I’ve been thinking lately about sustainable enterprises and realised I was getting muddled with “social” enterprises. What’s the difference?
Going to that font of all knowledge, the Internet, I found a definition of “sustainable enterprise” from the Financial Times Lexicon that said, “Sustainable business or sustainable enterprise are terms that are now being used by firms who are integrating sustainable business practices into their corporate and brand strategies whilst seeking to address both shareholder and stakeholder interests.” After noting that “Sustainability is rapidly emerging as a critical element of business strategy, driven by a convergence of factors — increasing regulation, changing customer expectations, competitor and technology advances, value chain partner requirements, brand equity protection, and global risk management”, Deloitte said that “The ‘Wholly Sustainable Enterprise’ (WSE) is defined as a company that generates continuously increasing value through application of sustainable practices in the entire base of activity — products and services, workforce, workplace, functions/processes, and management/governance.”
For “social enterprises”, I found that while there is no accepted international definition, the European Commission noted that “their key distinguishing characteristics are the social and societal purpose combined with an entrepreneurial spirit of the private sector.” They may take the form of a business, non-profit, co-operative or charity in order to become what Wikipedia defined as “an organization that applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders.”
It seems to me from these and the many other definitions I found, that “sustainable enterprise” refers to companies that are improving their environmental and social performance, while “social enterprises” are set up from the start with environmental and social outcomes in mind, which their activities are dedicated to achieving.
That is, sustainable enterprise reflects the changes – even radical transformations – that existing organisations want and need to make in order to meet internal and external expectations around people and the environment, while social enterprises are new organisations that are set up on that basis.
That’s why I like the European Commission’s definition – it highlights the creative, entrepreneurial attributes of the founders of new social enterprises. And many of them are set up by young people whose creative flair and business acumen allow them to think up the most wonderful – and often profitable – ideas.
That said, within a period of about six months, a friend of mine in her early 60s spawned about four viable ideas for social enterprises, all totally different and all meeting a real social and environmental need that no-one else seemed to be doing anything about. Clearly a field for the innovative thinkers of all generations!
I’m sure that in the real world, these terms (and others) are used interchangeably – and rather than sustainable or social enterprises being better than the other, we need both processes to gain more and more traction, with existing organisations adapting to the social and environmental needs of their communities of interest, and creation of new ones that challenge our ideas of what business is and what it’s for.
We could look at it as being approaches from along a spectrum meeting in the middle, where all organisations become sustainable social enterprises. We can also look at it as perhaps the two movements, both new and existing organisations, making their way up the same peak by scaling different flanks.
It’s the ascent of Mount Sustainability.
Here are the links to the sources listed above:
Deloitte on The ‘Wholly Sustainable Enterprise’
The Financial Times Lexicon definition of “sustainable enterprise”
The European Commission’s definition of “social enterprise”
Wikipedia’s definition of “social enterprise”
Interface’s description of its sustainability journey and the ascent of Mount Sustainability