According to a Harvard Kennedy School and Business Fights Poverty report,
“For large companies, enterprise development is also a business imperative. It strengthens the value chain by increasing quality, quantity, and security while potentially decreasing cost on the supply side and by increasing sales capacity on the distribution side. It expands the market by driving job creation and GDP growth. And it enhances corporate reputation by contributing to local, national, and global priorities. Just as enterprise development is critical to large firms, large firms are critical to enterprise development. They can support entrepreneurs through corporate social investment in start-up capital, basic business skills, mentoring, and networking with peers and potential customers. However, large firms increasingly realize that when it comes to supporting entrepreneurs, their comparative advantage is not social investment but rather demand for goods and services within their core business operations and value chains – demand that creates the business opportunities entrepreneurs need to grow.”
We asked three experts from Sodexo, Business for Social Responsibility (BSR), and SABMiller to share their experiences and articulate the value proposition for multinational companies investing in women in the global supply chain. For all three, there was a clear social component to their women-focused programs but also a compelling business case to be made.
Sodexo’s focus on gender equality and inclusion started internally and, in keeping with the company’s double bottom-line mission, was soon mirrored throughout the company, including its supply chain. To that end, Sodexo has committed to invest $1 billion in 5,000 small- and medium-sized enterprises (SMEs). Adrienne Axler, CEO of Sodexo Germany, shared two examples of these investments, which the company sees as good not only for business owners and their communities but also for Sodexo itself in sourcing new, locally-produced products that consumers are demanding. For instance, an investment in Chilean beekeepers helped scale up the business from 51 beekeepers with 385 beehives producing 30 tons of honey to 150 families farming 1,500 beehives and producing 45 tons of honey. Sodexo supported these entrepreneurs’ efforts to market their products locally and eventually establish an association that now exports honey to Europe. For the company, “there is ROI in money but also in the social perspective,” said Adrienne. In Peru, another Sodexo program trained 1,500 small business owners, more than half of whom were women, and 800 of whom now form part of the company’s supply chain. Such programs benefit the entrepreneurs themselves and simultaneously strengthen Sodexo’s business operations.
In discussing the rationale for women’s economic inclusion, Peder Michael Pruzan-Jorgensen, Vice President for Partnership Development and Research at BSR, pointed to a recent McKinsey report that found women’s equal participation in the economy could add up to $28 trillion to global annual GDP by 2025. “Businesses want their share” of that market opportunity, he said.
BSR has demonstrated how educating employees about health can contribute to a company’s bottom line. Through the HERhealth project, BSR showed quantifiable business benefits to providing health information and services for garment factory workers, including reductions in worker absenteeism, early leave requests, staff attrition, and “error rates,” or mistakes made in manufactured garments. One factory measured a return on investment of $4:$1 due to reduced absenteeism and turnover rates. “Once you start training low-income female workers in reproductive health, they are less sick,” Peder Michael said. “Similarly, when you invest in women you enable them to rebound from the [economic] shocks and create more resilience in supply chains.”
Complementing HERhealth, BSR’s HERfinance project, developed with support from Women’s World Banking, delivers financial education in the workplace and trains workers as peer educators. The workplace can serve as an effective point from which to responsibly bring low-income laborers—both women and men—into the formal financial system. In addition to the direct benefits to employees, who have shown significant increases in financial capabilities, HERfinance is also good for factory owners. If an employer can help employees access or better use financial resources, this can go a long way toward improving relations between workers and management. Such initiatives can also strengthen the link between workplaces and community organizations to increase employee access to critical services. Pilot results indicate that more informed and financially stable workers are more satisfied with their employer and their employment—a powerful result that supports the business case for further investments in financial inclusion in the workplace.
For SABMiller, a gender lens is quite important, because women are a critical part of the company’s value chain. According to Lauren Iannarone, “it is a mutually dependent value chain, from small farmers to mom-and-pop shops that sell products, to large distributors. Women are part of the value chain. [SABMiller’s] future growth is dependent on the ability of those stakeholders to be successful. The two are very much linked.” The company, which bottles Coca-Cola products, has direct buying and selling relationships with 1.5 million small businesses, many of which are women- and family-owned.
Iannarone sees access to finance as a key issue for small businesses, not just financial products but also skills development and access to value chains and markets. SABMiller is conducting needs assessments to understand what suppliers need to support their businesses and families. This research is helping the company understand how to better support suppliers and retailers, as well as gender differences so they can ensure women are being served.
All three panelists emphasized the importance of partnerships. BSR collaborates with its members, factory owners, and other NGOs. Sodexo is partnering with WEConnect International, which helps women-owned businesses succeed in global value chains. SABMiller is working with the Inter-American Development Bank to offer business and life skills training to 40,000 retailers at risk of falling below the poverty line in six Latin American countries. These retailers, known as tenderos, are essential to supply food, beverages and services to more than 2,000,000 homes in some of the region’s poorest neighborhoods. As more corporations increase investments in their supply chains, this partnership approach will be critical to successfully integrating women.
This blog was based on a panel at the Making Finance Work for Women Summit hosted by Women’s World Banking in Berlin last November. To learn more, check out the video of the full panel discussion here.