Over the last month, across flagship annual events including Climate Week, UNGA week, the Sustainable Development Impact Summit, Goal Keepers, and the Clinton Global Initiative, there was one stakeholder in particular getting more attention than ever before: the social enterprise. Investors, business leaders, foundations, and even governments all highlighted the importance of the social enterprise movement, and its potential to achieve the SDGs while transforming the way the world does business in the process. Indeed, even in separate closed door round tables with policy makers, CEOs, and CFOs, social enterprises were identified as essential catalysts to advance core business objectives WHILE doing good for people and planet in the process.
While social enterprises represent a much smaller portion of the economy than corporations, social enterprises are having an outsized influence because they are demonstrating that scalable, sustainable, and profitable business models are possible — and that’s upending the status quo of what business can, and should, be.
“There is a great business opportunity, if we seize it, to help harness markets — and all the financial, human, and innovative capital they represent — to deliver the world we want. It’s a minimum $12 trillion opportunity and 380 million more jobs. It is the biggest business plan opportunity of all time and it’s worth going for… Consumers demand it… Employees will leave without it… Governments will eventually require it.”
Former Unilever CEO, Paul Polman
Global corporations like SAP, Unilever, IKEA, and more are increasingly partnering with social enterprises in order to achieve their own financial and non-financial goals. So much so, that social enterprise partnerships will be a defining feature of ALL corporations in the future. In our work across industries, we’ve seen that social enterprise partnerships across ten distinct business units/functions can unlock business value for corporations in ways that are also beneficial to the social enterprise movement as a whole.
Business and sustainability leaders at corporations can ask themselves these 10 questions to identify where they are already tapping into these shared-value opportunities, and where they may be missing out:
- Partnering with social enterprises at the executive level to develop future business models?
- Connecting our product teams to social enterprises to build better, more accessible products for the needs of our current and future consumers?
- Collaborating with social enterprises to build more resilient, sustainable supply chains?
- Improving our distribution channels and closing gaps in the last mile by tapping into social enterprise networks?
- Using our marketing and communications podiums as a megaphone to increase attention on social enterprises and ensure we are communicating to an increasingly aware consumer base?
- Leveraging our influence with political and governmental groups to advocate for social enterprise friendly policies and ecosystem building to help build capacity for the sector?
- Implementing procurement targets that prioritize social and environmental return on investment alongside cost?
- Using Tier 1, Tier 2, and Tier 3 partnerships to help social enterprises bring innovations into global value chains?
- Building human-centered and sustainably-minded leaders by connecting HR programs to social enterprises on the front lines of social innovation?
- Integrating social enterprises into employee engagement, pro bono volunteering, and philanthropic programs to create long-term sustainable impact for both our employees and the world?
Below, we expand on each of these areas:
1. Business model innovation
When social enterprises can engage with senior leaders at companies, not only do social enterprises get inside connections and guidance to help them scale up their business models and position their offerings to larger corporate clients, but the business leaders lending their support also get exposure to more sustainable and innovative business practices that they can translate to their own way of operating. Indeed, the majority of corporations need to keep evolving their business models in order to stay relevant in a future economy that prioritizes stakeholders – including employees, consumers, and communities they operate in – rather than exclusively shareholders. Even oil and gas companies are pivoting to become “energy” companies, and are partnering with social enterprises to help invent, pilot, and scale more sustainable energy solutions, like wind and solar, for the future.
As an example, take Shell’s involvement with the Global Off-Grid Lighting Association (GOGLA) to explore commercial ways to provide access to energy to underserved consumers. While it remains to be seen if Shell can make up for its carbon emissions of the past, if social enterprise partnerships can help an oil & gas behemoth like Shell make the transition towards a lower carbon energy system, they can certainly help other carbon-intensive businesses do the same. In a recent LinkedIn article, the VP of sustainability at Anheuser-Busch InBev shared that, “A closer look reveals that corporations and entrepreneurs are, in fact, interdependent. Both need the other to thrive…one area of interdependence that stands out is that both players increasingly find their most significant common ground in innovation.”
Chief executives and leaders of product, marketing, and finance in particular should proactively seek social enterprise partners to learn from and as a source of inspiration for setting ESG and social innovation targets that move them towards more sustainable, circular, and regenerative business models. In the same way that corporate executives of the past have been known to visit Toyota manufacturing plants to see continuous improvement in action, leaders should spend time with social enterprises to see social innovation in action.
