'Social enterprises can’t make a real impact unless they’re profitable'

As the Netherlands' very first professor of social entrepreneurship, Harry Hummels holds a chair, made possible by ABN AMRO. What does he consider to be the main challenges facing social entrepreneurs? And what’s the key to successful social entrepreneurship? 'The biggest challenge is business management.'

What is social entrepreneurship?

'By 2050, the Earth will be home to between 9.5 and 10 billion people. That fact alone will inevitably pose a number of important social challenges involving environmental protection, combating poverty and strengthening human rights. Back in the 1990s, entrepreneurs like Anita Roddick (who launched The Body Shop) and Ben Cohen and Jerry Greenfield (of Ben & Jerry’s) were already pondering these issues, and they decided to contribute to society through their profitable companies. Now more and more entrepreneurs are joining their ranks, partly as a result of the Sustainable Development Goals, an international rescue plan for the Earth.'

When is someone considered to be a social entrepreneur?

'Social entrepreneurs work to make the world a better place. Essentially, you’re considered to be a social entrepreneur if you use your entrepreneurial skills to pursue a social objective or challenge. One example is Plastic Whale, which fishes plastic waste out of Amsterdam’s canals to make "wasteboards". Another is Blixem, a lunch cafe in the town of Nijmegen, which will be celebrating its twentieth anniversary next year as the oldest social enterprise in the Netherlands helping people with difficulties entering the labour market.'

What do you consider to be the main challenges facing social entrepreneurs?

'The biggest challenge is business management. It’s not enough simply to have social value. At the end of the day, social enterprises can’t make a real, long-term impact unless they’re profitable. For many social entrepreneurs, there’s a lot of tension between the social and business side. A recent example is an entrepreneur who opened a packaging-free grocery store. He ended up going bankrupt because his business management skills let him down. He had been too optimistic in all his projections – from potential customers to costs. So I think it’s terrific that Blixem, an initiative piloted by a health and social care provider, has been around for nearly twenty years.'

'If an enterprise is to be successful, it needs leadership, as well as vision, community involvement, marketing, product development and sales. It’s only if all these are aligned that you can make a long-term contribution. That’s one reason certain social entrepreneurs look to collaborate with multinationals. Take Muhammad Yunus, who won the Nobel Peace Prize, for instance. He teamed up with Danone to create a social enterprise that manufactures fortified foods for malnourished children. Danone adds micronutrients to the food. Although it’s a commercial enterprise, all the profits are reinvested in similar businesses.'

What can a bank do for these entrepreneurs?

'A lot. Without financial backers, it’s nearly impossible for social enterprises to exist at all. Banks can supply them with the start-up capital they need. One example is the ABN AMRO Social Impact Fund. Financial backers are often experts on how to run a healthy business. Impact investing – investments made in companies aiming to make a measurable, positive contribution to society or the environment – is becoming more and more popular. Over €100 billion has now been invested worldwide in microfinance, renewable energy, healthcare, social housing and sustainable food.'

Social entrepreneurship chair

Harry Hummels was appointed the Netherlands’ first professor of social entrepreneurship in May and holds a chair co-funded by ABN AMRO at the Utrecht University School of Economics. Hummels is initiating a research project on international innovation in the value chain, and will initially be looking at the value chain for cocoa. He is also Professor of Ethics, Organisations and Society at Maastricht University, where his work includes reflecting on value-based trading in business, the financial sector and society.