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64% of social enterprises working towards SDG5 &8
- Social economy now accounts for 7% of global GDP
- $1.8 trillion in impact investing by 2030
- 80% of social enterprises indicated that they had active social campaigns in Africa
- 50% of companies engaging in social innovation have seen employees becoming more innovative
- 80% of social enterprises indicated that they had active social campaigns in Africa
The Corporate Social Innovation Compass Report 2024 said 64% social enterprises were reported to be working towards the United Nations Sustainable Development Goal (SDG) 5 (Gender Equality) and SDG 8 (Decent Work and Economic Growth).
The report – produced by the Schwab Foundation and the Global Alliance for Social Entrepreneurship – added that 45% of social enterprises were reported to be prioritizing SDG 9 (Industry, Innovation and Infrastructure).
The participants surveyed and interviewed for this report represented a diverse array of organizations, including: commercial companies, ranging from technology conglomerates to household manufacturers; social enterprises and intermediaries, including a venture capital firm investing in technology for sustainable supply chains and an Africa-based initiative bridging the gap between youth and information technology (IT); and conveners, connecting social enterprises with companies or NGOs.
All 31 participants had a global presence in their social outreach. The most targeted geographic region for these organizations was Africa, with 77% operating there, followed by Latin America, where 73% were active. In pursuit of social impact objectives, all 31 organizations reported alignment with the 17 United Nations Sustainable Development Goals (SDGs). The most commonly cited SDG was Goal 8: Decent Work and Economic Growth, with 69% of participants listing it as one of their objectives. Goal 13: Climate Action was the second most prevalent, with 58% identifying it as a primary goal.
Social enterprises’ driving force is promoting the greater good, safeguarding collective welfare and enhancing the well-being of individuals and communities through a unique approach to conducting their operations.
Social enterprises are profit-generating organizations that apply commercial strategies and innovative approaches to social challenges. Social entrepreneurs center their business models on achieving social and environmental goals, emphasizing impact over profit maximization.
As the influence of social enterprises continues to grow, the broader social economy is also developing into a major player – by one estimate, the social economy now accounts for 7% of global Gross Domestic Product (GDP).
The financial aspect of social impact investing has gained considerable traction, with the impact investment market’s total scale reaching a noteworthy $1 trillion in 2021, according to Global Impact Investing Network (GIIN) data. With an annual growth rate of 9%, this market is projected to exceed $1.8 trillion by 2030, emphasizing the substantial and expanding influence of the social economy and the role of corporate impact investing in driving this growth.
Collaborating with social enterprises offers companies a unique pathway to drive business innovation and achieve impactful social progress.
Companies are no longer assessed solely on their financial performance but also on their ability to make progress on issues that are important to customers, such as diversity, inclusion and the environment.
According to the #GetOutInFront global research report, which surveyed 10,000 consumers in six different countries, 23% said they will switch their loyalty to eco-friendly brands, and 42% have changed their consumption habits due to environmental concerns.
Social enterprises and innovative approach:
Social enterprises are uniquely positioned to offer new and impact-focused perspectives due to their mission-oriented approach. They develop novel products, services and processes that maximize the use of often scarce resources.
Being adept at producing innovative work within the confines of limited resources, social enterprises carve out competitive niches over their commercial-only counterparts. The latter are often unable to take paradigm-shifting stances independently due to a smaller appetite for risk and ability to deploy truly disruptive approaches. This ability to innovate while maintaining profitability in competitive niches is what makes engaging social enterprises so compelling: 50% of companies engaging in social innovation have seen employees take a different perspective on their work and therefore more innovative approaches to doing business.
After interviewing more than 75 leaders from across organizational roles in corporate social responsibility (CSR), social enterprise and impact investing, MovingWorlds – an organization of Responsible Companies Partner with Social Enterprises – highlighted exposure to new business models and disruptive innovation as an important benefit and source of value to be gained from corporate partnerships with social enterprises.
By engaging with social enterprises, companies can access new markets and reach new consumers by incorporating new products, expanding into new geographies, reaching new populations or evolving their services. With their extensive knowledge, innovative business models and local networks, social entrepreneurs can assist companies to gain insights into, and access, difficult-to-reach markets.