2. Product development and enhancements
Product and marketing leads should actively partner with social enterprises to inform the design of new products and services. Not only can social enterprises facilitate new insights about consumer demands, but their innovative thought processes and human-centered products can help corporations develop products and services with the social and environmental return on investment that consumers are demanding.
As an example, when IKEA was looking for ways to appeal to an increasingly socially and environmentally conscious consumer base that wanted to know their purchases were fair, sustainable, and ethical, IKEA partnered with Indsutree Foundation to find ways it could integrate community-created artisanal products into its stores. Daily Harvest, trying to appeal to this same customer base, partnered with social enterprise Vega Coffee to source organic, fair trade coffee that put even more money into the hands of smallholder farmers. Currently, Cemex is looking at reducing the carbon footprint of its building supplies by partnering with social enterprises like Arqlite to upcycle recaptured plastic into sustainable construction inputs.
Product leads should actively try to find social enterprises operating in their same industries that they can partner with in design-thinking sessions and innovation workshops to pilot, build, and scale products and services for the future.
3. Supply chain innovation
Political instability, climate events, and health crises have permanently changed the way corporations think about their supply chains. Not only do they need to be more diverse, but they also need to be more resilient. The most progressive corporations are already shifting towards sourcing from regenerative agricultural organizations and circular suppliers that also focus on more equitable and just treatment of their employees and the communities where they work.
As an example, take Carlsberg, which has partnered with the social enterprise Desolenator to use desalinated sea water to produce its beer in a more environmentally sustainable way.
Business leaders with supply chain responsibilities, as well as procurement departments, should hire social enterprises as consultants to help them develop more diverse and resilient supply chains, and then work with procurement organizations like Buy Social, Benefit Corporation, Good Market, SEWF, and more to find social enterprises to source from.
4. More Effective Distribution
Many corporations look at the bottom of the pyramid as a potential gold mine…. IF they can get the unit economics right, which is only possible if they figure out how to effectively distribute their products. However, reaching this audience is very challenging. Social enterprises operating along the last mile have already built the trust and community support to make sure the most vulnerable and underserved are not being taken advantage of, and if corporations want to improve their distribution, they need to partner with the social enterprises who are already doing it successfully.
As an example, take Unilever, has partnered with social enterprise Kasha, a mobile e-commerce and content platform that confidentially sells and delivers women’s health and personal care products such as sanitary pads, contraceptives and soaps in Rwanda.
Delivery leads at companies should analyze the key business metrics they need to improve, like cost, carbon usage, and delivery speed, then connect with social enterprises in target geographies with an established presence. From there, they can launch pilots to see how they can deliver products in ways that achieve both cost and carbon targets.
5. Publicity, Promotion, and Brand Building
Corporations have some of the largest megaphones in the media, and despite the consistent backlash they receive, are in fact more trusted than many other entities, including governments. Corporations that can promote the work of social enterprises help build awareness and trust of the movement, while at the same time building their brand as a socially responsible company by highlighting the social enterprises they’ve partnered with to operate more sustainably.
Take Anheuser-Busch InBev and its 100+ accelerator. Not only does it provide funding to support social innovation, but it also finds additional ways to promote these organizations in mass media to help them grow their brands and revenue through partnerships.
Brand, marketing, communication, PR, and other citizenship leads at corporations should identify opportunities to do business with social enterprises to develop better campaigns, spend advertising dollars with contractors who are social enterprises or B-Corps, and also amplify partnerships with social enterprises in media and news outlets to both build their own brands, and use their global platform to elevate social enterprises without the opportunity for that level of publicity otherwise.
6. Advocacy and Policy Development
Corporations can accelerate the social enterprise movement by helping support advocacy efforts that make it easier to incorporate as a social enterprise, and also build localized ecosystem support for social enterprises. Take Agora Partnerships, which knows that the only way that social enterprises can effectively scale is if there are local systems in place to support them. While many examples exist of governments, corporations, and intermediaries (like Agora) working together to help build social enterprise ecosystems, the space is still underdeveloped compared to the corporate sphere. By leveraging their resources and influence to facilitate better coordination amongst ecosystem actors, companies can build their brand while demonstrating that their commitment to a more sustainable world is more than just PR .
In the Netherlands, corporations like PwC partner with local municipalities so that laws, policies, and support systems are put in place to help social enterprises get established, get support, and ultimately thrive.
