Considering Net Positive Impact in the Social Enterprise Space
There is little contestation that the concept of Net Positive Impact and its noble primal objective of putting back more into society, the environment and the globe than it takes out is conceptually admirable. The Forum for the Future (2016), posits that, organisations in the public, private and not-for profit sector that take a Net Positive approach share an ambition to grow their brand, have strong financial performance and attract the brightest talent”. In pursuit of this ambition, the destination for all organisations is seemingly the same: thriving organisations that deliver benefits that extend far beyond traditional organisational boundaries. But perhaps we should reconsider whether the destination for all organisations is indeed the same if they pursue the said ambitions. In doing so, we need to remind ourselves that neither of the above-identified sectors operates independently, in silos or in bubbles, and that a possibility exists whereby one entity’s ambition might be another’s downfall. For the sake of this article, let us consider the specific example of a social enterprise and its ability to deliver benefits to society and the environment given its necessary interplay with other organisations in its environment.
The purpose of social enterprises is arguably to deliver Net Positive Impact through their application of commercial strategies to maximise improvements in human and environmental well-being. The benefits accrued through such strategies do not only extend beyond traditional organisational boundaries but transcend organisational boundaries all together. The very raison d’étre of such organisations lies beyond its boundaries. The concept of social enterprises is also not new. It was first put forward by Freer Spreckley in the UK in the 1978, and has recently been gaining momentum in South Africa through targeted government funding, European support programmes and progressive academic institutes. Corporations are also increasingly considering social enterprises as partners to help them improve their positive impact with respect to commercial orientation and their social value bottom line. Social Enterprises in turn choose to work with business to direct capital to impactful social and environmental investments. Social enterprises are also known for disrupting markets and supply chains through innovative ideas and products that respond to the demand of poor and marginalised groups whilst improving efficiencies. In claiming this space social enterprises often advocate for the poor and marginalised groups. Despite the converging interests of business and social enterprises as articulated above, fundamental diversions prevail in the pursuit of Net Positive Impact.
Social enterprises have primal accountability to the communities in which they operate whereas the first line of accountability of business is towards its shareholders. The purpose of the former lies beyond organisational boundaries and the purpose of the latter resides within organisational boundaries. Responsiveness, innovation and community-based participatory research and engagement guide and guard the work of social enterprises. Where social enterprises, in pursuit of capital for social purpose, fail to uphold their accountability to communities, impact is eroded and neither business, nor enterprises reach their destination.
Four critical factors contributing to such erosion are articulated:
1. Investment in social enterprises requires of these enterprises to achieve set targets on both projected profits and social/environmental impact simultaneously:
Empirical evidence from enterprises benefitting from recently introduced funding instruments for social enterprises suggests that such an existence of opposing requirements often favours capital above community accountability. In a bid to satisfy capital, social enterprises often deliver on the requirements of technological innovation, but neglect to engage meaningfully with communities to inform product development and to secure sustainable markets. Community engagement and participatory product development requires time, patience and expertise, commodities often poorly understood and costed. In a bid to meet capital requirements, social enterprises are at risk of developing products and services with no or little uptake in communities and even at risk of being sabotaged. Such top-down approaches do not only defeat the noble objective of Net Positive Impact, but destroys the very potential of communities to advance self-governed local economic development.
2. Companies favour quantitative methodologies to measure Net Positive Impact:
Social impact measurements, however, combine both quantitative and qualitative methodologies with a stronger emphasis on the latter, a fact which is divergent from capital’s expected output. The preference for quantitative methodologies has further perverse effects on communities when legislation requires quantifiable quotas on output. The hard-earned gains to unite communities for development, gender equality and economic prosperity are depleted when programmes are tailor-made by social enterprises to achieve the transformation targets of corporations instead of communities.
3. Development demands uninterrupted engagement, consent and consensus seeking:
In communities where trust has been eroded over many years through systematized oppression and deprivation of economic and social benefits, this commodity should be treasured and protected even more. In the absence of trust, net negative impact is the only outcome. When private and political interests delay promised investments, and social enterprises seizes engagement from communities as a result, trust, community prospects and profits are destroyed.
4. For social enterprises to take a Net Positive Approach, they must position themselves to attract the brightest talent as articulated by the Forum for the Future (2016):
This talent must be able to understand complexity, community participation, innovation and responsiveness in addition to being skilled in subject fields such as project management, engineering, accounting, development, and impact measurement. A couple of social enterprises have taken the lead to engage with institutions of higher education to develop interdisciplinary curricular solutions to complex problems. Companies should invest in such visionary endeavours to develop a pipeline of professionals with the capabilities and competencies to drive Net Positive Impact in all sectors.
A Net Positive Approach to sustainability is certainly a noble concept and a good case has been made for its potential to deliver and transcend benefits within and beyond organisational boundaries. However, the particular case of the application of this concept in the social enterprise space reminds us that we need to carefully consider and reflect on our methodologies and praxis in pursuit of our collective ambition. No organisation is a silo and the common good is our collective responsibility.
Prof Pienaar is an A-SDA Wisdom Board Member
and a specialist in the field of social entrepreneurship.
