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Photo by Markus Spiske on Unsplash .
We’re at a critical turning point in history. Wildfires, floods and seemingly relentless disasters remind us on a daily basis that we’re living through a climate crisis. Add to that the global spread of COVID-19, which has exacerbated existing structural inequalities and you also have an economic and social crisis, and the most severe global recession since World War II . It’s enough to make any business ask themselves tough questions like ‘will my business survive?’ and ‘what else can I do to help?’
So, it should come as no surprise that businesses around the world are turning their attention to prioritising people, planet and purpose, over profit. But what is this move to purpose-driven, cleaner and greener businesses all about?
Understanding the impact economy
Since the 2008 global financial crisis, trust in political, economic and social structures has remained at an all-time low. As such, business leaders are rising to fill these gaps using the market as a mechanism for creating change. These businesses, otherwise known as ‘ social enterprises ’, make the greater good a priority by using profits generated by trade to redress social and environmental challenges such as healthcare, education, social inequality and climate change.
Unlike charities, social enterprises generate most of their income through trade (not donations or grants), and many pour the majority of their profits back into working towards their social or environmental mission. There are many different models of social enterprise; there is no magic formula for social enterprise business model design.
Combined, the social enterprise sector creates what’s known as the ‘impact economy’, a subset of the broader economy that works to ensure that the value generated by businesses is used to improve the health and wellbeing of people and our planet. Curious to learn more? Social Change Central has put together this great article with everything you need to know about the impact economy.
Image: Social Enterprise Campaign supported by Queensland Social Enterprise Council (QSEC)
The rise of the social enterprise movement
Right now, we are all facing challenges of a nature and scale that we’ve never faced before, and these times are calling for us to try new things and ways of working because so much of the old system wasn’t working. As a result, more and more businesses are joining the growing ‘purpose-led’ movement with the aim of creating a more inclusive economy.
There are estimated to be over 20,000 social enterprises in Australia, operating across a wide range of industries, including health and social assistance, transport and storage, manufacturing, accommodation and food services. These enterprises, by nature, are deeply connected to their communities because they exist to tackle social problems and create an environmentally sustainable society. Many work side by side with some of the world’s most vulnerable and isolated people.
Purpose-driven business is the future, and that future is here
A recent study by Deloitte found that the
pandemic has reinforced consumers’ desire to support businesses, putting people and the planet ahead of profits. And, according to the 2019 Edelman Trust Barometer Special Report,
a staggering 64% of consumers identify as ‘belief-driven buyers’, i.e. they choose, switch, avoid or boycott a brand based on its stand on social issues.
Therefore, as more entrepreneurs, business owners, investors, and even corporates turn their attention to creating a more sustainable and inclusive economy, this trend towards for-purpose businesses is only set to increase.
The rise of B Corp certified businesses in Australia and New Zealand points to this growing trend in purpose-driven businesses. In fact, there are now over 3,000 B Corp certified businesses globally (up 58% in Australia since 2018), all meeting the highest social and environmental standards for businesses.
Wondering which companies are certified B Corps? Look up the Australian Directory here.
Bringing the purpose-driven movement together
With causes at the centre, it can be easy for social enterprises to zero in on the monumental task in front of them, meaning that you have thousands of businesses all rowing in different directions, diluting the impact that we could have if we all worked together. The sector needed more ‘glue’ to bring it all together.
Globally, initiatives such as the Social Enterprise World Forum have been paving the way for businesses to embrace the opportunities of for-purpose business. Since 2008, the organisation has helped shape the priorities of tens of thousands of social enterprises globally by hosting regular events across the globe to reach both developed and emerging economies. This year’s forum, held in late September, brought together entrepreneurs and business leaders from all over the world in a new format for this new physically distanced world, under the banner of ‘creating a new global impact economy.’
Australian social enterprises were well represented in proceedings at SEWF 2020 thanks to an exciting and innovative campaign that brought together the vast and vibrant social enterprise community from across Australia in the lead up to the Forum. Under the banner of Enterprising Stories, social enterprises from remote Northern Territory to inner-city Sydney came together to tell their stories and share their wisdom on the journey of change. This represented a unique opportunity to connect our local efforts into the growth of the global impact economy.
Still not convinced that impact-driven businesses are the future? Here are three reasons to consider building social purpose into the fabric of your organisation:
#1: Resilience
No business operates in a vacuum, which means being in-tune with social and environmental concerns is key to future-proofing your business. In order
to prepare for the unexpected, businesses need to understand how to adapt and build flexibility into their business models, products and services to
stay in touch with current market conditions.
As we’ve seen with the global pandemic, being able to ‘pivot’ (everyone’s favourite word!) when disruptions occur in supply chains or operating conditions shift will put you in the best position to ride out the challenges of being in business. By embedding impact-driven objectives into your business from the start, you’ll be better equipped to navigate the inevitable obstacles that come your way with a more sustainable and responsive business model.
#2: Transparency
Businesses are more connected with their customers than ever before. In just a few clicks, your business activities can be accessed by anyone with
an internet connection. With customers demanding more sustainable products and ethical services from brands and businesses, having transparent and ethical practices at every level of your business is key to earning and retaining trust with your
customers. Given that it is usually more expensive to attract new customers than to retain existing ones, transparency and trust must be a hallmark of your business’ strategy.
#3: Competitive edge
Set yourself apart by building your business on impact-driven goals and objectives. More consumers want to put their money where their mouth is and
spend with businesses that align with their values ,
whether that be supporting sustainable environmental practices or enabling more equal access to education and employment opportunities. By building a for-purpose business ,
you’re giving your customers another reason to buy from and trust your brand for all the right reasons.
Want to know more out why it’s good for business to create a purpose-led business? Try Carolyn Butler-Madden’s book Path to Purpose. She mounts a powerful argument from a seasoned marketer’s perspective.
As we come together this November to celebrate World Social Enterprise Day (November 19) - is it time that your business put the three ‘P’s’ - purpose, planet and people - first?
If you’re looking for ways to navigate these uncertain times with confidence, BASic Bookkeepers’ team of qualified bookkeepers and BAS agents is here to help. Get in touch by giving us a call on 1300 852 575 or submit an online inquiry here .
