Why inclusive business models matter in the age of climate crisis

Climate change looms as one of the defining challenges of our time, threatening ecosystems, economies, and societies across the globe. The impacts of climate change extend far beyond the natural world, affecting businesses on multiple fronts. From increased insurance costs to resource scarcity, climate change risks ripple through every facet of the business world.

On World Ozone Day, we reflect on the meaning and significance of this important day, which aims to raise awareness about the protection of the ozone layer. The ozone layer, a fragile shield of gas in our earth's stratosphere, protects us from harmful ultraviolet (UV) rays.

Its preservation is crucial in mitigating climate change because it acts as a guardian against the harmful effects of UV radiation, which can have detrimental consequences for both the environment and human health.

The theme of World Ozone Day is not just about ozone protection; it is about acknowledging our collective responsibility in addressing environmental challenges. It is about recognising that the very industries and businesses that contribute to climate change can also be part of the solution. This brings us to the concept of inclusive and sustainable business models.

In India, this business model embodies a comprehensive approach that extends beyond mere profitability. It places equal importance on the welfare of people and the environment. It emphasises the need for community development at the grassroots level, recognizing that the success of a business must align with the well-being of local communities.

Without people, there is no planet. Without the planet, there are no people and systems

Climate and social businesses that work in the climate space rely on partnerships at all levels - without which thought/strategy becomes isolated and action is unidirectional. An integrated 3P approach (plan, prepare, and present) is necessary for business models to contextualise work and drive real, measurable and meaningful impact.

In the current market, inclusive businesses have the potential to generate Green Jobs, accelerate climate action and develop long-standing solutions and businesses in circularity, regenerative practices/agriculture etc.

Green Jobs, which directly indicates people and community involvement in climate work (businesses), in turn generates awareness and exponential impact in the medium to long term. Inclusive businesses also are ones that take into account the potential impact of climate change on their staff/workers and their contribution to climate change through business processes as a whole - which drives forward a more Net Zero approach of thinking, where ESG are improved upon in tandem, supply chains are made carbon neutral and in turn, employees are given better spaces to work.

Climate-resilient business models

Resilience building begins at a grassroots level - through communities that face the brunt of climate change, such as fisher folk, marginalized urban populations etc. Tackling micro issues, which are a day-to-day reality for these communities, and building systems around the same - ensure long-term action and positive changes that add up to a larger impact.

Business building centred around climate models can foster partnerships between private and public sectors, speeding up climate action, generating much-needed employment for vulnerable communities, and empowering them whilst contributing to climate action. This can further aggregate action at all levels (panchayat, district, rural levels) to exponentially drive change.

An example of a business that has integrated climate-responsive practices into their models is Hasirudala, a good example of gender inclusivity - by empowering ragpicker communities through standardization & good working conditions, they have been able to bridge the gender divide and take a very important first step towards inclusivity in the circular front

Community-based climate solutions

Community-based business models serve as foundational elements of inclusive business strategies. By empowering local communities to address climate challenges, these models not only fulfill their corporate social responsibility but also fuel economic growth. Their localized approach ensures that business decisions are rooted in the realities of the community, making inclusivity a cornerstone.

One shining example of this synergy is the promotion of inclusive farming and agriculture practices. Community-supported agriculture programs encourage sustainable farming methods, thereby reducing carbon footprints. Moreover, they extend opportunities to marginalized communities, enabling their participation in agriculture and related enterprises.

Inclusive climate finance

Inclusive climate finance stands as a linchpin in the creation and sustenance of inclusive business models, where environmental sustainability and social equity converge for a more equitable and resilient future. It ensures that the benefits of climate action extend beyond financial returns to reach those most vulnerable to the consequences of climate change.

Mechanisms for equitable climate finance access begin with direct channels to communities in need, investing in capacity building, insurance etc, all geared towards promoting equity, enhancing resilience against climate risks, creating job opportunities, and fostering local economic growth. In addition, inclusive climate finance empowers businesses to proactively address challenges faced by marginalized communities and fosters innovation, acting as a catalyst for the development and adoption of sustainable technologies and practices. This multifaceted approach drives market competitiveness while upholding environmental responsibility, propelling businesses toward enduring sustainability.

Challenges and strategies

Despite the potential for transformative change, inclusive business models face several challenges. One of the foremost challenges is securing climate finance, particularly for businesses operating in climate-vulnerable regions. This lack of resources hampers their ability to develop and scale their initiatives effectively. In addition to this inconsistent or restrictive policies can impede the growth of inclusive businesses.

Therefore governments have a crucial role to play in promoting these models by implementing policies and regulations that incentivise and support inclusive climate business ventures. To tackle these challenges, a multi-faceted approach is required that combines creative financing solutions, strategic partnerships or collaborations with NGOs, governments, and other businesses, innovative practices, and active engagement with policymakers.

As Climate change continues to demand urgent action, businesses must play a central role in addressing this challenge. Inclusive business models offer a viable and effective pathway to align business success with social equity and environmental sustainability. These models will be key in not just driving financial success but also making a meaningful difference in the lives of marginalized communities and contributing positively to environmental sustainability.

(Vandana Sharma currently is a senior associate in the Climate Practice Portfolio in The Catalyst Group. She has been a significant part of different projects related to climate change, gender, water, livelihood and agriculture. Vishrut Shivkumar is the business lead for Shoonya Net Zero Catalyst - an initiative assisting MSMEs, apparel factories & brands towards their Net Zero goals.)

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)