PAID POST BY UBS

Sustainable investment: Creating decent work and economic growth on a global scale

When entrepreneur N.K. Chaudhary started his small rug business in Rajasthan more than 40 years ago, he didn't realize it would become a global brand, supporting the U.N.'s 2017 mission to boost economic growth.

 

With annual revenues now in excess of $25 million and rug exports to 45 countries, N.K. Chaudhary hadn't foreseen that his business idea would expand to provide 40,000 crucial jobs for people experiencing poverty. And he certainly didn't know that his original business model would eventually blaze a trail for businesses in emerging economies and investors worldwide. It's fair to say that Chaudhary is one of the world's original impact investors. So what can entrepreneurs, investors and advisors learn from him today?

Empowering the impoverished

Chaudhary reflects on his own start-up moment when he realized the poorest people in his village wanted decent work to help build a life and climb out of poverty. While some of the community opposed Chaudhary's efforts, he taught villagers how to weave traditional rugs. Setting up looms in people's homes, Chaudhary enabled workers to create and sell hand-knotted rugs directly to Europe and the United States. By cutting out the middleman, Chaudhary maximized pay and profit. This business approach provided decent work, empowered local villagers to form partnerships and grew the region's economy.

And it's a business trend that needs to continue around the world if extreme poverty is to be eradicated.

According to the UN, the number of workers living in extreme poverty in developing countries has declined over the past 25 years, as the middle class has tripled. Despite this positive trend, more than 2.2 billion people still live on less than $2 a day.

For Sergio Ermotti, group chief executive officer at UBS, business has a significant role as well as a responsibility in helping lift people out of poverty. He describes the huge difference in income between rich and poor as "causing widespread unease today."

As CEO of one of the world's leading wealth manager, Ermotti says he has firsthand knowledge of the role his clients, many of whom are highly successful entrepreneurs, play in founding businesses which create lasting jobs, generate tax revenues and support the infrastructure spending that underpins economic growth.

Ermotti believes that strategic partnership or impact investing rather than simply donating is a way the private sector can make a difference.

Jaipur Rugs Foundation

The Jaipur Rugs Foundation partners with different organizations to train its artisans in grassroots leadership and give them access to health care, education and financial inclusion.

Chaudhary, who is often referred to as "India's social entrepreneurship pioneer," says he has always been an advocate of "for-profit solutions to social issues."

Over the next five years, the foundation has pledged to provide sustainable livelihood opportunities to 9,000 marginalized women and lead a range of grassroots leadership programs for 15,000 artisans.

While the Jaipur Rugs Foundation demonstrates how entrepreneurship and innovation can play a key role in the creation of decent jobs and ensure sustained economic growth, we can all play a role in sustaining these businesses and support the U.N.'s Sustainable Development Goals.

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