Are Social Enterprises the Future of Sustainable Business Practices?

By Zafirah Kesington, GLOBUS Correspondent

“The business of business should not be about money. It should be about responsibility. It should be about public good, not private greed.” – Anita Roddick, 2000 (Founder of The Body Shop) 

Whether the industry is fashion, agriculture or even technology, greater precedence is being given to sustainability and the impact that businesses have on the surrounding environment. The concept of “Corporate Responsibility” is also being pushed to the forefront of discussions surrounding businesses; concerned with “the sustainability of an organisation over the long term” the term describes how “corporate responsibility seeks to add value to an organisation’s activities by ensuring they have a positive impact on society, the environment and the economy.” (Scott, n.d.). Recognising this responsibility is crucial in ensuring that society transcends to a more environmentally, economically and socially sustainable state. But how might corporations achieve this? 

This is where social enterprises comes in. Though gaining prominence in recent years, the concept of social enterprise is not a new one, dating as far back as the Victorian era with the historical social entrepreneur Florence Nightingale (Poon, 2011). Social enterprises are businesses which integrate social aims alongside profit-making (Poon, 2011), a definition further explained by Social Enterprise UK (n.d.) which describes social enterprises as “businesses changing the world for the better”.  Whilst they do have the goal of making a profit, “it’s what they do with their profits that sets them apart” as they reinvest or donate them “to create positive social change”. In the UK alone, there are “over 100,000 social enterprises’ which contribute “£60 billion to the economy” and employ 2 million people (Social Enterprise UK, n.d.). According to the State of Social Enterprise Survey (Villeneuve-Smith and Temple, 2015), “31% of social enterprises are working in the top 20% most deprived communities in the UK” and 59% of them “employ at least one person who is disadvantaged in the labour market”.   

Social enterprise encompasses all types of businesses ranging from local start-ups to multinational corporations. Some examples include The Body Shop, Ben and Jerry’s , BrewGooder, Conscious Step and lesser known, more local businesses companies like Mums Kitchen CIC and Icycle. Take Conscious Step, as an example; currently, they are helping to fund “110 000 trees through Trees For The Future, 216 000 months of clean water through water.org and 25 230 meals through Action Against Hunger”, (Long, 2019) or The Body Shop with their “Enrich Not Exploit’’ campaign, a commitment of 14 targets the brand hopes to achieve by 2020 that focus on topics such as fair trade, campaigning, reducing their environmental footprint, supporting threatened areas and enriching biodiversity (The Body Shop, n.d.). Additionally, Brewgooder donates 100% of profits to clean water projects worldwide, impacting 64 748 lives (Brewgooder, n.d.) alongside Mums Kitchen which helps disadvantaged women in the Coventry local area, helping them to rise out of social isolation and gain the necessary skills to find employment.  

The potential of Social Enterprises are not limited to Western countries. Deaf Can! In Jamaica seeks to empower Deaf people to be able to thrive in society through the employment of young deaf people (Deaf Can Coffee, n.d.) whilst in Indonesia, social enterprises contribute an estimated “1.91% of Indonesia’s GDP (19.4 Billion)” (British Council and UNESCAP, 2018). Furthermore, there are around 9000 social enterprises in Turkey (British Council, 2019) including Joon, a business that supports “craftspeople from disadvantaged backgrounds – including refugees” (Leal, 2019). It is clear to see how social enterprises are revolutionizing the way businesses operate, providing a positive impact for local and international communities. 

However, social enterprises aren’t all positive. Many find it hard to find a “balance between social purpose and commercial viability” with 71% of social ventures struggling to make a living as well as finding sustainable revenue streams (Sheppard, 2018). The pursuit of business-for-good to iHowever, social enterprises aren’t all positive. Many find it hard to find a “balance between social purpose and commercial viability” with 71% of social ventures struggling to make a living as well as finding sustainable revenue streams (Sheppard, 2018). Whilst business owners aim to help the wider community through business-for-good, they are often left at an economic disadvantage as income is not guaranteed due to the volatility of their revenue streams. This is partly due to the fact that stakeholders are wary of social enterprises, with the understanding that they fail more when compared to standard businesses. However, according to a report published by Social Business International (2014), despite the greater support that PLCs (Public Limited Companies) receive in terms of contracts awarded by government and public sector bodies who view them as “safe investments”, the top 100 PLC’s of 1984, determined by the FTSE 100 index actually “show a smaller chance of 30 year survival when compared to the top 100 trading members of the third sector” – that is, social enterprise. 

Changing the attitudes towards social enterprise is imperative in order to ensure that they perform well in a business economy. This can be done through more thorough research on the stakeholders part, but also conversely by social enterprises themselves to appropriately assess and measure the impact of their business ventures. Doing so will not only allow them to make better business decisions, but will allow investors and stakeholders to view them more positively when shown empirical evidence of the value that they create (Midgley, 2014).  

