Growing Sustainable Business

• What advantages come from partnering through GSB?
• What is expected of a company?
• How can a business investment help reduce poverty?
• Is there a market potential in developing countries?
• What is implied by establishing a GSB Delivery Mechanism in country?
• What is it within the scope of UNDP to do?
• Is the GSB a financing mechanism?
• What is the history of the GSB initiative?

What advantages come from partnering through GSB?

Partnering through the GSB mechanism provides credibility created through a multi-stakeholder approach, which helps remove obstacles to a business investment. The GSB is set up to broker partnerships, which enable a company to engage with the host Government, civil society, the donor community, and investment partners. Such partnerships mitigate investment risks by resolving obstacles and facilitating access to supplementary finance, new markets, and information. Meanwhile, the accumulated expertise of GSB partners represents an opportunity for developing or refining business models that are adapted to the local circumstances and needs, and for identifying opportunities for integrated cross-sector solutions, such as complementary products and risk sharing.

What is expected of a company?

Since the GSB initiative is about doing business, the company is expected to work in a spirit of "enlightened self-interest", apply a long-term perspective, and to be a business leader from start to finish. It is expected to invest in the development of an adequate business model, which relates directly to the company’s core business or to its value chain. While expected to demand a decent return on its investment, the company is asked to take on capital and operational expenditures when applicable. Finally, the company must be ready to engage in multi-stakeholder & cross-sector partnerships and support innovative and unusual business activities that are critical to success, often in public-private alliances. In short, the company is expected to focus on core competencies, partner with external resources, and localize the value creation (WBCSD).

How can a business investment help reduce poverty?

As far as GSB is concerned, poverty reduction is first of all a question of accelerating achievement of the MDGs by providing the poor with access to needed goods/services and to livelihoods opportunities. This implies that a business investment can help reduce poverty by establishing infrastructure and/or by otherwise providing needed goods and services, as well as by generating local economic development and employment.

Is there a market potential in developing countries?

Developing countries represent a challenging and often risky business environment. The foundations for private sector growth and the pillars of entrepreneurship are often inadequate, deterring both domestic and foreign investment. The challenges often relate to the macro environment, the physical and social infrastructure, the rule of law, fair competition, and access to financing, skills, and knowledge. Nonetheless, the populations of developing countries represent enormous untapped business opportunities. Approximately 4 billion people make up the “bottom of the economic pyramid”, i.e. more than two thirds of the world’s population earns US$ 1,500 or less per year. 82 million of the net 83 million people added to the planet every year are from developing countries. Supplying these consumers with affordable and adequate products and services has the potential to entail robust commercial development. The GSB mechanism fills the gap between the challenges and the opportunities.

What is implied by establishing a GSB Delivery Mechanism in country?

The GSB is an operational and practical arm of the United Nations Global Compact. Experiences so far show that the GSB initiative is preferably launched in a country through a consultative and transparent process lead by an impartial convener such as UNDP. The process implies engaging all stakeholders in government, private sector, NGOs, donors, and the UN followed by a launch workshop to introduce the initiative, deliberate on the enabling environment, and discuss specific investment projects. Depending on the outcome of the launch workshop, UNDP can take the lead in establishing a multi-stakeholder GSB Coordinating Group to oversee and guide the initiative, and to establish concrete project alliances responsible for implementation – all supported by a GSB Secretariat (GSB Broker).

What is it within the scope of UNDP to do?

UNDP can provide a demand-driven, open, inclusive, and transparent multi-stakeholder platform for brokering pro-poor business development in support of UNDP’s goals and national priorities. It can promote respect for the Global Compact principles and ensure that unfair competitive advantage is NOT conferred to a particular company. UNDP/GSB can also facilitate access to supplementary (public) finance (e.g. SRI) in support of specific investments as well as consider financial support on a cost-sharing basis to research and capacity building activities that are of public value and vital to GSB business model development. See the GSB Value Proposition.

Is the GSB a financing mechanism?

In principle all costs associated with a GSB business venture should be borne by the company in the expectation to recover costs from the envisaged profit. However, in certain circumstances, the GSB can decide to support research and capacity building activities, which are key to success, but which are also of public value beyond the immediate interests of the project.

What is the history of the GSB initiative?

The GSB initiative grew out of the 2002 UN Global Compact policy dialogue on “business and sustainable development”. This implies that in the run up to the World Summit on Sustainable Development in Johannesburg in 2002, the WBCSD and the ICC created an alliance to seek solutions to the challenges of Sustainable Development. Chaired by Shell's Chairman, Sir Mark Moody Stewart - and in cooperation with the Global Compact office - the alliance gathered volunteer companies to work with the UN to deliver on the MDGs. As such, the GSB initiative was conceptualized by the private sector, presented and endorsed in a high-level WSSD session attended by UN Secretary-General Kofi Annan, UNDP Administrator Mark Malloch Brown, heads of state including British Prime Minister Tony Blair and French President Jacques Chirac, chief executive officers of global companies and representatives from labor, non-governmental organizations, and UN agencies. Due to its convening power, its country office network, its impartiality and its unique ability to “create space” at the country level to facilitate dialogue and action between multiple stakeholders, UNDP was then asked to coordinate the initiative. UNDP with Richard Sandbrook in the lead then started to develop what has now become the GSB as the vehicle that delivers the vision of the initial alliance.