Social Enterprises are an important factor in achieving the SDGs.
The start of the new millennium had brought with it a sea of change in the sphere of social development. The Millennium Development Goals (MDGs) were formulated by the UN upon the realisation that the global ‘Business as Usual’ method of functioning would have disastrous consequences on society and planet. Aimed at eradicating poverty, protecting the environment, and the protection of human rights, these goals were to be achieved over a timeline of 15 years.
After uneven success with the MDGs, the universal and more comprehensive Sustainable Development Goals (SDGs) were launched, as part of the development agenda post-2015. Ideally, the success of these long-term goals requires the active participation and collaboration among governments, civic bodies, businesses and consumers. Specifically, over the past few years, an important actor – Social Entrepreneurship – has gained immense significance in this equation.
Social Enterprises – Where Do They Fit In?
International Aid, donations, Corporate Social Responsibility (CSR) funds, and other traditional methods such as political/legal action cannot alone be relied upon to achieve Sustainable Development. In developing countries, for example, people are often not able to afford green solutions immediately, as they are usually more expensive. They therefore have to stick to non-renewable sources of energy until renewable energy becomes the norm and more affordable. In this case, a government sanction banning the domestic use of coal wouldn’t work and would actually hurt the most vulnerable people in society. And that’s where social entrepreneurs can step in.
The two main reasons they pose an alternative to the traditional methods of development are:
- They are the self-sustaining change-makers that do not depend on external funds.
- Social enterprises use business management principles and practices to provide efficient, innovative and sustainable solutions to social and environmental problems. Many social enterprises use bottom-up approaches to devise solutions, so that they are effective and affordable within local contexts. Their mission is not just profit, but also positive social and/or environmental impact.
Social Enterprises – In Between Businesses and NGOs
What makes social enterprises so special is the fact that they are following a social or environmental vision, whilst being financially sustainable. They are doing business – but in a better way. Either their product or service solves a social or environmental problem, or they are producing a traditional product or service in a way that doesn’t harm people or planet.
Social Enterprises are therefore a complementary factor to traditional NGOs. There is a lot of overlap – and the two types of organisations can learn a great deal from each other. It comes at no surprise that NGOs are now often adopting a more entrepreneurial model, as funds are becoming increasingly hard to secure, and donations and financial support are often tied to specific goals and implementation practices.
In contrast, Social Enterprises compete with traditional business models. Ideally, they would replace the purely for-profit organisation, and place social and environmental concerns at the core of doing business. Only then can an economic system previously based on depletion and exploitation be made more sustainable.
Challenges faced by Social Enterprises
What drives social entrepreneurs is their passion to create a positive, long-term impact. They ensure, therefore, that their enterprises function in a socially, and environmentally responsible manner. However, this requires them to avoid cost-cutting practices, and therefore endure higher costs. Additionally, private businesses – who can operate on lower costs – pose fierce competition to social enterprises, thereby adding to their existing challenges.
For Social Enterprises to reach their potential, scale up and succeed, the general business environment needs to change so that it supports and fosters social ventures. Stronger punishment and sanctions for unethical business practices, as well as greater support and incentives for social and environmental sustainable production processes are a good start for governments to look into.
But it’s not just governments that can foster this process. A lot of responsibility also lies with customers. Based on the basic economic principles of supply and demand, businesses will respond if we start switching our consumption patterns and choose products of social enterprise over conventional ones. It’s not an easy task, with many hurdles ahead. But starting with small changes, big goals might become more achievable.
Do you want to learn more about social enterprise and get insights into how it works in practice? Take a look at our Social Entrepreneurship Internship or Professional Placement, and make a more conscious volunteer decision today!