For many businesses, the focus has always been the bottom line. But business trends have been showing the emergence of a new kind of corporation. For some new companies, the bottom line is no longer the only important aspect. Say hello to the social enterprise paradigm.
Instead of focusing on profits, a social enterprise also wants to make positive impacts. These companies can be very successful and profitable. And at the same time, they also accomplish social and ecological goals. Surpluses often get invested back into the business to continue reaching its objectives.
A social enterprise can take on many forms, including co-operatives. The stakeholders have an interest in the work that the business is doing. They are active and engaged as well. Many of these companies also give jobs to those who are living in at-risk situations.
Instead of the bottom line, a social enterprise looks at the triple bottom line. The single bottom line might take into account profits and losses that a company incurs. But it fails to consider all the costs linked to a company’s actions.
For example, a clothing company might show a monetary profit. But what if hundreds of people die in the factories that make the clothes? What if the cargo ships that transport the products create huge carbon footprints? And then it leads to the destruction of marine life? What is the real total cost now?
Advocates have argued that companies need to introduce full-cost accounting. The idea of a triple bottom line adds two more ‘bottom lines’ for a company to consider. These lines have to do with social and environmental concerns. Together, the three ideas are often called ‘Profit, People, Planet’. A social enterprise works with a triple bottom line.
Social enterprises are not to be confused with social entrepreneurship. The latter focuses on people who develop ways to drive social and Earth-friendly changes. Let's look at some examples of social enterprises.
Solar Sister is based in Africa and aims to replace dangerous and unhealthy kerosene lamps. These lamps provide most of the light in rural households. Solar Sister creates jobs and offers women in Africa chances to earn their own income.
These women are all given inventory start-up kits, training and marketing support. Then, the women become their own bosses. They go door-to-door locally trying to replace kerosene lanterns with solar lamps. The women create businesses and incomes for themselves. At the same time, Solar Sister has spawned a profitable business.
Better World Books is a for-profit company. It shows just how easy it is to have a positive social impact while making a profit. Better World Books donates one book to a non-profit literacy program for each book it sells. The company also donates about 7% of its revenue to libraries and other literacy-focused groups. Better World Books has a very simple idea: the more people who can read, the more people who will buy books.
In 2008, Canadian brothers Craig and Marc Kielburger founded Me to We, a for-profit social enterprise. Me to We offers camps and seminars for youth, volunteer travel events around the world, Canadian-produced, sweatshop-free environmentally friendly clothing handmade by artisans in communities around the world.
Half of the annual proceeds from the sale of all of these products go to Free the Children. It's a non-profit charity. Free the Children is a global youth movement that gives young people around the world a chance to help other young people. With the proceeds from Me to We, Free the Children is able to continue its non-profit work.
Many successful and big businesses right now still just look at the bottom line. There are ongoing contentious debates on the social and environmental liabilities of these companies. Social enterprises believe that it's only by meeting the triple bottom line that a modern business can truly be successful. Countless companies today show that it's possible and profitable to care about our world and its people.