Why Engage?

Why is business engagement necessary to achieve the Millennium Development Goals?

1. There are approximately 1 billion people in the world today living on less than $1 a day. This is extreme poverty and it means they are not able to afford the most basic necessities to ensure survival. 8 million people a year die as a result of extreme poverty. Most foreign aid is targeted at moving the poor from $1 a day (below subsistence) to $2 a day (subsistence).
2. There are approximately 2 billion people in the world today living on $2 a day. This is moderate poverty and it means households can just barely meet their basic needs, but they still must forego many of the things that we take for granted such as education and healthcare. The smallest misfortune (health issue, job loss, etc) threatens their survival.
3. An increase to $3 a day would reach a minimum liveable level. At this level, food and shelter is available as well as basic healthcare and primary education. Achieving an income of as little as $3 a day can transform the lives of those living in poverty.

The crucial difference between exploitation, early death and wasted potential of poverty and successful human development is the opportunity to generate income.

While civil society and government are able to help the poor move from $1 a day to $2 a day through foreign aid and humanitarian relief, neither is able to lift the poor to self-sufficiency ($3 a day) without the involvement of business.

Why should my company consider doing business with the poor?

Aligning your business with the MDGs not only helps to alleviate poverty but it can also contribute positively to your company in several ways:

• Improved supply chain
• New marketplace opportunities
• Become an employer of choice
• Improve corporate culture
• Staff retention and morale
• Increased license to operate
• Global corporate reputation

The world's multinational companies are leading the way in doing business with the poor. There is currently a major strategic directional change taking place in the world's leading multinational corporations, redefining what it means to be a corporation in the 21st century.

What is the Business Call to Action?

The Business Call to Action is the focal point for mobilising the expertise and efforts of business to support growth in developing countries and contribute to the Millennium Development Goals (MDGs).

The Business Call to Action challenges companies to explore new business opportunities that use their core business expertise. Whether through manufacturing, finance, telecommunications etc, businesses can contribute to both achieving the MDGs and improving commercial success.

For businesses, making a profit and 'doing the right thing' are not mutually exclusive. Contributing to the MDGs not only helps create a safer and more prosperous world but also helps secure future commercial success in new markets and build a more profitable business environment.

Ass part of the Business Call to Action, global business leaders have signed their commitment to the following:

"As leaders from the private sector, we declare our commitment to meet this development emergency. We commit to action and because the scale of the challenge means no one acting alone can achieve the difference we need, we call on all parties, including the private sector, governments, civil society and faith groups to play their part. It is only by acting together in a genuine partnership that we can succeed."

Companies that have already signed the Business Call to Action (www.business-call-to-action.com) include:

What is the marketplace opportunity?

The overwhelming characteristic of the emerging markets are that they consist in large majority of low income communities that are defined as the Base of the Pyramid (BoP)¹, or those living on less than US$1,500 annually.

Some 4 billion people make up the BoP and hold US$5 trillion in purchasing power. Asia is home to the biggest BoP market with 2.86 billion people on an income of $US3.47 trillion. That reflects 82% of the region's population and 42% of its purchasing power²

Australia conducts one third of its international trade with emerging markets in Asia. Australian companies therefore are well placed to broaden operations, supply and procurement to involve the Base of the Pyramid in this region. By utilising their resource capabilities, companies can improve the lives of people in developing countries through increasing investment, creating jobs, increasing skills, and developing and providing goods, technologies and innovations.

To successfully engage with the BoP marketplace, new and innovative strategies will be required to deal with the unique obstacles facing these low-income communities.

What if I don't supply products and services to the emerging markets?

There are four primary ways in which your business can contribute to the region's development, depending on your business footprint:

• Operations
  If you have operations based in any of the emerging markets, engagement with local low-income communities can improve company operations. This may involve initiatives such as working with local entrepreneurs, training future employees, increasing supply of local raw materials, and improving the health and education of current employees and their families.
• Procurement
  If you have a supply chain which extends to emerging markets you can benefit from engagement with low income communities in areas such as direct procurement which bypasses costly intermediaries, and the use of cause-related marketing to position products sourced from low-income communities.
• Supply
  If you are a manufacturer of goods and services, especially in the pharmaceuticals, ICT, food and beverage and agribusiness sectors, there are a myriad of opportunities to provide products and services which are of benefit to low income communities.
• Investment
  If you are a company in the finance sector, you can benefit from engagement with low income communities in areas such as investment in infrastructure such as electricity, road, rail, telecommunications, investment in microfinance loans, and Carbon credit trading through providing cash to low-income communities to undertake carbon reducing initiatives such as reforestation

1 In economics, the Base of the Pyramid is the largest, but poorest socio-economic group. This group live on less than $2 per day, typically in developing countries.

2 "The Next 4 Billion - Market size and business strategy at the Base of the Pyramid" (2007). International Finance Corporation and World Resources Institute, p. 9.