What is a social enterprise, anyway?

Source: Ian Schneider/Unsplash.

Much like “impact investing,” “social enterprise” is a term that evades clear definition. So much so, one of the biggest struggles that social entrepreneurs brought up at the Skoll World Forum this year was that they have trouble explaining what they do.

“Social entrepreneurship is, at its most basic level, doing business for a social cause,” according to e-commerce website Shopify. Early examples of social enterprise include People Tree, a sustainable fashion initiative; Nobel Peace Prize-winnerMuhammad Yunus’s Grameen Bank; and soleRebels, an Ethiopian footwear company.

In the past decade, the sector has increasingly flourished. In 2018, the Financial Times reported that, globally, a third of new startups are social enterprises; mostly-younger entrepreneurs around the world are starting up business ventures that have “a primarily social or environmental purpose” with alacrity. Examples of some newer social enterprises are Malawi-based Tiwale, which provides skills training and employment support for women; Ignitia, which sends reliable tropical weather forecasts to small-scale farmers in West Africa; and Jibu, which helps entrepreneurs in emerging markets bring clean water to their communities.

The confusion is usually around whether social enterprises are for-profit or non-profit endeavours—and the truth is, they can be either or both.

B Lab

With the rise of social enterprise has also come a designation—Certified B Corp—that’s issued to companies that “harness the power of business to help address society’s greatest challenges.” The B Corp certification is given out by B Lab, a non-profit. Some of the most prominent B Corps are Patagonia and Danone North America.

Many Certified B Corps are benefit corporations. Benefit corporations are legal entities; essentially, they are structured as a “traditional corporation with modified obligations committing it to higher standards of purpose, accountability and transparency.” The benefit corporation structure was created and developed by B Lab, and has been legislated in over 30 U.S. states.

Looking Ahead

As the space has matured, the ethos of social enterprise has begun affecting the traditional business landscape. For a business to acknowledge its social or environmental impact is no longer just a “nice to have,” but rather, according to a recent Deloitte report, adapting to this new paradigm is an imperative for long-term, sustainable growth and success.

World Vision Canada invests in social enterprises through its Social Venture Fund. For more information, visit svf.worldvision.ca.