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Big business can make more room for innovators. Here’s how

Social enterprises drive change in the global economy in two very important ways: by directly addressing difficult social and environmental challenges; and by influencing the broader business community to act responsibly

By: EBR - Posted: Thursday, November 11, 2021

"As consumer pressure grows for business to become good global citizens, inaction is becoming increasingly costly".
"As consumer pressure grows for business to become good global citizens, inaction is becoming increasingly costly".

by Isis Bous*

Social enterprises drive change in the global economy in two very important ways: by directly addressing difficult social and environmental challenges; and by influencing the broader business community to act responsibly. These “impact organizations” expand the scope of what is normal, what is possible, and what is acceptable, creating a greener and more inclusive global economy.

This influence is more imperative than ever, and the business community has never been more ready to accept it. The singular, profit-loss focus of the modern global economy is beginning to loosen its grip as countries and organizations look to “build back better” in the wake of the COVID-19 pandemic. Social entrepreneurs can seize this moment to help shape a new business paradigm – and they must be supported to do so.

Consumer pressure is encouraging brands to develop a social conscience

Corporate conduct is under the spotlight as social media helps to build consumer pressure, challenging brands to not only provide quality products and services, but also to act as good global citizens. Similarly, employees are demanding their employers act responsibly to earn their service and loyalty. It is not uncommon to hear statistics showing Unilever’s purpose-led, Sustainable Living Brands growing 69% faster than the rest of the business and delivering 75% of the company’s growth, or Patagonia – with its reputation for environmental responsibility and its purpose-driven mission – reaping upwards of 9,000 applications per position.

Beyond the external pressures to remove profit-centered blinders and take a more holistic approach to business, industry leaders are beginning to realize that the global economy requires companies to act sustainably in order to ensure any long-term profits at all. Agriculture companies face collapse if the climate continues to degrade, energy companies will fail without alternative solutions to dwindling fossil fuels, technology relies on energy, banking relies on technology, and so on. And every industry relies on human capital, interpersonal communication, and cooperation to innovate, trade, sell, serve and travel, placing diversity, inclusion, and social sustainability among the highest priorities.

Inaction comes at great cost

It is long-past time for the global economy to catch up with social and environmental realities. Paul Polman, Unilever’s CEO from 2009 to 2019, and still a widely respected voice calling for corporate action, has said, “Sadly, we have reached a moment where the cost of not acting is higher than the cost of acting.” Environmental, social, and governance (ESG) considerations are finally at the forefront of boardroom discussions and solutions will become more attainable with corporations supporting the charge. Businesses have reached a stage where they want to act sustainably for all the reasons listed, and more, but are often paralyzed by how to accomplish these goals.

Social entrepreneurs offer a guiding light. Impact enterprises have spent decades innovating around sustainable, inclusive, and stakeholder-focused ideals. They develop and iterate on new and alternative products and business models and demand ethical value chains. Their success becomes an example of what is possible, allowing larger corporations to learn and adopt sustainable practices.

A classic example of a successful social enterprise with enormous influence is TOMS shoes. TOMS set a new bar in 2006 by creating a product using environmentally responsible materials and instituting a ‘buy one, give one’ policy. The practice has since become so popular that it is now commonplace, with several successful corporations now emulating the model. Social enterprise Seventh Generation, similarly paved the way for larger industry, by proving that profit was possible in eco-friendly cleaning, paper, and personal care products. Their mission is to “transform the world into a healthy, sustainable, and equitable place for the next seven generations.”

Big business has a key role to play in helping social entrepreneurs achieve greater impact

Corporate leaders invested in sustainability know that these entrepreneurs are a valuable resource, and they actively tap their innovation. Both Unilever and IKEA operate accelerator programmes focused on helping social entrepreneurs achieve greater impact. Capacity-building programmes like these are essential to ensuring that pioneers have the tools and expertise they need to experiment, iterate, and perfect new ideas so they can be adopted by the broader business community.

Guidance navigating specialized areas like logistics, marketing, finance, legal and regulatory obligations is paramount. For instance, the Lex Mundi Pro Bono Foundation supports and empowers high-impact entrepreneurs by connecting them with critical pro bono legal services. These matches ensure small, resource-constrained organizations are advised by qualified lawyers with indigenous expertise who bring local perspective and connections, helping them explore new solutions, address challenges, find opportunities, and scale impact.

Inspired social entrepreneurs work around the world to improve education, fight disease, combat global warming, protect civil rights, and lift people out of poverty. More and more, these changemakers are teaming up with like-minded corporations to increase their impact and influence.

Last month, Acumen urged corporations to #BuySocial and published a list of 100 ‘corporate-ready social enterprises’ – all social entrepreneurs who are working with large corporations to transform their operations and business models. They are, variously, ensuring that digital infrastructure exists to build transparent, traceable supply chains; offering products and innovative solutions that can help corporations deliver on their procurement goals; and financing the transformation of such value chains, an area where governments can play a catalytic role.

Acumen, IKEA, Lex Mundi Pro Bono Foundation, and Unilever are each members of the World Economic Forum COVID Response Alliance for Social Entrepreneurs (CRASE). Established in April 2020 to mobilize support for social entrepreneurs on the frontlines of the crisis, CRASE actively calls on all actors to stand by social entrepreneurs as the first responders to the COVID-19 crisis and as pioneers of a green, inclusive society and economic system.

For every grand challenge, there are dedicated social entrepreneurs working on creative solutions. These businesses are short on resources but big on innovation. A key challenge now is to mobilize those with resources, the corporate world, to create an enabling environment for smaller innovators to thrive. Big business doesn’t need to have all the answers, but it does need to move over and make room at the table for the visionaries among us. Our collective future may depend on it.

*Managing Director, Lex Mundi Pro Bono Foundation
**first published in: www.weforum.org

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