Why doing good is good business: an imperative for businesses to behave like social enterprises
The Philippines has seen fantastic growth of social enterprises that generate vital jobs and empower marginalized communities. From producers of sustainable products such as bamboo bicycles to digital apps that give farmers direct access to consumers. In a new study by the British Council and the Philippine Social Enterprise Network (PhilSen), there could be as many as 164,473 social enterprises operating in the country.
But are social enterprises simply the domain of community associations and non-governmental organizations? Social enterprises are organizations that apply business solutions to solve social problems. In doing so, they are necessarily companies that strive to maximize their profits while maximizing the benefits for society and the environment.
People-planet-profit has been the mantra of the Triple Bottom Line framework that helps create greater overall value for the business. However, its operationalization remains elusive. But no less than strategic management guru Michael Porter has realized the unintended ramification of his five-force industry analysis model that perpetuates extreme competition, crushing bargaining powers, and maximizing profits at the expense of stakeholders. Since then, he has urged companies to practice creating economic value while creating value for society and the environment. Businesses and entrepreneurs are generally agents of change, who can tap into their creativity and ingenuity to reinvent sustainable products, services and practices.
In response to clamors for greater transparency and accountability, the Securities and Exchange Commission in February 2019 released sustainability reporting guidelines for publicly traded companies (PLCs) – not only in reporting financial matters but also in regarding the economic, environmental and societal sustainability challenges and the resulting business response. But these duties should not be the sole responsibility of DFC. A parallel or equivalent set of metrics can be adapted to the context of micro, small and medium enterprises and non-PLCs.
Another bright light was the articulation of the Pact for Shared Prosperity in November 2020 by 26 of the country’s most influential business groups. Commitment is a commitment to promote inclusive and fair business practices, which encompass a variety of stakeholder-centric businesses. The call to action came as closures and resulting trade disruptions due to the pandemic pushed more Filipinos into poverty and desperation. That the relentless, unfair and opportunistic business practices thus far have contributed to the widening of the socio-economic divide – which has only exposed the country’s vulnerability in dealing with the adverse effects of economic crises.
With more of these welcome initiatives, business owners can realize that making a profit and doing good for the company are not mutually exclusive goals. As businesses have the scale and the means to create greater impacts, this is the rationale it needs to blur the lines between traditional businesses and social enterprises.
Geraldine “Dina” Go-Bernardo is Senior Lecturer in Strategic Management and Sports Management at De La Salle University Ramon Del V. Rosario College of Business. She is also a research associate of the Business for Human Development Network (BHDN). The opinions expressed above are those of the author and do not necessarily reflect the official position of De La Salle University and its professors and administrators.