In the study conducted for this report, 80% of social enterprises indicated that they had active social campaigns in Africa, the most common region among the participants.
For many years, engagements with social enterprises have been initiated and managed by the CSR function, which has largely been relegated to a staff function with little involvement in core business. But as Impact Europe outlines in its study on Social Impact through Strategic Alignment, companies are increasingly aligning their business goals with their social impact ambitions in thematic, industry, business and non-material categories.
Reporting about commitment to sustainability, climate action, and social impact:
In recent years, there has been a surge in the adoption of climate, sustainability and other social impact goals among companies and organizations worldwide. As of 2022, 96% of Standard & Poor’s 500 companies and 81% of Russell 1000 companies (the top 500 and 1000 US companies by stock market capitalization) reportedly published environmental, social and governance (ESG) reports in some form.
This advance was driven in part by the growing demand for corporate transparency and industry commitment to socially responsible business practices, which caused governing bodies around the world to issue new regulations and policies to create incentives for established social impact goals.
Companies new to or experienced in sustainable development reporting can use social enterprise engagements to meet social impact targets and sometimes mandated compliance goals.
Consequently, by engaging social enterprises and showcasing the impact of this collaboration, employers can boost their employer brand and ability to attract talent.
In a study conducted by Yunus Social Business, one in three companies saw improvements in their ability to attract talent as a result of their social innovation activities.
In another survey, employees of a global chemicals company that were participating in the company’s social innovation activities were more than 34% more likely to be highly engaged and more likely to recommend the company as an employer. Additionally, collaborating with social enterprises provides employees with valuable development opportunities. Pro bono consulting projects with social enterprises offer chances for employees to take on challenging assignments. That way, they cultivate the necessary leadership skills for the next generation of sustainable businesses.
Companies that operate with a sense of purpose beyond profit also retain employees at higher rates. The opportunity to make a meaningful contribution to society while at work promotes a sense of community and leads to reduced employee turnover. Purpose-driven companies report 40% higher levels of workforce retention compared to their competitors.
To scale social enterprises, companies need to consider how to engage, create network effects and integrate the partnerships into their businesses.
Engagements between social innovators and companies come in different shapes and forms. As the space has evolved in the past few years, so have the different mechanisms for partnerships.
While there are many mechanisms and ways of engaging with social enterprises, there is no one-size-fits-all approach.
A company can find the appropriate way to engage with social entrepreneurs by assessing where it stands in its journey towards social innovation. Corporate agendas differ in their prioritization of collaboration with social enterprises as part of their strategy and broader social responsibility or sustainability efforts. Their experience and exposure ranges from starting their journey and exploring an engagement to having invested billions of dollars into this space.
Drawing from the industry experiences and insights highlighted in this report, there are clear recommendations for companies at any stage of their development to maximize the impact and business benefits.
There are four stages of evolution. Each stage is determined by a set of criteria. These criteria have been co-developed by a working group of the Global Alliance for Social Entrepreneurship, comprising corporate representatives, intermediaries, social innovators and academics.
And while each company’s journey with social entrepreneurship is unique, there are clear recommendations on how to apply each of these measures at four general stages: exploring, instituting, championing and finally transforming social innovation.
The report highlighted important recommendations to maximize the effects of collaboration with social innovators, including identifying the most appropriate ways to engage social enterprises; working across the broader social entrepreneurship ecosystem; and integrating social enterprise engagements into the core business.
This report and the Corporate Social Innovation Compass built on and synthesize previous research focused on the topic of corporate social partnerships with social innovators.
The growth of social enterprises presents a golden opportunity for traditional businesses to engage in collaborations that not only expand their commercial prospects but also amplify their impact. Social entrepreneurs are distinguished by their agility and creativity, adept at exploring and implementing market ideas that enrich both business value and societal welfare.
Envisioning a future in which the concept of “social enterprise” becomes the norm in all business practices has become more than a dream – it has become a goal. Realizing this goal requires the commitment of social entrepreneurs driven by a passion for change and corporate leaders who prioritize this vision. Together, they can forge a path towards a world in which business success and social progress are inextricably linked, creating lasting, meaningful impact.