Issue 23 – Initiate and invest differently
Professor affiliated with HEC Paris, co-founder of the chair “Social Business / Enterprise and Poverty”
Between the logic of gift and that of profit maximization is emerging in recent years a middle path: that ofsocial business . The idea is based on two observations. On the one hand, public authorities and civil society struggle – particularly in poor countries – to solve certain problems, such as food insecurity, lack of access to health, water, energy or to decent housing. On the other, the profit-maximizing logic shows its limits by increasing for example the pressure on resources, contributing to global warming or rising inequality.
Private enterprise can provide answers to these challenges with social business , it is at the service of social causes. Profit becomes a means and not an end in itself; the company is not acting alone but in co-creation with government institutions and civil society. This approach attracts many stakeholders: employees searching for meaning, conscious policy to reduce unemployment, companies seeking to regain the confidence of citizens and certain to play a true role in society, responsible investors, international donors, etc.
But where is the boundary between social business and ” business as usual “, particularly when return on capital is expected? How to distinguish a proactive and sincere commitment of operation washing social ?And beyond the intentions, how to assess the net impact of social business ? As for impact investors, expectations in terms of financial and social returns are also very different – how to best meet them? All these questions therefore require clear definitions associated with specific ranges in terms of return on capital and explicit indicators. However the double pursuit of societal and economic objectives it is not utopian? Few social enterprises that achieve breakeven, for example. How to find the right business model to meet the needs of the poor while generating a profit? And, when the activity is well established, how to achieve change of scale?
So many questions this 23rd issue of the magazine Private Sector & Development is trying to respond to define the conditions for sustainable development and large-scale social business . The game is worth the candle. Paving the way for a truly inclusive economy based on co-creation with stakeholders, giving access to essential goods and services, to decent work, a fair sharing of value, this is basically the main issue ofsocial business .