The social enterprise sector is continuing to gain increasing recognition with many high profile government figures endorsing it. Gordon Brown has called it “the new British success story” and Minister for the Third Sector Phil Hope said that businesses within it are "setting the ethical standards for others to follow ". But in a sector that values positive social change as much as, if not more than financial return, is it asking too much for the business world with its focus on the bottom line to learn from social enterprise?
The first thing to make clear is that an increasing number of social enterprises are profit-making businesses; it’s just that they take a ‘more than profit approach’, where a percentage of profits are used to a social or environmental purpose.
Whilst no big business with shareholders would willingly sacrifice its bottom line, there may be one thing more powerful than shareholder pressure; consumer pressure.
For businesses to continue their success it’s vital they are aware of the changing desires of their consumers. A recent survey into corporate social responsibility trends showed that a high degree of social responsibility is an important or very important factor when forming a purchasing decision for 85 per cent of British adults. Similarly, over two thirds felt that industry and commerce do not pay enough attention to their social responsibilities. Interestingly, less than a third of business leaders felt this way.
But being more socially responsible does not mean a business has to completely overhaul its way of operating - there are smaller things it could do too. For example a business could ensure socially driven firms are given priority consideration as suppliers, or set up an ethical investment policy. A growing number of investment funds are springing up to fund such enterprises, which are in a position to fulfil their loan obligations thanks to their income generating model.
Whilst a more socially conscious approach may involve some investment, it is a wise move to make because it will generate a competitive advantage, which in today’s economic climate is more important than ever, and if managed correctly could make this a more viable option for even the most profit-hungry shareholder.
Young, growing businesses are also in a great position to learn and benefit from the social enterprise sector. Previously the options to anyone wishing to start their own business were fairly limited, and many were simply unaware that other routes existed. This is changing and more entrepreneurs are considering one of the many social enterprise models for their new company.
More education is certainly needed around the true characteristics of a social enterprise but I believe that the influence exerted by this sector over traditional business will continue to increase, and that firms should ignore this trend at their peril.
Kim Stoddart is an ethical business woman and founder of ethical media relations company Blue Rocket (
www.bluerocketgroup.com
), Green Rocket and Future business