Social enterprises, a relatively new concept in Sri Lanka, are businesses that trade to tackle social problems, and improve communities or the environment. They combine entrepreneurial approaches and trading methods of the private sector with the social mission and community values of the voluntary and public sector, with part of the profits often being reinvested into the business or the community.
The British Council has been taking the initiative in Asia to promote social enterprises. According to the Head of Partnerships and Business Development of the British Council’s local branch, Eranda Ginige, Sri Lankan private sector and government policy can do more to support the emergence of a social enterprise movement.
What is social innovation?
There are multiple definitions of social innovation. My favourite is ‘ideas that work’. Social innovation is about creating products and services, business models, supply chains, and policies that not only create profit, but also positive social and environmental impacts. In strict economic terms, there is the capitalism model and the socialism model. Social innovation is a hybrid of the two.
What role do people play in social innovation?
I see four broad areas of social innovation, or how it’s being delivered. One is by big corporations or multinationals like Unilever, Nestle and Virgin. This is not CSR. According to some radical social entrepreneurs like Liam Black, CSR is dead. CSR is just green washing everything. This is about changing business models and building innovative products to reduce harmful impacts on the environment and address social issues.
Second is the social enterprise movement seen around the world, especially among millennials. We see the world’s problems differently than our parents because we are living the problems. Our generation is starting enterprises with the core purpose of addressing social issues, not to make money. However, social enterprises can be for profit, part profit-oriented private limited companies or not-for-profit companies.
The third area is policymakers and governments around the world who are creating platforms, financial tools and policies to support this development. The UK has a social value act and has introduced social bonds to support social enterprises. There are social stock exchanges in Canada, the UK and Singapore.
The fourth area is the social awakening. With this generation being more aware of the problems, we are acting now. Examples of this are organizations like Greenpeace and the Arctic Movement.
What is a social enterprise?
The core mission of social enterprises is to address and solve social issues sustainably. But they are actually trading a product or service for money. That’s what differentiates them from a donor-funded NGO or charity.
There are different social enterprise models. My favourite social enterprise is Blue Sky Developments in the UK, which counters the problem of youth re-entering prisons: the rate of relapse is alarmingly high at about 60-70%. Blue Sky Developments employs only ex-offenders. There is an empowering training and rehabilitation process, and in six months they are ready for employment with Blue Sky’s recommendation. They provide services like construction, gardening, clearing and catering. It’s a company, they are providing a service and people pay for it, but they are also creating a social impact.
Another guy in London is reducing the harmful impact of disposed plastic water bottles through GiveMeTap. Through a partnership network with cafes and restaurants, anyone can get their GiveMeTap-branded aluminum water bottle refilled free of charge. The company spends 65% of its profit to fund projects in Africa where it’s a struggle to find clean drinking water.
Where is Sri Lanka in the social enterprise movement?
Sri Lanka is at an early stage. Social economic indicators show we are better than regional peers in poverty, health, education and doing business. Our problems are slightly different. We don’t have wide-ranging poverty, but we have pockets of it, no huge health problems but rising non-communicable and agriculture-related diseases. A few people in Sri Lanka identify themselves as social entrepreneurs, but I’m confident there are many who don’t realise what they do is social enterprise. We need to start identifying and supporting these social entrepreneurs to grow the ecosystem.
Governments and the world’s big intergovernmental organizations like the UN are failing to find sustainable solutions to social and environmental problems. Sri Lanka is at an important point and we have a unique opportunity to leapfrog. The social enterprise movement started over the last 20 years. There are about 80,000 social enterprises in the UK contributing billions to the country’s GDP, the US has beneficiary corporations, Japan is developing social innovation differently, and several East Asian countries are on another level. South Asia has been struggling for a long time – India has been pushing towards it and Bangladesh has Grameen. Sri Lanka cannot be complacent.
In the digital age we have the information to sidestep the mistakes. Companies need to take social enterprises seriously. I challenge Chief Executives to make their CSR departments a separate subsidiary company. Then they will actually strive to be sustainable, scale and be more impactful. Don’t just give them 5% of the annual profit to do some project.
My challenge to business-savvy young professionals is to start technology-infused, radical, ground-breaking, headline-making social enterprises in the country. If we start now with a planned mission, in a decade, we will have a considerable social enterprise sector contributing a measurable economic value to GDP.
Do social enterprises always involve the community?
If someone invents an affordable product that filters harmful chemicals from the water, it will sell and they will make money and create a social impact. It doesn’t necessarily have to mobilize the community or employ vulnerable people. Your core mission should be to address a social issue. Ask yourself, is your company making a social impact? Is your company self sustainable (can it run without donor funding)? If you answer yes to these two questions, then you broadly qualify as a social enterprise.