Nearly a decade ago, Palladium’s Eduardo Tugendhat published the seminal Inclusive Growth: Profitable Strategies for Tackling Poverty and Inequality in the Harvard Business Review alongside Robert Kaplan and George Seraphim. In it, they lay out a new way for the private sector to address poverty, by reimagining the regional ecosystems in which they participate. Now, he’s revisiting and revising the concepts he built that first article upon with the original authors, as it’s more relevant than ever. Here, he shares his thoughts on why inclusive growth has come back into vogue and why it’s critical as we turn towards a greener, more sustainable global economy.

As we approach 2025, inclusive growth is re-emerging as a central strategy for businesses and development organisations alike. While not a new concept, its rising prominence reflects the growing recognition that sustainable development requires a unified approach—one that bridges public, private, and community interests to tackle complex global challenges.

For development organisations reliant on donor funding, or any organisation or business looking to stretch budgets and make big impact with less capital, inclusive growth provides a compelling framework to mobilise resources and create lasting impact.

At the same time, it offers businesses a roadmap to align profit with purpose, ensuring resilience and relevance in an increasingly interconnected world.

At its heart, inclusive growth ensures that economic progress benefits all segments of society. This means integrating marginalised groups—such as rural communities and indigenous populations—into the economy, not as recipients of aid but as active contributors and beneficiaries.

For decades, we have championed this approach.

The strategy is both straightforward and ambitious: use public funds as catalytic seed capital to unlock private investments, establish governance frameworks to build trust among stakeholders, and create partnerships that drive systemic change.

For instance, in Malawi, where we worked with tobacco and other agribusiness companies to develop competitive peanut and soybean value chains as a means of providing tobacco and other farmers with alternative livelihoods, we united corporations, research institutions, and investors to develop commercially viable solutions from seeds to processing. By aligning these diverse actors around a shared strategy, the initiative not only improved livelihoods but also enhanced resilience to climate shocks—a model that can inspire other sectors and regions

Or similarly in Peru where we worked on the Peru Cacao Alliance, facilitating transparency and traceability to rethink the larger system. It channeled funding to new technology and bio-diverse “growing” models to ensure farmers could maximise available land while meeting international standards for quality and supply. Most importantly, the farmers weren’t merely passive beneficiaries on the receiving end of fleeting social largesse. They were full-fledged business partners, called upon to articulate the nuanced challenges they face, outline distinct areas of need, and enlist peers so the program could reach critical mass.

A Business Imperative

For corporations, inclusive growth may have felt like a “nice-to-have” but has always been a business necessity – assuming one wants their business to last. The traditional corporate social responsibility model, often characterised by fragmented and short-term projects, is finally being replaced by integrated strategies that address the root causes of inequality and environmental degradation while at the same time opening new commercial opportunities.

The logic is simple: businesses cannot thrive in isolation from the societies and environments in which they operate. If large portions of the population are excluded from economic participation—unable to buy products, work in factories, or contribute to supply chains—growth stalls. Moreover, the raw materials and resources businesses rely on are increasingly at risk due to climate change and unsustainable practices. Meanwhile solutions to climate challenges are opening enormous new market and employment opportunities.

Inclusive growth provides a pathway for companies to modernise operations, mitigate risks, and tap into new markets. It’s not philanthropy; it’s about aligning long-term business interests with societal needs.

Why Now?

Several factors are driving the renewed focus on inclusive growth. First, governments in many countries face fiscal constraints, limiting their ability to fund large-scale development projects. This places the onus on the private sector to fill the gap, often in partnership with aid agencies and implementers like Palladium.

Second, the urgency of global challenges—from climate change to education inequalities—requires unprecedented levels of innovation and collaboration. Public funds can play a critical role as early-stage capital, incubating partnerships and scalable solutions. For instance, initiatives under USAID’s CATALYZE program demonstrate how targeted investments in education and access to finance for women can unlock broader economic opportunities across whole countries and regions.

Third, inclusive growth is proving, and will continue to prove, to be critical in post-disaster recovery efforts. When crises strike, whether due to natural disasters, conflict, or pandemics, inclusive growth strategies ensure recovery efforts extend beyond immediate relief to build long-term resilience. By engaging diverse stakeholders—local communities, governments, businesses, and donors—such approaches create solutions that rebuild economies while addressing systemic vulnerabilities.

We’re seeing this approach being adopted in Mozambique, where USAID’s Bureau of Humanitarian Assistance recently launched a three-year project designed to support Internally Displaced Persons and returnees through agricultural development, private sector partnerships, and sustainable livelihoods to restore economic stability. I expect we’ll see similar strategies over the coming months and years as Ukraine begins the rebuilding process, too.

Finally, inclusive growth aligns with the rising expectations of consumers, investors, and policymakers for businesses to prioritise environmental, social, and governance (ESG) factors, especially in light of increased compliance and disclosure requirements. While ESG and the UN Sustainable Development Goals may be buzzwords, they signify a critical shift: companies are increasingly evaluated on their ability to deliver shared value.

But implementing inclusive growth strategies is not without its challenges.
Success requires navigating competing priorities and expectations among stakeholders. For governments, it’s about ensuring accountability and demonstrating value to taxpayers. For businesses, it’s about showing shareholders that investments are not just ethical but profitable. And for communities, it’s about seeing tangible benefits, from improved livelihoods to reduced vulnerabilities.

Transparency and trust are essential. Misalignment often arises when stakeholders assume others are disproportionately benefitting. Tools like the Balanced Scorecard can help define shared objectives and measure outcomes in ways that resonate across the board.

A Catalyst for the Future

Inclusive growth is not about “do-goodism.” It’s a pragmatic strategy for addressing systemic challenges while driving growth and innovation. Whether it’s restoring vulnerable forests, improving education systems, or rebuilding communities after disaster, the approach is grounded in the understanding that no single actor can solve these issues alone.

By acting as catalysts, organisations like Palladium bring together diverse players—corporates, donors, governments, and communities—to co-create solutions. This is the essence of inclusive growth: aligning interests to achieve outcomes that are greater than the sum of their parts.

As we head into 2025, the question is not whether to embrace inclusive growth but how.

The stakes are high, and the opportunities—economic, social, and environmental—are too significant to ignore. For businesses and development organisations alike, inclusive growth is the strategy for building a more equitable and sustainable future. It’s both timely and timeless, a trend rooted in decades of experience and poised to shape the decades to come.