The emergence of more socially responsible, more conscious businesses around the world is a welcome trend. Whether you prefer to call them social enterprises, social businesses, social impact enterprises or another similar term, the increasing public interest and investment funding devoted to this sector provides a warm glow to the future of social enterprises as a valid business model.
And with almost 1,000 businesses around the globe now certified as a B Corporation, there are shining lights on the horizon toward a more sustainable, ethical and socially equitable business sector.
Yet, the wider business community still lumbers on using conventional business models, operating systems and decision structures based on a very limited appreciation of the massive environmental and social pressures facing our world. While many business leaders may give glancing looks at the flashing red lights and warning signs, it’s as if much of the corporate world is driving through the night with fogged up windscreens and no lights on.
Social enterprises, B Corporations and impact investing are like green shoots in a huge desolate wilderness that is slowing drying up and losing its ability to support its natural fauna and flora, including species like us. We need urgent, larger scale change to address the crisis we face as a global community. We can’t rely solely on small, conscious businesses to make the wholesale transformation we require. We need the broader corporate sector to not only wake up, but to acknowledge and embrace its critical role as a solutions provider and “creator” of a truly sustainable economy.
Businesses create products to meet consumer demands. And many businesses even develop products that are marketed to create an artificial demand. I’ll park the topic of rampant, irresponsible consumerism for another blog post! The point, though, is that for a business to survive and be profitable it needs the support and loyalty of a certain number of customers. For a business to invest in truly sustainable products and processes, it needs confidence the market will embrace them. Yes, a business could achieve this on a local – even regional or national level – on the assumption that consumer demand will be there when they launch. For the global change we need, business leaders may well argue the risk is too high. And so we get token action or no action at all.
So why hasn’t consumer demand changed the way the corporate sector operates? Despite our best ethical intentions, many consumers fail to follow through with their desire for ethical, sustainable or “green” products when it comes to making an actual purchase. Indeed, the Stanford Social Innovation Review found that “consumers want to act green, but they expect businesses to lead the way”.
As a result, business continues as usual.
And there’s the conundrum. Who should lead first?
There are many competitive advantages to adopting more sustainable business practices, from reducing pollution, waste and energy, to lessening their reputational and legal risks from environmentally “unfriendly” products, to increasing revenue and margins through premium pricing strategies. It would appear a no-brainer for business to invest in sustainable business systems given the benefits to reap. But many of these investments can give rise to short-term uncompetitive positions for companies. Thus, significant change is rarely achieved and investments are done at the margins.
To achieve the transformation throughout the world that we need to address our urgent social and environmental pressures requires more than a transformation of the business sector. We also need a transformation of our consumer sector. We need enlightened consumerism to grow hand-in-glove with an enlightened business community.
The signs are promising. There is rising global consciousness of the human impacts on our Earth and its ability to sustain us and our future generations, including the future of our natural world and its complex ecosystems. While we need these green shots emerging from the business and consumer sectors to flourish and bloom into wonderful new sustainable creations, we need the rise in global consciousness to permeate (quickly) through the wider business and consumer markets.
And we need conscious awakening to translate into action. We need people to change the way they buy. We need them to support ethical, sustainable, ‘green’ businesses, and we need them to consciously decide not to buy from companies that fail to change. At the same time, we need business to redesign their processes, products and systems to a more enlighten capitalism mode of operating. Business has the opportunity to reinvent itself as a changemaker for a more sustainable world.
The question is whether consumers and business will act soon enough.