing to the Millennium Development Goals



                                                                                  Drawing the map
                                                                 How environment and poverty are
                                                                                          linked
                                                                                 Setting the course
                                                                   Introducing the ‘HDtM approach’
                                                                                    Setting the Sails
                                                                               CSR along value chains

        Getting on board                                                           Getting on board
                                                                                                 Next steps
        Next steps




                                                    Slide ㉛




Getting on board
Next steps


             Key questions
                                 Innovations:
                                    What role businesses can take to
             Business Strategy:
                                    create product and service-
               How does HDtM fit
                                    innovations for HDtM?
               into business
               strategy?                                  Role of business for enabling sustainable lifestyles

                                                 How to implement
Business Models:                                Human Development
  How to address social and                      through the Market
  environmental issues and
  improve profitability?

                 Networks:
                   How can business help to build strong networks?
                   What role will different actors play in these?



Michael Kuhndt    cscp | www.scp-centre.org                    IGES International Symposium, Kobe, 17th January 2007   32




                                                    Slide ㉜




                                                       
   “Business and Environment”International Symposium 2006 Proceedings
   Towards Sustainable Lifestyle and Business Model




The link between human development and environment
What kind of development?




                                                                 High demand on biosphere per person
                                                                                                              leap Sustainable
                                                                                                                    Development
                                       ‚Developed Countries‘                                                frogging
                                                                                       tra
                                            Minimum acceptable level of Human Development

                                                                                             d
                                                                                           i t io
                                                                                        ‚Developing
                                                                                                            Role of business for enabling sustainable lifestyles



                                                                                                 n
                                                                                         Countries‘
                                                                                                       al




                                                                                                                 World average biocapacity
           Human Development Index




                                                                                                                   available per person
                                                    High demand on biosphere per person
                                                           Low human development
                                                                                                                                             Within carrying
                                                                                                                                                capacity
                                                                                                                                               Low human
                                                                                                                                              development

                                                                                                        Ecological Footprint per person




Michael Kuhndt                       cscp | www.scp-centre.org                               IGES International Symposium, Kobe, 17th January 2007             33




                                                                              Slide ㉝




Human Development through the Market
Contributing to the Millennium Development Goals




                                     Thank you for your attention !!!
                                                                       Michael Kuhndt
                                                                              CSCP

                                                            Michael.kuhndt@scp-centre.org
                                                            Fon + 49 - 202 . 45 95 8 - 20
                                                            Fax + 49 - 202 . 45 95 8 - 30
                                                                www.scp-centre.org




                                                                              Slide ㉞




                                                                                 8