If you believe that the social and environmental challenges facing our world are too complex for any single organisation to solve alone, we agree with you.
Inclusive growth has emerged over the past decade as a new approach to achieving sustainable economic growth. The approach has been developed to consider how economic growth is achieved, and at what true cost. It can align public policies and private sector investment to achieve better outcomes for all.
Inclusive growth enables equitable distribution of the benefits of economic growth across society and the environment.
In 2020, the COVID-19 pandemic led the world to prioritise social welfare over economic output, illuminating to all the challenges with stopping the economy in favour of wellbeing. It has led to the most severe global economic contraction since the Great Depression and the sharpest drop in equity markets since 1987. However, the impacts have not been distributed equitably. Some sectors have prospered while others have experienced financial devastation, thus exposing the underlying inequalities in societies around the world.
Structural, social, and environmental issues existed prior to the pandemic. The rise in populist sentiment, including in countries with healthy economies characterised by high GDP output and strong employment, reflects public dissatisfaction with the outcomes of economic growth. This has been exemplified by political turmoil and the events leading up to the US election.
The Organisation for Economic Cooperation and Development (OECD) suggests that this is occurring because growth alone does not address the social challenges of poverty, unemployment and inequality. Furthermore, the OECD recognises the need to account for environmental costs of growth and a new approach to ensure natural assets can continue to provide the resources and environmental services on which our wellbeing relies.
This is a challenge we all need to own.
Ensuring the economy works for everyone is a priority for investors, businesses and governments alike. In the face of world events, investors and businesses have identified that a more comprehensive definition of business sustainability is needed, as well as a more integrated approach to investment – one that is inclusive of the outcomes for a broader cross-section of society and the environment.
The potential for inclusive growth
Our inclusive growth model ensures that distribution of benefits is incorporated into transactions and accrued by beneficiaries when the growth occurs – not relying on income transfers (taxes) and systems of government to redistribute proceeds downstream. The model has clear application in developing countries where weak taxation systems and institutions can often fail to provide social and environmental protections. However, the approach can also be powerful when applied to investment in advanced economies.
By applying an inclusive growth lens, transactions can achieve financial returns with enhanced outcomes such as improved economic resilience, reduced poverty, lower unemployment and reduced social inequality. Through an inclusive growth approach, ecosystem services and environmental protections (and credits) are integrated with the investment structure.
Inclusive growth is by no means a silver bullet. It has received significant interest across the private sector, however practices have yet to mature. Businesses and investors in many countries are exploring inclusive growth approaches to deliver better environmental, social and governance (ESG) outcomes, deeper social licence to operate, more productive and resilient supply chains and improved business sustainability.
Blackrock, Goldman Sachs and J.P.Morgan have been active in advocating the approach. Unilever, Mars, Danone, BASF and Johnson & Johnson are among a growing number of businesses adopting change in practice towards inclusive growth.
How we can help
Inclusive Growth Partners has emerged as an advisory firm and platform provider in response to the need for intermediaries to enable an accelerated transition to sustainable investments. We are at the forefront of public-to-private and private markets investments that deliver economic growth with sustainability, impact and ESG outcomes. Our firm develops assets through stronger partnerships between investors, businesses and governments that improve financial returns and deliver sustainable results that benefit communities and the environment.
Our team has sector expertise in energy and water, natural capital, real assets and infrastructure. We have substantial experience operating in emerging markets and developing economies and a strong cross-sector network spanning Australia and New Zealand, Singapore, the United Arab Emirates and the United Kingdom. We draw on the expertise of over ninety specialists in all fields required to create and maintain value in complex political, environmental and socioeconomic settings.
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