As we wrote previously, procurement divisions within companies have massive potential to accelerate the growth of the social enterprise movement. By committing even just small percentages of procurement budgets to social enterprises, corporations (and even governments) can unlock billions and billions of dollars that can fuel social enterprises to grow their revenues, and in turn, their social and environmental impact. Corporations that do so also realize benefits of their own in terms of brand building, more sustainable and resilient supply chains, and progress towards ESG commitments (which Ernst & Young Global Vice Chair of Sustainability called “a net positive for business” in a recent LinkedIn post.)
Take Bayer, which not only has created social enterprise procurement targets internally, but has also launched a Sustainable Procurement pledge initiative to drive awareness and knowledge on responsible sourcing practices and empower procurement professionals in other corporations to join the movement. Similarly, Unilever has made a commitment to spend $2 Billion of its annual procurement budget with social and diverse-owned enterprises. In 2020, SAP launched the 5 & 5 by ‘25 initiative, committing five percent of addressable spend to social enterprises and diverse-owned businesses by 2025. eBay, Google, and many other leading corporations are also following suit. One report from Yunus Social Business and Bain found that social procurement represents a $500 Billion market opportunity for real impact.
8. Partnership development and scaling support
Corporations that can help social enterprises build partnerships, get in the door with potential corporate customers, and make introductions to other partners help social enterprises lower costs and accelerate learning, iterative improvement, and time to scale.
In the TRANSFORM Support Hub, powered by MovingWorlds and sponsored by Unilever, SAP, the UK’s Foreign, Commonwealth & Development Office (FCDO) and EY, we help corporate professionals find social enterprises for procurement opportunities, and we also help social enterprises find connections into the corporate sector for customer discovery, research, and even direct capacity-building support and connections to sales opportunities. Since social enterprises often emerge from communities that have been historically marginalized and are underserved, many entrepreneurs don’t have access to the skill-building and strategic connections needed to realize their world-changing potential. By simply taking the time to learn and connect with social enterprises, and then make introductions, corporations can help individual social enterprises scale by breaking down silos and facilitating inclusion.
9. Human Resources & Leadership Development
Report after report highlights that one of the biggest barriers facing social enterprises is a lack of access to people with the right skills and mindsets to overcome their most pressing business challenges and barriers to scale. HR teams from corporations also encounter this issue, and they have the knowledge to help social enterprises recruit, engage, and develop the talent they need to scale. One amazing benefit that happens with HR teams at corporations support social enterprises externally is that they also end up achieving their own internal goals, too.
SAP, for example, combines training and real-world experience through its signature leadership development program (ETAB) by giving emerging leaders the opportunity to both support and learn from social enterprises shaping the future of their industries, and then translate that learning to inform the way they operate in their own full-time roles at SAP.
HR leaders know that if you want people to understand how to balance purpose and profit at work and develop future-fit skills, then people need more, outside-the-classroom and diverse experiences. Experiential learning programs like ETAB that connect emerging leaders with social enterprises unlock genuine shared value for both the corporate employees giving their time and skills, and the social enterprises receiving them.
10. Employee engagement via pro bono engagements and funding programs
As SAP’s Corporate Social Responsibility leader pointed out in a LinkedIn post following UNGA week, the evidence is clear that when Human Resources and Leadership Development teams within corporations partner with social enterprises to enhance their programming, the resulting experiences represent some of the most dynamic purpose discovery and mission alignment opportunities that companies have to offer. Corporations that want to develop purpose-led and future-fit leaders should be involving their leaders with social enterprises on the front lines of social innovation to provide project-based assistance, consulting, training, and/or mentorship. If these engagements are done programmatically alongside peers through structured in-person programs (like SAP’s Social Sabbatical program facilitated by Pyxera Global) and/or scalable and globally accessible and inclusive virtual pro bono engagements (like through the TRANSFORM Support Hub powered by MovingWorlds), these returns on investment for both the corporate employees and social entrepreneurs are more pronounced.
The following table summarizes the key benefits to corporations and social enterprises when they partner together across the 10 functions above:
Regardless of where your corporation is on its journey to leveraging strategic partnerships with social enterprises, there is always room to do a little more. The questions outlined in the introduction, and the case studies embedded within, provide a useful compass on how to build executive level support for partnering with social enterprises in a way that will support your corporation’s mission, while also contributing to the achievement of the Sustainable Development Goals.