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6 Major Reasons for How and Why Social Enterprise Works

Social Enterprise
Traditional businesses measure their success by profit and how much they can bring shareholders. Social enterprises have multiple bottoms lines: profit, people and planet. Profit is important in sustaining a business, but the idea of corporate social responsibility (CSR) is gaining in popularity. Consumers educate themselves on products which leads businesses into action. Focusing on multiple areas of business (triple bottom line) is the crucially important reason why social enterprise works.

The Traditional Standard: Profit

Profit is an excellent measure of growth and is quantifiable. A business that has a surplus by the end of the year means bills were paid and employees provided for. It doesn’t hurt that investors or shareholders see a return on their money. If there is profit, that means the company is an asset to the economy; this then means more customers, more employees and more investors overall. This business detail remains a critical factor in why social enterprise works.

The Growing Standard: People

People want to be happy, and as most of a person’s waking hours are spent at work, these two aspects of life are thereby deeply intertwined. It’s becoming common knowledge that a happier employee means a more productive workplace. An employee who feels empowered and enjoys what they do generally equates to higher productivity and profitability.

Success with people can lead to 65 percent in higher share prices and 100 percent more job applications for the company.

The Growing Concern: Planet

Consumer understanding of the planet’s dwindling resources are slowly impacting their buying habits. There hasn’t been a huge move towards green living, but some like social enterprises make this a priority along with profit and people. A new awareness day, Overshoot Day, marks the calendar for when humanity has used up Earth’s resources for that year.

From 2000 to 2017, Overshoot Day crept up from late September to early August, almost by two months. Social enterprises have noticed this trend and are now making moves to change it through sustainable resources.

A Moral Solution: Changing the Trajectory for an At-Risk Individual

Many businesses might choose a social entrepreneurial path because there is an issue the organization wants to address. At the heart of freedom businesses (a subgroup of social enterprises) is the goal to hire at-risk individuals. Some businesses like Purnaa, a manufacturing business in Nepal, were inspired to create opportunities for marginalized people and survivors of exploitation. Others like Papillion Enterprise, an Artisan shop in Haiti, wanted to prevent orphans through job creation.

Using Resources to Continue the Process

A difficult move for many small social enterprises is growth, particularly in some countries outside of the U.S. There might not be property to mortgage against or the interest rate would kill the purpose. Some social enterprises — like Kairos Trader — use profits and fundraising to provide 0 percent loans to social enterprises. As business grows and money is repaid, the loan can then be cycled into another loan to help social enterprises start or step up.

Economic Growth: The Ripple Effect

This list would not be complete without mentioning social enterprises’ impact on economic growth– freedom businesses’ commitment to marginalised people and the Earth is why much of its social enterprise works.

Communities that may have been jobless or ostracised now have opportunities. Those with jobs are able to educate their children and become consumers which grows consumerism on a generational scale building the economy with it.

According to Matt Peterson, founder of Kairos Traders, every sector is needed to make a change for people and planet, but business offers a unique solution. It can seem counterintuitive to have a triple bottom line, but success is proving why social enterprise works.

Profit is needed to be able to grow and provide jobs and materials, but a business that bases its impact on community and planet is a more holistic approach that will bear more fruitful results.

– Natasha Komen

Photo: Flickr

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3BL Associates: Sustaining People, Places and Profits

3BL_associates
Generations of business have been driven by one bottom line: profit. Cash at any cost, be it man or nature. Based in Bahrain, 3BL, or Triple Bottom Line, Associates has deemed this to be an unsustainable business model. 3BL advises for many to consider another business model that takes into account three bottom lines: people, place and profit.

3BL Associates refer to itself as “Bahrain’s first social impact and sustainability consultancy and think-do-tank.” It works with innovative companies that seek to grow harmoniously with the people within the MENA region. The idea of a triple bottom line was coined by academic John Elkington, who proposed “that business goals are inextricably linked to the societies and environment in which they operate, and that business practices utilized to achieve short-term economic gain but fail to consider social and environmental impacts are ultimately unsustainable.”

Established in 2010, 3BL now teaches these business principles to businesses large and small looking to “do well, do good.” They offer services such as sustainability audit and needs analysis, benchmarking and research as well as smart partnering. 3BL advocates for Corporate Social Responsibility.

Maintaining good CSR is growing a company while keeping in mind the social equity: Is it good for the people of the area or are you abusing the locals? Good CSR takes into account environmental sustainability: Does this company deplete the natural resources of the area or does it replenish them after use? This capitalization of sustainability is “an opportunity to generate social, environmental and economic prosperity, in tandem.”

3BL Associates took its business agenda to the next level when it published its own findings on Bahrain sustainability in a report entitled Bahrain Responsible Business Survey. In the survey the respondents were asked a variety of questions, in efforts to determine their perceptions of healthy CSR and what the role the government should be in keeping companies accountable.

It was found that 87 percent of respondents understood CSR to be “community engagement.” It was found that CSR tactics such as community engagement, employee wellness, transparency, corporate governance, health, gender equality and diversity were practiced already, but only in about one-third of the respondent’s organizations. The study also found that only 55 percent of respondents cared whether their organizations were working environmentally responsibly. Only 26 percent of the organizations in Bahrain currently meet these standards.

3BL Associates co-founder and managing director Leena Al Olaimy said, “CSR and sustainability have far more value than just “doing good,” and have the potential to simultaneously contribute to national socio-economic development, and to raise Bahrain’s rankings on a number of indices such as the Global Competitiveness Index.”

The report, compiled by Al Olaimy and her associates, also revealed popular sentiments when it found that 80 percent thought the government should regulate CSR practices. In addition, 95 percent felt there should be government incentives for those organizations implementing CSR, while 83 percent felt there should be some kind of government subsidy for the programs.

3BL Associates has only been in business for four years, but has already gained the trust of its people. Khamis Al Muqla, honorary chairman of 3BL Associates, further noted, “The intersection of social and environmental issues in business has become an international topic of concern for corporations and countries alike.”

– Frederick Wood II

Sources: 3BL, AME Info, CSR Middle East
Photo: Flickr