“Social enterprises are the future of business and social progression”

''Yet another political daydream comes to an end, and we wake up to the same world with the same problems. Eranda Ginige, Co-founder of Social Enterprise Lanka, a pioneering initiative tells us of a new force that is trying to solve the world’s 

problems''

 Social Enterprise Lanka Co-Founder Eranda Ginige

Q: What is this force for good?

A: It is the responsibility of the Government to solve social and environmental problems in a country. But the fact is that they have continuously failed to find sustainable solutions to even the most pressing problems. The Non-Governmental Organisations (NGOs) have also failed to find sustainable solutions to our problems due to various reasons. There is a fast growing form of business called ‘Social Enterprises’ that are solving social and environmental issues around the world. It is the future of business and social progression.

 

Q: What are these social and environmental issues?

A: It’s a long list… poverty, alcoholism, drug abuse, domestic violence, child abuse, rape, crime, road accidents, unemployment, under-employment, lack of access to education, lack of access to health services, aging, air pollution, rise of non-communicable diseases, corruption, contaminated food and water, agriculture-based kidney disease, ethnic and religious disharmony, terrorism, climate change, sea-level rising, man-made natural disasters, extinction of species, ocean pollution, cybercrimes, malnutrition, energy crisis, water crisis, waste, child labour, etc. I think you get the picture, the world is full of problems. And we are running out of time.

 

Q: So is Social Enterprise another name for CSR (Corporate Social Responsibility)?

A: Clearly not. CSR, corporate philanthropy, Creating-Shared-Value or whatever they call it, the temporary projects run by large companies are good, but will not solve the problems sustainably. Their impact is small, isolated and usually does not solve the underlying problems. Their primary focus is not making social impact, but making profit. So their investment in CSR is just a side-line. Besides, most of those companies create far more social and environmental damage through their business practices and supply chains, which cannot be balanced off. CSR and all its derivatives are basically not working.

 

Q: So what is a Social Enterprise then?

A: In broadest terms, a social enterprise is any entity with a core-purpose of solving a social or environmental problem, and is self-sustainable. In other words, a ‘Good Business – Doing Good’.

 

Q: Do you mean a profit making business?

A: Yes, of course. A business that can’t generate profit is unsuccessful. Profit is not a bad thing as long as it doesn’t become your core-purpose. Profit is an essential resource for social enterprises to grow their business and create larger social impact. Social Enterprises by definition reinvest a majority of their profits back in their business and its social mission.

 

Q: Can you give us an example?

A: My favourite social enterprise is a British company called ‘Blue Sky Developments’. In the UK like everywhere else, people go to prison for various reasons. And when they come out, they fall into the same gangs, crimes, drugs and re-enter the prison. The rate of relapse in the first and second year is alarmingly 60-70%. We know prisoners are a huge burden on the society. It’s also a huge cost to the government because maintaining prisons uses taxpayers’ money. So what this company does, is employ only ex-prisoners. They are paid well and trained well. In a few months, they are in a state to be recommended to work anywhere else or ready to start their own enterprise. It’s a very successful business in the UK.

 

Q: But can you do such things in Sri Lanka?

A: Employing only ex-prisoners is a fast growing model in Europe and North America. It’s not the country that matters. It’s how visionary business founders look at solving age old social problems through new and disruptive ways. In Sri Lanka there’s a social enterprise called ‘Selyn’ that works on similar principles. Their core-purpose is to economically empower the vulnerable women in their community. They make high-end fabric and garments, by training women, providing them with machines to work from home while taking care of their children, and very importantly they pay their employees well.

Q: Does that mean large apparel manufacturers are social enterprises?

A: Certainly not. Their core-purpose is not economically empowering their female workers. They exist to make more and more profit for their shareholders. As we all know garment factories carry a long trail of social and environmental issues. Those women work like machines, they work and live under harsh conditions, they get abused, they are not paid well, they work long-hours, and they are not upskilled or trained to grow beyond what they are doing. If they are to become a social enterprise, then they’ll have to seriously change their business model, supply chains, technology, profit distribution, transparency etc. Doable, but it requires amazing visionary leaders to make that paradigm-shift. 

 

Q: Give us more examples?

A: Bangladesh’s Grameen is a large social enterprise. But I have to say that the plethora of finance companies in Sri Lanka doing micro-financing are not social enterprises. Most of them just use the term to give high-interest loans and exploit the poorest layer of the market. They are in it to make more money, not to take their customers out of poverty.

Almost all organic farms, and related businesses that do not use harmful additives, preservatives, and give ethical wages to their employees are social enterprises because by definition they are trying to give their customers healthy foods. 

Renewable energy makers who do not damage the environment, companies that make low cost houses, provide low cost education and health services are broadly social enterprises.

There’s an interesting social enterprise in Jaffna called the T.C.T Supermarket. The only reason why the owners run that business is to use its profit to operate their home for girls affected by the war. I call it the hybrid-model of social enterprise where a business and a charity are linked together.

 

Q: So are the philanthropists who make donations to charities are social entrepreneurs?

A: Not really. Giving a small amount of money to a charity is okay, but that’s just temporary. What happens to the charity when that money runs out? And chances are most of these high net worth individuals use unethical business practices, pollute the environment, pay low wages to their employees, and invest in sin industries (such tobacco, alcohol, weapons). Giving a fraction of their wealth to a charity is not social entrepreneurship. However they can invest in social enterprises to create both financial and social impact. That’s a more sustainable approach.

 

Q: This is new to Sri Lanka. Where are we as a nation?

A: Considering the country’s astray economic system and policies, yes this is new to us. Most 50+ CEOs, Chairmen, and ministers don’t even understand the concept of Social Enterprise because they are so stuck in the old paradigm of failed capitalism. But then again, our pre-colonial history and traditions have embedded traits of modern social enterprise. So I don’t think it will be very difficult for the masses to re-discover a social enterprise economy.

But from a sectoral point of view, we are still at the start. We have a long way to go compared to countries like the UK, USA and even some East Asian countries like Indonesia. Social Enterprise Lanka is giving leadership to that journey by working with everybody with a similar vision and values. 

 

Q: What’s Social Enterprise Lanka doing to make it happen?

A: Our vision is to develop a thriving social enterprise sector in Sri Lanka by 2025. We have started identifying social entrepreneurs scattered around the country, provide them with training, access to markets, impact investment, and also to recognise and reward them. We need to develop policies and systems to support the development of social enterprises. We need to educate the public about social enterprise and why they should buy only from social enterprises. We need to nurture the next generation of business leaders to think ‘social’. There’s plenty of work that needs to be done. But we can’t do it alone. So we warmly invite everybody who can share our vision and work with us to join hands.