Promoting socially and environmentally sustainable social enterprise

Frequently Asked Questions

What is socially and environmentally sustainable private enterprise?

Environmentally sustainable private enterprise is business activity undertaken for profit but where the investment is undertaken in ways that will ensure short, medium and long-term environmental sustainability. Socially responsible and sustainable private enterprise refers to investments undertaken for profit in ways that respect the rights of those in the communities in which they are located (e.g. land rights) and deal fairly with their workforce.

What is social enterprise?

A social enterprise is an organisation that applies commercial strategies to maximise improvements in human and environmental well-being, rather than maximising profits for external shareholders. Social enterprises can be structured as for-profit or non-profit, and may take the form of a not-for-profit-distribution private company, co-operative, mutual organisation or a charity.

Many commercial enterprises would consider themselves to have social objectives, but commitment to these objectives is motivated by the perception that such commitment will ultimately make the enterprise more financially valuable. Social enterprise differ in that they do not aim to offer a fully commercial return to their investors, except where they believe that doing so will ultimately further their capacity to realise their social and environmental goals.

There are numerous examples of successful social enterprise whose governance and leadership originates within local communities. Social enterprises typically are established to deliver social benefits such as better access to affordable low-cost housing or to healthcare in circumstances where market and/or government failures deny such access to the community. The success or otherwise of social enterprise models depends crucially on the governance, incentives and means of financing employed. EfD will identify, highlight and promote examples of best practice and support new ventures adopting best practice in our Focus Areas.

What is social impact investment?

Social impact investment is investment made by individuals who wish to see their capital advance social and environmental goals and achieve a pre-specified financial return. It generally focuses on the achievement of social and environmental goals at the expense of financial returns. In some cases there is a sub-commercial return on capital invested and in some cases there is no financial return with the benefits of the investment form the point of view of the investor being solely progressed by achieving the social and environmental goals.

Social impact investment in private enterprises is investment by individuals who wish to see a commercial return on capital invested but also to have the assurance that capital is invested in a socially and environmentally responsible and sustainable way.

What is inclusive economic growth?

Inclusive economic growth is growth of the economy in ways that the benefits are widely shared, generally resulting from investment in sectors where employment and employment income grows strongly, notably in such sectors as agriculture/agribusiness, construction, logistics, industry and value-adding processes and services.