Imagine waking up in a world where you feel positive and motivated about going to work, knowing that your work provides value to customers in a way that is sustainable and responsible. Your employer operates with the express aim of benefiting members of the community and reinvests all profits to further its social aims.
This hypothetical future may seem a distant reality, yet many people today recognise a need for change: executive salaries of large corporations have become excessive, senior managers of listed companies worry about meeting analyst expectations rather than customer expectations, and global finance now focuses largely on speculation and market timing rather than funding productive investment.
Rise of Social Enterprise
The growing trend towards social enterprise could be a game changer. A social enterprise, in essence, is an organisation which is not run primarily for profit and is required to reinvest any profits to further its social aims.
A world based on social enterprise may be closer than you think. Since the late 1990s, the social sector has been on the rise. In Canada, for example, these institutions now contribute 8% of the country’s GDP. And the pioneering work of social enterprises in sectors like construction, manufacturing, banking, hospitality and healthcare suggest that innovative and sustainable businesses are able to thrive without being run primarily for profit.
Social enterprise has the potential to change the status quo in three important ways:
- Firstly, social enterprises are allowed to make a profit, which means they have an incentive to innovate and operate efficiently.
- Secondly, social enterprises are required to reinvest any profits rather than pay dividends. This enables them to focus on long term sustainability and community benefit, and is an attractive model for charities since funding social projects out of profits makes them less dependent on grants and philanthropy. Take, for example, BRAC, one of the world’s largest social enterprises. Since 1972, BRAC has supported over 100 million people through social development services and almost 80% of its revenue comes from commercial enterprises, including a large-scale dairy and a retail chain of handicraft stores.
- Thirdly, social enterprises have the potential to out-compete equivalent ‘for-profit’ businesses in three ways:
- Social enterprises often qualify for tax concessions and free support available solely these kinds of organisations;
- Consumer preferences are increasingly supportive of ethical and sustainable business practices; and
- Management are likely to be under less pressure to shrink a social enterprise during a downturn. This may allow social enterprises to make significant gains in market share during periods when ‘for profit’ organisations are making cut backs.
Who is leading the charge?
We understand that this will be the world’s first book to explore the prospect of social enterprise becoming the central model of local, national and international business by 2050. It will also outline practical steps that people can take to fast-track an evolution towards a sustainable economy.