Social Entrepreneurship In a Time of Urgency
While the definition of a social enterprise varies from market to market, in its broadest form, a social enterprise exists to use the power of the market to solve pressing social issues. They are commercially viable existing to benefit those in need rather than shareholders and owners. But is this really the best way to approach business for good? Is the notion that a business that does good needs to come at the cost of profits the most effective way to solve the biggest issues facing the world today?
The vast global issues we face today cannot be solved through philanthropy alone. We require the brightest minds in business to find solutions, and the collective force of communities both personally and in business to solve these issues through raising awareness, building understanding and driving purpose. We at Barefoot Citizens believe that purpose drives people, people build communities and communities change the world. We also believe that this cannot be done in isolation by a small group of social enterprises and not for profits.
In recent years there has been a growing swell of prominent business leaders who have stated their position on this matter, and the idea that doing good for the world need not come at the cost of profits. Rather, it should fundamentally drive purpose to affect real change and work towards solving the Sustainable Development Goals by 2030 as set out by the United Nations.
Larry Fink, CEO of BlackRock, the largest asset management company in the world with over USD7 Billion under management has stated, "Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Without a sense of purpose, no company, neither public nor private can reach its full potential."
A number of years ago BusinessWeek conducted a survey looking at the compensation packages for MBA’s ten years out of business school. The median compensation for a Stanford MBA with bonus at the age of 38 was $400K. Meanwhile, for the same year the average salary for the CEO of a $5M+ medical charity in the United States was $232K and $84K for a hunger charity. How can a sector which undervalues the need for pay parity for a CEO of a for profit business versus a CEO of a non for profit truly prosper and affect change?
It is easy to see why the non for profit sector, which in Australia employs one in three people, is currently struggling, with many non for profits desperate to survive this COVID-19 crisis. Why is there such disparity when it comes to accepting high salaries for purely for-profit business versus those that use profit for doing social good? Do we really need to differentiate between companies by whether they are purely for-profit or not? Surely the most important question to ask is why doesn’t this business use its profits to benefit not only its shareholders and owners, but also to create positive impact by using a portion of its profits to achieve the UN SDG’s? Why is this not the standard baseline business model across the board?
Research recently conducted by the Harvard Review has shown that 87 percent of survey respondents were willing to pay more for products and services provided by companies that are committed to positive social and environmental impact. On top of this, a staggering 70 percent would rather work for such a company, indicating a clear market shift. Ultimately, with this shift continuing to gather momentum, is it not those companies that really stand for something that will categorically not only survive but thrive? All businesses have a responsibility to their people, shareholders and the planet.
Business is business. The most important question is, who do you want to do business with?
Get in contact to book a keynote, talk about how you can put purpose at the core of your corporate strategy or to start a conversation about partnerships for the goals