Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Ethical Trade as a tool for Inclusive Development 


Published on

SATO Kan Hiroshi, Institute of Developing Economies
GDN 14th Annual Global Development Conference
19-21June 2013
Manila, Philippines

Published in: News & Politics
  • Be the first to comment

  • Be the first to like this

Ethical Trade as a tool for Inclusive Development 

  1. 1.  Ethical Trade as a tool forInclusive Development  GDN 14thAnnual Global Development Conference20 June 2013 Asian Development Bank ,ManilaSATO Kan HiroshiInstitute of Developing EconomiesPhoto by F.IkegayaPhoto by Sumitomo Chemical Col
  2. 2. Development and Business06/20/13 Ⓒsatokan 2013• ①People wants more efficiency forDevelopment / Aid industry needmore Fund for Achieving MDGs• ②Consumer demand more socialresponsibility for BusinessDevelopment(Aid)AltruisticEthicalBusiness(Trade)EgoisticEfficient①NeedsEfficiency ②NeedsSocialResponsibility①NeedsMore Fund2
  3. 3. Development sector’sapproach to Businiss• UNDP: Business call to action,GSB ( Global SustainableBusiness)• UN: Global Compact• IFC: Inclusive Business Leaders Forum• USAID:GDA ( Global DevelopmentAlliance )• DFID: Challenge Fund• JICA :BOP Business support grant  06/20/13Ⓒsatokan 20133
  4. 4. Why private businessshould be social/ethical ?• For the sake of avoiding boycott risk• For the sake of profit (BOP Business)• For the sake of sustainable supply chain.• ・・ But, the meanings of ethical varies:environmentally friendly, workplacecondition, living wage, no discrimination,philanthropic investment etc.ⓒsatokan 201106/20/13 Ⓒsatokan 2013 4
  5. 5. Avoiding Risks• Information of discriminated,oppressed, suffered and poor people ina value chain will spread quicklythrough advanced ITC and NGOnetworks.• Ethical Consumer “I don’t want to buySweat shop products”• High risk of Boycotting06/20/13 Ⓒsatokan 20135
  6. 6. と Manufacturing06/20/13 Ⓒsatokan 2013ProductionConsumersProcurementDistributionDevelopingcountriesIndustrializedcountriesValue Chain and RisksenvironmentChildlaborGlobal Value ChainsafetypriceManufacturingLivingwagesafety6
  7. 7. BOP Business• Business targeting at the lower incomestrata less than US$3,000 ( PPP ) .• Making goods and services affordableand available for BOP.• BOP are expected to be not onlyconsumers but also producers anddistributers (BOP 2.0).• BOP people are now included into Businesslandscape. =Inclusive Business.06/20/13 Ⓒsatokan 2013 7
  8. 8. Ⓒsatokan 2013Concept of BOP Penalty• BOP are considered as out of themarket and distribution network(exclusion) therefore ・・・・・・• They should buy with few choices• Lower quality (overdue, fake, inferior)goods, in exchange for higher money• Overcoming a lot of difficulties toaccess• Poor people are obliged to pay highercost than rich people ( BOP06/20/13 8
  9. 9. 06/20/13 Ⓒsatokan 2013Poverty Reductionthrough Consumption• If a good become available more easierand cheaper, life will be more stable• If a good become more durable andbetter quality ( even if the priceremain same ) , standard of life willbe uplifted.• Private investment for producingbetter quality goods with cheaper pricebenefits for economic growth andpoverty alleviation.9
  10. 10. 06/20/13 Ⓒsatokan 2013Concept of BOP Business• BOP people are Sleeping consumers• Low benefit but mass amount• Future Volume Zone• Poverty reduction through consumptionBase of the Pyramid    less than$3000PovertyReductionthroughConsumption10
  11. 11. 06/20/13 Ⓒsatokan 2013BOP Business Examples11Health :Privent MalariaElectricity: Education and healthTransportation: IncomeCommunication: OpportunityNutrition: Enjoy EatingCommunication :Security
  12. 12. Cause Related Marketing= CRM• Ethical as a tool for marketing• Poverty and development are verygood topic for CRM• Fair trade tells consumer that somepart of the payment will contribute thebetterment of producers life (not onlyliving wage but also education, healthand sanitation, infrastructure buildingand human rights)• Environmental certification are alsopopular. Ⓒsatokan 201306/20/13 12
  13. 13. 06/20/13 Ⓒsatokan 2013 13
  14. 14. Goodwill competition?06/20/13 Ⓒsatokan 2013 14Cadbury declared all Dairy milk will be100% Fair Trade cacao.      Nestle followed to make 100% FairTrade   KitKat  
  15. 15. Social Business• Variety of social business models areinnovated• Fee for Service/Cross Subsidy Pricing• Social marketing• Development oriented Socialenterprise・ Grameen model ofSocial Business = nodividend for shareholder06/20/13Ⓒsatokan 2013 15
  16. 16. Marriage ofDevelopment and Business• Business with Ethic and Developmentwith Efficiency will Overlap• Widening overlapping area may lead tomore inclusive developmentⒸsatokan 2013EfficientDevelopmentEthicalBusinessSocial BusinessSocialEntrepreneurPrivate companiesBOP Business06/20/13 16