As consumers, we must take care to not accept a businesses self-declaration as a social enterprise status for gospel. Doing so leaves businesses free from scrutiny, thus enabling them to market themselves as environmentally friendly or socially responsible when that may not be the case. Consumers must undertake private research and personal engagement with brands, as well as demanding transparency from the businesses’ side. Companies should endeavour to explicitly state exactly how their business works to create a positive social impact, rather than hiding behind buzzwords and phrases like ‘environmentally-friendly’ and ‘socially responsible’. This further ensures that any businesses operating under false pretences of sustainable practice are unable to continue to do sp. 

Based on this, there is overwhelming evidence to support the notion that social enterprises do more good to society than harm. Although there is scepticism regarding profitability and security from the perspective of stakeholders and investors, social enterprises are performing well in line with their counterparts. More efforts should be made from both the consumer and investor view to support emerging and existing entrepreneurs willing to enter the social enterprise sector to ensure that the positive impacts are maximised locally, nationally and internationally. It would be beneficial if more businesses considered ways in which they can give back to the community to not only provide economic sustenance, but social wellbeing and environmental consideration too in order to truly revolutionize the way in which future businesses exist in the social sphere.

Image by Natalie Ronan Futara via Unsplash  

References 

Brewgooder. (n.d.). Brewgooder. [online] Available at: https://www.brewgooder.com [Accessed 18 Dec. 2019]. 

British Council (2019). The State of Social Enterprise in Turkey. [online] British Council. Available at: https://www.britishcouncil.org.tr/sites/default/files/20190702_se_research_report_the_state_of_social_enterprise_in_turkey_eng_single_page.pdf [Accessed 15 Dec. 2019]. 

British Council and UNESCAP (2018). Developing an Inclusive and Creative Economy. The State of Social Enterprise in Indonesia. [online] British Council. Available at: https://www.britishcouncil.org/sites/default/files/the_state_of_social_enterprise_in_indonesia_british_council_web_final_0.pdf [Accessed 13 Dec. 2019]. 

Deaf Can Coffee. (n.d.). Deaf Can Coffee | Our Vision. [online] Available at: https://www.deafcancoffee.com [Accessed 18 Dec. 2019]. 

Leal, N. (2019). Turkey’s social enterprises have “exciting potential” | The Social Enterprise Magazine – Pioneers Post. [online] Pioneerspost.com. Available at: https://www.pioneerspost.com/news-views/20191016/turkey-s-social-enterprises-have-exciting-potential [Accessed 18 Dec. 2019]. 

Long, A. (2019). Can socks save the world? Why social enterprise is the new normal for entrepreneurs. [online] World Economic Forum. Available at: https://www.weforum.org/agenda/2019/01/socks-save-world-why-social-enterprise-new-normal-entrepreneurs/ [Accessed 2 Oct. 2019]. 

Midgley, L. (2014). Measuring and managing societal impact | The Broker. [online] Thebrokeronline.eu. Available at: https://www.thebrokeronline.eu/measuring-and-managing-societal-impact/ [Accessed 16 Dec. 2019]. 

Poon, D. (2011) The Emergence and Development of Social Enterprise Sectors. Social Impact Research Experience (SIRE). 8. h p://repository.upenn.edu/sire/8  

Roddick, A. (2000). Business as Unusual. Thorsons. 

Scott, F. (n.d.). Corporate Responsibility | Factsheets | CIPD. [online] CIPD. Available at: https://www.cipd.co.uk/knowledge/strategy/corporate-responsibility/factsheet [Accessed 15 Dec. 2019]. 

Sheppard, E. (2018). ‘Social enterprises go bust all the time’ – how the sector is tackling its image problem. [online] the Guardian. Available at: https://www.theguardian.com/small-business-network/2018/mar/12/social-enterprises-go-bust-all-the-time-how-the-sector-is-tackling-its-image-problem [Accessed 14 Dec. 2019]. 

Social Business International (2014). Who Lives the Longest? Busting the social venture survival myth. A Comparative Analysis of the Longevity of PLCs and Third Sector Organisations – prepared for E3M. [online] Social Business International. Available at: http://socialbusinessint.com/wp-content/uploads/Who-lives-the-longest_-FINAL-version2.pdf [Accessed 10 Dec. 2019]. 

Social Enterprise UK. (n.d.). What is it all about?. [online] Available at: https://www.socialenterprise.org.uk/what-is-it-all-about/ [Accessed 12 Dec. 2019]. 

The Body Shop. (n.d.). About Us | The Body Shop History | The Body Shop®. [online] Available at: https://www.thebodyshop.com/en-gb/about-us [Accessed 18 Dec. 2019]. 

Villeneuve-Smith, F. and Temple, N. (2015). State of Social Enterprise Survey 2015. Leading the World in Social Enterprise. [online] Social Enterprise UK. Available at: https://www.socialenterprise.org.uk/wp-content/uploads/2019/05/FINALVERSIONStateofSocialEnterpriseReport2015-2.pdf [Accessed 14 Dec. 2019]. 

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