I am taking part in a panel discussion at the Strathclyde Business Network conference, “Digital and Ethical Leaders of the 21st Century,” on 12th October on the subject “Social Enterprise: A Successful Business Model?”
The answer is yes, certainly.
It will be an interesting discussion for sure and people will have different views on the effectiveness of social enterprises. The sector remains tiny and therefore its global impact is insignificant compared with commercial business activity. But the values and practices underpinning social enterprise are solid. The challenge is how to get the sector to grow.
The growth in the sector has been organic but we need to see systemic change before we can see the real impact of social enterprises.
So how do we do that?
We can start by looking at the global economic system and working out how to change it. The current system just keeps feeding on itself, making the rich richer and the poor poorer. Money goes to money. If you were lucky enough to have any money during the past year you could have made a lot more by simply investing on the stock market. But if you were working flat out on a zero-hour contact just to pay the rent and feed yourself, then you would still be close to the breadline.
The whole system around the role of business in society needs to be changed and the development of the social enterprise sector could provide an important lead.
I am on record as saying that we need a completely new economic system. We need what I call the “New Ism.”
There are several important concepts and initiatives which have been created over the past 20 years. One of those is Fair Trade, which has grown rapidly over the past 20 years. The concept is simple but effective. Farmers, producers and workers in poorer countries are paid a proper wage for their labour and goods. Customers recognise the Fair Trade brand and are prepared to buy these goods in order to support an ethical way of trading.
There are 1.65 million farmers and workers who hold fair trade certificates and there are 1,226 fair trade organisations, and with growth continuing its upward trend, the impact is significant.
Another is Microfinance. Again, this has really grown over the past 20 years. People living in poverty can gain tiny loans in poorer countries and change their lives completely. The concept has been copied across the globe and the industry has expanded rapidly, with the leading microfinance institutions located in Bangladesh, India, Brazil and Mexico.
These are the two best known examples of new economic concepts which have been rolled out but there are many others. Some have developed, others are still on the drawing table and some are just in their infancy. New legal entities are also being rolled out to provide appropriate administrative backing for these social ventures.
Apart from fair trade, microfinance and social enterprise there is a lengthy list of concepts and mechanisms which are becoming part of everyday business language. Here are a few: social investing, impact investing, B Corporations, social entrepreneurship, investing for good, social loans, venture philanthropy, ethical trading, cooperatives, international development enterprises, social economy, community interest companies, online micro loans, Tobin Tax, ethical stock market, fair trade plus, green economy.
People are busy working away at making these concepts work in practice. This is very positive news but in themselves none of these concepts are perfect. Many people feel that Fair Trade organisations could do much more and the microfinance sector is full of disagreements amongst many of the main practitioners. The critics are right, these concepts are not perfect but they have made a huge difference to the lives of many people across the world. The challenge is to build on these foundations and improve continuously.
We need to pull these initiatives together. I am convinced that these practical inputs can provide the basis of a new economic system. People are already walking the walk. It might not be perfect just now but these initiatives are based on values of fairness and equality. This then becomes the basis of a new economy.
Attempts have been made to look at a post-capitalism economy and no-one has come up with the answer but more attempts are being made. By building on the existing practical work of some inspirational people around the world, clarity will soon emerge about the new economy. We need to write it down.
The New Ism will be here soon. And social enterprise will be one of its cornerstones.