We are increasingly hearing about the social enterprise model, enterprises that have a positive impact on the environment and on society. How do they primarily differ from traditional companies?

While virtually the sole objective of commercial enterprises is to maximise their profits, social enterprises seek to make a positive impact on the community, workers, consumers or the environment.

In some ways, these enterprises are challenging the current business paradigm. However, in a commercial enterprise, results can be accounted for, quantified. How is social impact measured instead?

Although measuring the environmental impact is easy, calculating social impact is not quite so easy. Tools do exist to measure it, and since the majority of these companies operate in a very specific community, the impact is very obvious.

It seems more difficult for them to attract funding. How do they it?

The people who invest in these organisations are investors who align the company's values with their own. They are called impact investors or “patient capital,” as they offer more time and flexibility in terms of a return on their investment, unlike traditional investors. They also give the company the freedom to achieve the goals and social impact they propose.

And in the current economic context marked by globalisation and business growth, how can these kinds of companies find their place in the market?

It is important that we consider what role the company has to play in society. The economy is the tool that has to enable us to achieve social welfare, and growth should not be the ultimate goal, but the way to achieve it. If we internalise this idea, we will see that social enterprises make the most sense. A company that has no reason to exist beyond producing and making a profit without any added value has an expiry date.

Why?

The rules of the game have changed. Consumers are more demanding and also have the power to make a positive impact through their purchasing decisions. If they cannot find a social element, they will probably choose another brand. A purposeful project, which works with people with disabilities who bring value to the company, the end consumer and their community, has more of a future because its existence makes sense.

In view of the new scenario, what situation will companies with no purpose be left in?

Fiscal and environmental regulations, for example, will be more stringent than they have been so far, so any company that does not align with the UN’s Sustainable Development Goals (SDGs) or European Union policies will find it more difficult to survive.  

I understand that big corporations are the ones that will have to transform the most. Is there one that has already made the change to a more socially responsible model?

More and more organisations are able to generate a social impact at every step of their production chain. Also, many corporations are achieving B Corp certification, a seal to accredit companies that balance their social and economic purposes. It is clear that Corporate Social Responsibility (CSR), as pure marketing, has become obsolete and that consumers now demand more transparency. As I said before, buyers are now less loyal and will have no problem changing brand if they find an alternative that fits in better with their values. It is necessary to not only appear to be responsible, but to really be responsible.

How has the pandemic impacted social enterprises?

They have suffered to the same extent as any other type of company. However, it is undeniable that the COVID-19 crisis has stirred up society and the conscience of many consumers, who will now have an opportunity to do things differently. And if people want to do things better, social enterprises will respond to this demand.

Are the new generations being trained to act within this new paradigm?

Although this is a relatively recent phenomenon, both in universities and business schools the need has arisen to train hybrid professionals who achieve a balance between the economic and social aspect. In fact, social enterprises are accustomed to being very complex, so it is important to take them into account, study them, listen to them and convey the knowledge they offer not only to the new generations but also to the economic and business world because they have a lot to say.

How will social enterprises attract the young talent that might still prefer to join a professional business?

Young people entering the labour market are part of a generation that has grown with a concept of success that has already become obsolete. Today, individual social awareness has been gaining ground and new factors such as a positive contribution to the community come into play when mapping out a career. That is why the best talent will certainly choose social companies with a social purpose because they will find meaning there, beyond position or salary. In contrast, conventional companies, which cannot and will not be able to offer this intangible benefit, will find it more difficult to capture and retain talent.