Ethically driven businesses are becoming increasingly popular and profitable but they can face threats for shaking up the existing order, entrepreneurs said on Social Enterprise Day.
When Meghan Markle wore a pair of “slave-free” jeans on a royal tour of Australia last month, she sparked a sales stampede and shone a spotlight on the growing number of companies aiming to meet public demand for ethical products.
“Right now is the perfect time to have this kind of business,” said James Bartle, founder of Australia-based Outland Denim, which made the $200 (150 pound) jeans. “There is awareness and people are prepared to spend on these kinds of products.”
Social Enterprise Day
Social Enterprise Day, which celebrates firms seeking to make profit while doing good, is being marked in 23 countries, including Australia, Nigeria, Romania and the Philippines, led by Social Enterprise UK (SEUK), which represents the sector.
Outland Denim is one such company, employing dozens of survivors of human trafficking and other vulnerable women in Cambodia to make its jeans, which all contain a written thank-you message from the seamstress on an internal pocket.
Bartle said he wanted to create a sustainable model that gives people power to change their future through employment.
More companies are striving to clean up their supply chains and stamp their goods as environmentally friendly and ethical, with women and millennials, people born between 1982 and 2000, driving the shift to products that seek to improve the world.
“For-profits create the mess, and then the not-for-profits clean it up,” said Andrew O’Brien, director of external affairs at SEUK, which estimates that 2 million British workers are employed by a social enterprise. “We are an existential threat to that system, by coming through the middle and forcing businesses to change the way they do business.”
Britain has the world’s largest social enterprise sector, according to the U.K. government. About 100,000 firms contribute 60 billion pounds ($76 billion) to the world’s fifth largest economy, SEUK says.
Elsewhere in the world, it can be a risky business.
“I get threats,” said Farhad Wajdi who runs Ebtakar Inspiring Entrepreneurs of Afghanistan, which helps women enter the workforce by training and providing seed money for them to operate food carts in the war-torn country. “I can’t go to the provinces.”
His work has met resistance in parts of Afghanistan, a conservative society where women rarely work outside the home.
“A social enterprise can lead to sustainable change in those communities,” Wajdi said on the sidelines of the Trust Conference in London. “It can propagate gender equality and create friction for social change at a grassroots level.”
Niche? Window dressing?
There is, however, a danger that social enterprise will remain a niche form of business or become window-dressing for firms that just want to improve their public image.
“I don’t want social enterprise to become the next (corporate social responsibility), another (public relations) move,” said Melissa Kim, the founder of Costa Rican-based Uplift Worldwide, which supports social enterprises.
“To me this is just good business, and good sustainable business is not just about the environment and human rights ... if you care about your relationships internally and externally you will stay in business.”