Going beyond the romance of social enterprise

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Social entrepreneurship

Working for a better world, and making a profit into the bargain: it almost sounds too good to be true. Yet more and more businesses are using a commercial business model to achieve social or sustainability goals. Without the need for subsidies or donations, they make a profit and an impact. And sometimes highly successfully, with examples such as Tony’s Chocolonely, WAAR and SCOPEinsight. Social entrepreneurs gathered at the Social Entrepreneurship Festival in Utrecht this month to share their knowledge and experiences. Their potential is great, but more is needed in order to make the difference.

We believe in the power of social enterprise, and also in the need to create the right conditions for it in the market. Eric Buckens Eric Buckens Director ABN AMRO Social Impact Fund

From hype to structural development

Investors are becoming benefactors; consultants are providing advice for a good cause. The city of Amsterdam is developing an ecosystem, Utrecht a social enterprise factory. New and traditional market operators are jumping enthusiastically on to the social enterprise bandwagon. The current commotion around this theme has lent the term ‘social enterprise’ something of the character of a hype. But the idea is irresistible: improving the world by doing business. That’s why the movement is growing so fast.

Is social enterprise too good to be true? No, but it is important to be aware that we are not there yet. For example, we still do not know what is needed for a successful social business model. The ecosystem is far from mature, and we still don’t have a clear definition of the term ‘social’: what is and is not included in it, and how much profit is it acceptable for a social entrepreneur to make?

First chair of study established

To avoid social enterprise ultimately becoming bogged down in enthusiastic inspiration sessions, summits, roundtables and workshops, we need to look beyond the romance of the moment. The appointment of Harry Hummels as Professor of Social Entrepreneurship at Utrecht University is an important step in the right direction. The chair is part of the Faculty of Law, Economics and Governance and will be devoted to research and teaching in the field of social entrepreneurship. ABN AMRO has helped establish this chair, but as a substantive partner also provides interns, research topics and guest speakers. The theme for the coming period is sustainability in agricultural commodity chains, such as cocoa. It is therefore no coincidence that Tony’s Chocolonely is involved in the research; the organisation has for many years worked to achieve a slave-free cocoa chain.

Change-makers make the difference

The ABN AMRO Social Impact Fund works in partnership with Utrecht University. We believe in the power of social enterprise, and in the need to create the right conditions for it in the market. That’s why the Social Impact Fund is investing in businesses that add structure. Real change-makers, in other words, which not only create sustainable products themselves, but also set in motion change. The fact that more and more players are entering the market is of course a good thing. But we do need to press on with finding structural solutions, otherwise social entrepreneurship will get no further than the ‘buzz’. And that would be a pity, because the potential is enormous.

Impact with assessments and department stores

A good example is WAAR, the Dutch retail chain which has developed within a short space of time to one of the most important sales channels for social, sustainable and fair trade products. WAAR now has 21 outlets in the Netherlands, but that is just the surface: behind the shops is a global network of other social enterprises that use WAAR as a platform for their products. The department store therefore brings much-needed structure to the market.

SCOPEinsight does the same thing at a different level. This Utrecht company devised an assessment method for use on farms in developing countries. It is a multifaceted tool: the results can help farmers to improve their business, provide NGOs and governments with reliable information as a basis for policy and enable financiers to assess loan applications more accurately. This means that SCOPEinsight creates opportunities that didn’t exist in the past: a good reason for the Social Impact Fund to invest in this business.

Consolidation at the Social Entrepreneurship Festival

The Social Entrepreneurship Festival in Utrecht marked the start of Harry Hummels’ tenure as a professor. It was also a milestone in the research and education in relation to social entrepreneurship that Utrecht University has developed over the recent period.

During the week-long Festival, theory and practice came together, often encouraged by host and Nobel prizewinner Muhammad Yunus from Grameen: the organisation which introduced the concept of micro-finance. What you might call a structural addition to the market. And that is precisely what we need. Let us invest in research, education and structural solutions, so that the social market can really grow!

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