Inclusive Growth: Lessons from Israel
By Momo Mahadav, Skytop Contributor / February 8th, 2022
Momo Mahadav is the CEO of Maala – Business for Social Responsibility, Israel’s leading advocate for ESG and good corporate citizenship.
Maala works with 120 of Israel’s largest corporations on developing the Israeli practice of “Doing Well by Doing Good” and publishes the Maala ESG Index on the Tel Aviv Stock Exchange, which serves as a leading benchmark for ESG performance.
Momo joined Maala’s team in early 2006 as VP, before being appointed CEO in 2009. He specializes in leading value based change processes within the business, public and social spheres.
Momo holds a master’s degree in Public Policy and a B.A. in Social Work, both from Tel Aviv University. His previous positions include serving as Director of the SPNI Tel Aviv Center for Environmental Action, coordinating city-wide projects at the Tel Aviv Municipality and a community organizer.
Inclusive Growth Since the Pandemic
Two years ago, Maala (myself included) and Prof. David Grayson published the book Leaving No One Behind: Israeli Business and Inclusive Growth. It seems that since the pandemic started inclusive growth has become ever more relevant, though there are still many challenges in developing practices and ways to implement inclusive growth and to measure progress.
Inclusive Growth In Israel
In this brief article I’d like to share some of the knowledge and experience accumulated in Israel over decades of work on inclusive growth related issues. The focus is on practices and measurement tools developed in Israel that can help guide companies and investors alike.
Risk from Global Inequalities
Inclusive growth is defined by the OECD as economic growth that is distributed fairly across society and creates opportunities for all. Simply put, it is growth that benefits everyone. It is increasingly recognized that alongside the systemic financial and social risks from climate change, there is the parallel systemic risk from hyper global inequalities. These are two sides of the same coin; both demand transformative change in business and in society in the coming decade.
Israeli Strategic Approach to Inclusive Growth
In Israel, social issues and inclusive growth have long been high on the public agenda and businesses have been developing and implementing advanced social practices for decades. In the summer of 2011 Israel experienced a strong wake-up call in the shape of widespread social protests against the cost of living and growing inequalities. This further prompted a critical mass of businesses in Israel to become more strategic in their approach to Inclusive Growth. This is most apparent in the workplace and through active corporate citizenship in the community, and to an extent also in the marketplace and down local supply chains.
In Leaving No-One Behind we described with some 35 case studies of established and emerging practices the distinct Israeli way of businesses’ social impact. The case studies are arranged according to four pillars: Workplace, Business & Society, Supply Chain and Products & Services.
Strauss Group Case Study
One very comprehensive case study featured in the book is that of Strauss Group, an Israeli global food and beverage company. Strauss employs over 4,500 employees in Israel, of which around 3,000 were low-paid workers, meaning that social issues encompass a very large proportion of the company’s employees. The company shared some of the practices that were developed in order to increase the welfare and social mobility of employees. To name a few: enhanced minimum wage; education scholarships for employees’ children; all employees with children under age three receive a monthly addition to their salary and more. Alongside the financial measures, there is a combined effort to train and upskill entry level employees alongside yearly goals to recruit internally.
A Working Tool for Business Action
Actions across all pillars, such as described above, are also combined into a working tool for business action offering a range of practical measures that any business – large or small – can adopt and adapt to meet their own business needs and strategic priorities. The actions are categorized on three levels: Foundation, Development, and Champion, thus enabling companies to choose, implement and measure progress. This could also help investors and other stakeholders to measure commitment and engage in dialogue with companies. Indeed the Maala ESG Index on TASE already incorporates a large portion of the actions featured in the tool.
Here is one example from the tool illustrating the three levels of progress:
Moving Forward
Contrary to the initial worry that Covid would have a negative impact on businesses’ commitments to inclusive growth, the opposite has happened. The work is continuous and we’ve seen enhanced efforts to support employees’ welfare and well-being, strengthen partnerships with communities and empower suppliers. Hopefully, new practices that have emerged over the past two years will become rooted and will become the norm and the stepping stone for moving forward.