The impact of social enterprises could be amplified with more funding and better policies. Image: Schwab Foundation/Renato Stockler
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Social enterprises create over 200 million jobs and perform critical work towards sustainable development.
One in two social enterprises globally are led by women, compared to one in five conventional enterprises.
Social enterprises remain underrepresented and undersupported, despite their economic and social impact – but new regulations and investment are increasingly addressing this.
This article is published in Forbes.
A first-in-kind research by the Schwab Foundation’s Global Alliance for Social Entrepreneurship finds that there are approximately 10 million social enterprises worldwide, which collectively generate around $2 trillion in annual revenues, creating over 200 million jobs. The sector now outranks other mainstream industries by annual revenue, such as telecom and apparel. Moreover, social enterprises align their missions with the Sustainable Development Goals (SDGs), notably in creating decent work, driving climate action and reducing poverty and inequalities.
Social enterprises, which make up 3% of all businesses globally, stand out from traditional businesses by placing a strong emphasis on creating social and environmental value in addition to economic value. Unlike conventional nonprofit organizations, social enterprises are self-sustaining through their business activities. They prioritize social impact over financial returns and reinvest their profits back into their mission.
What’s equally striking is the leadership of these enterprises. Half of the social enterprises are led by women, compared to a mere 20% of conventional businesses. It underscores the inherent inclusivity and diversity ingrained within these ventures, both in their structure and goals.
Impacting the lives of millions
Besides the significant economic relevance of social enterprises, they positively impact the lives of millions, from rural villages in Africa to megacities in Asia and Latin America to underprivileged parts of North America and Europe.
According to data by the Schwab Foundation for Social Entrepreneurship tracking a global community of over 470 leading social entrepreneurs, these enterprises alone have already directly impacted more than 891 million lives over the past 25 years.
Patagonia and SEKEM are prime examples of the power of social enterprise.
Patagonia demonstrates how a company can prioritize environmental and social impact alongside profitability. While committed to sustainability and fair labour practices, Patagonia’s revenue has been consistently growing throughout the years. The company has an estimated value of about $3 billion and brings in $100 million in revenue annually. All profits are now going to a specially designed trust and nonprofit organization to combat climate change and protect undeveloped land around the globe.
SEKEM was established in 1977 as a farm operation, reclaiming 170 acres of desert on the outskirts of Cairo. It aims to facilitate the transition of 40,000 smallholder farmers to organic and biodynamic farming, producing organic foods, herbal teas, medicines and sustainable cotton. Through concerted efforts, SEKEM cultivates a future where sustainability isn’t a lofty goal but a tangible reality.
Generating revenues of $23 million in 2022, it also generated 53,705 end-of-life carbon credits along with 2,500 farmers and SEKEM farms, competing as an industry leader in the Middle East’s herbal and organic foods and medicine sector.
What is the Global Alliance for Social Entrepreneurship?
Essential support for social enterprises
Despite the significant contribution of social enterprise both in economic and impact terms, they are underestimated and underrepresented. In April 2023, the United Nations General Assembly adopted the first Resolution on the Social and Solidarity Economy to highlight the contribution of cooperatives, social enterprises and other social economy organizations to realizing the SDGs. Yet, only one in five countries has legal structures or specific legislation to support social enterprises.
Movements such as Catalyst 2030 are working with social entrepreneurs worldwide to advocate for better policies to support the social economy. For example, last November, the Schwab Foundation and Catalyst 2030 Brazil co-hosted a high-level roundtable at the Ministry of Development, Industry, Commerce and Services in Brasilia, discussing actions to unlock the social impact economy in Brazil alongside the launch of the “Enimpacto” presidential decree to invest in and advance its impact in the country.
Besides the lack of legal recognition in many countries, social enterprises also face a significant funding gap of $1.13 trillion. To bridge this gap, private sector engagement is crucial. To further mobilize private sector support for the social economy, the Schwab Foundation’s Global Alliance for Social Entrepreneurship, in partnership with Deloitte, has launched the “Corporate Social Innovation Compass” developed with the support of over 100 members of the Global Alliance. This framework guides companies in partnering with social entrepreneurs, presenting over 10 engagement mechanisms and tangible case studies illustrating the business benefits of such engagements.
Moreover, initiatives like People and Planet First, launched by the Social Enterprise World Forum in 2023, aim to create a shared identity for social enterprises and encourage consumers, businesses and governments to purchase from these entities.
These actions are essential to help increase the recognition and contribution of social enterprises towards sustainable development. By providing greater visibility, policy support and engagement from the private sector, social enterprises can transition from being the world’s best-kept secret to becoming trailblazers of an inclusive and sustainable economy.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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