BOI Encourages Businesses: Rethink CSR, Create Inclusive Business Models

The Board of Investments (BOI), an attached agency of the Department of Trade and Industry (DTI), is encouraging businesses to take advantage of the 2017-2019 Investment Priorities Plan’s (IPP) preference for Inclusive Business to scale up their existing corporate social responsibility (CSR) programs to business models that spur sustainable development.

Taking its cue from the United Nations’ (UN) Sustainable Development Goals 2015-2030, the BOI reiterated that the private sector has an essential role in ending all forms of poverty. The BOI also echoed the UN’s call to action at 2018 Economic and Social Council (ECOSOC) Partnership Forum held in New York, which emphasized the good business sense of incorporating low-income communities in the value chain.

From CSR to Inclusive Business
“CSR has been a traditional response by the private sector to the plight of the poor. By switching from CSR to Inclusive Business, entrepreneurs can help the poor in a way that generates both business growth and creates social impact,” said Trade Undersecretary and BOI Managing Head Ceferino Rodolfo.

While CSR programs tend to be an add-on activity without the intent of generating profit, Inclusive Business models help companies create a more sustainable way of helping communities: by building on their capacities as suppliers and business partners, which give them stable sources of livelihood.

“The Philippines’ economy has seen strong and steady growth over the past years, but there are around 22 million Filipinos continue to live in poverty. There is a great opportunity for businesses to tap into this market by addressing their needs or providing livelihood opportunities for them,” Rodolfo added.

Citing the results of Business+, a joint study with the United Nations Development Programme’s (UNDP) Istanbul International Center for Private Sector in Development (IICPSD), the BOI highlights that companies can create their Inclusive Business models regardless of size.

The small-scale operations of micro, small, and medium enterprises (MSMEs), which make up 99.57 percent of Philippine establishments, have the greater flexibility to adopt Inclusive Business models. On the other hand, Inclusive Business models in large companies can take advantage of their reach to deliver a wider scale of impact.

While integrating poor communities in business value chains is essential in creating an Inclusive Business model, building on their capacities is vital to business sustainability. Small-scale suppliers, for example, need trainings and seminars to develop skills and ensure high quality supply. These skills development activities in the fields of marketing, entrepreneurship, and finance will also amplify existing policies and programs that support Inclusive Business.

Business+ recommends increased collaboration between different sectors such as the academe, development actors, non-government institutions, and government agencies to deliver these learning experiences for poor communities. The Study also recommends that the IB ecosystem can be improved through policy interventions that will stimulate companies to leverage on a pro-business and pro-poor approach towards alleviating poverty.

Fiscal incentives
A conducive regulatory environment is essential for Inclusive Business models to flourish. For its part, the BOI has already introduced incentives for companies who implement their own Inclusive Business models. Under the IPP, medium and large enterprises in tourism and agribusiness that incorporate micro and small enterprises in their value chain may receive five-year income tax holidays.

While the government is only giving out incentives to Inclusive Business in the tourism and agribusiness sectors, replicable models exist in other Philippine industries such as health, finance, and energy. The BOI also reminds the private sector that it is ready to help companies who want to create their own Inclusive Business models.

“To create Inclusive Business models, businesses need a certain level of expertise and experience. Making the transition from CSR to IB is an opportunity for the companies to engage in multi-sectoral collaboration as they try to meet the requisite knowledge and capability,” Rodolfo said. “We look forward to seeing more partnerships with the business community as we all work together to create an equitable economy where Filipinos can enjoy shared prosperity.”