Chain Reactions: growing business between social enterprise and corporates
By Nick Temple, Director of Business at Social Enterprise UK
21 December 2011
It is social enterprise conference season, and one of the subjects du jour seems to be “how social enterprises can better engage with corporates”. I’ve sat on two panels recently that have discussed this area in all its various component parts: CSR, staff engagement, mentoring, pro-bono support, brand and reputation, and so forth. But the piece of the jigsaw of that keeps coming up again and again is supply chains.
This rising interest reflects a convergence of a few trends.
Firstly, social enterprises’ primary need is customers. This might sound like an obvious point, but more customers means more social impact and more profit to reinvest in their social purpose. At a time when public sector (or quasi-public sector) agencies have less to spend, businesses and the private sector are a huge and relatively untapped market. Fightback Britain, Social Enterprise UK’s most recent state of social enterprise survey found that for 37% of social enterprises, their main source of income was from the general public, with 18% naming the public sector, and only 13% the private sector.
The second trend is the changing world of corporate (social) responsibility. In previous years, C(S)R often meant charitable work or sponsorship: digging gardens or choosing a charity of the year. Increasingly, though, forward-thinking companies are aligning their activity in this area with their core business. Organisations like IHG provide vocational and workplace training that benefits those involved and the business; Wates endeavours to put social enterprises throughout its supply chain; and PwC invests in a centre for social impact to help social enterprises now, but also because it sees that more integrated reporting is the future.
This area of measuring social value is the third trend: whether it is being incorporated into public procurement and commissioning, into greater integrated reporting, or even financial and accounting systems, the “direction of travel” (a phrase I hate!) is clear. So companies will need to demonstrate their social and environmental impact in practical and tangible ways: changing who and how they buy is one way to achieve that rapidly…and is simpler than changing their delivery methods or launching joint ventures with social enterprises (though that may also grow).
All of this adds up to burgeoning levels of interest, but there are key challenges ahead, many of which social enterprise shares with the SME sector (indeed, BiTC are currently undertaking an Enterprise Inquiry into how SMEs can better work with big corporates). The first challenge is one of scale: there are few social enterprises who can currently deliver at the scale necessary for big corporates: can partnerships and consortia address this, do we just wait for social enterprises to grow, or do the big companies need to break down contracts into more accessible chunks? (As well as accompanying problems of decent payment terms, finance, cash-flow etc…). Access is key more generally: awareness and ensuring opportunities are disseminated widely (you can’t win a contract you don’t know about). Big companies also shouldn’t underestimate the power they have to influence their own partners and suppliers to buy differently as well: more access, more opportunities.
But there are equal challenges on the social enterprise side: quality needs to be not only high, but consistently so; it needs to be a case of underpromise and overdeliver (or, at least, promise accurately and deliver on what you’ve said). And intermediary organisations such as ourselves need to work better in partnership (with each other) and as an expert broker and facilitator and match-maker. Alongside the inspirational case studies that prove the concept, it is cross-sectoral work that will help level the playing field and open up such opportunities. To create (supply) chains that connect and add to what each other has, rather than tie us in knots and restrict us to current practice.
This blog first appeared on the BIS website.Read more...
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