An article by Dr. Stavroula Kalogeras, MBA Programme Director at Edinburgh Business School, Heriot-Watt University Dubai

There is a growing trend towards businesses that do good, and social entrepreneurs fit that bill. Social entrepreneurs establish new businesses that contribute positively to people’s well-being and society’s greater good. Social entrepreneurs are guided by the same principles startup founders are concerned with and focus on generating social change or impact. These organisations do not retrospectively embed social impact; they are part of their core business model and are driven by how many lives they can impact and how much change they can make. Social impact can bring significant and positive changes to address a social issue or challenge. Social impact entrepreneurs deal with the same problems and concerns that all entrepreneurs deal with, which are about profit and impact; therefore, the venture’s business model and financial viability are critical appeals for investors.

Similarly, there is a growing trend in impact investing. The impact investment market provides capital to sectors to address the world’s most pressing issues, such as renewable energy, sustainable agriculture, eradicating poverty, affordable healthcare and education. High-growth sectors are attracting entrepreneurs who wish to contribute to social good. Brands that prioritise purpose contribute to improving communities, educating consumers, and driving substantial global change for the betterment of societies worldwide.

Organisations used to rely on philanthropic donations to help solve social and environmental issues. Today, impact investing offers opportunities for investors to advance social solutions while making a profit. Impact investors put their capital to work in ventures that align with their values. The appeal for investors is to make a profit while making a substantial difference. These investors approach decision-making considering several factors, such as impact objectives, risks, and financial return. 

Impact investing is leading the way, and shown below are some successful impact-driven ventures and support systems: 

UpEffect: A crowdfunding platform inspired by the disparities in social wealth distribution dedicated to serving businesses and building a kinder society.

Sitti: Lifestyle brand committed to the self-reliance of refugee and displaced communities through long-term employment opportunities and skill development training, empowered by an inclusive global economy.

Bill Drayton: Drayton pioneered the field of social entrepreneurship and founded Ashoka. The company “envisions a world in which everyone is a changemaker.” And selects promising “Ashoka Fellows” around the world, providing them with the knowledge, finances, and logistical means to effect change.

According to the World Economic Forum, “The Global Impact Investing Network (GIIN) estimates that the size of the worldwide impact investing market has now surpassed the key milestone of $1 trillion under management since 2022 and is expected to keep growing at a double-digit compound annual growth rate until 2030.”

When considering setting up a social enterprise, the following basics should be taken into consideration: (1) identify a social problem, (2) conduct research, (3) brainstorm innovative solutions, (4) consider feasibility and scalability, (5) seek feedback, (6) develop the business plan, (7) seek impact investors, (8) launch the venture (9) measure impact. Impact measurement is critical in ensuring social entrepreneurship and impact investing delivers. Measurement involves assessing the impact on society and the environment. Tangible evidence such as strengthened communities, improved lives, and fed and educated people is needed. Measurement makes organisations accountable and helps them refine their strategies to maximise their positive influence.

Millennials and Gen Z are the main reasons for the rising demand for socially responsible corporations and purpose-driven brands. Born in the digital age, these generations are seen to be more socially aware and environmentally responsible. Their commitment to social awareness has made entrepreneurship and corporate social responsibility a priority for businesses of all sizes. Understanding these generations is imperative when considering how businesses and brands can co-exist, connect, and communicate with consumers. As the new generations demand more socially responsible brands, businesses respond with more socially responsible products and services. This is a significant shift in consumer behaviour that companies need to understand and adapt to. 

According to a study by McKinsey regarding Gen Z, companies should be attuned to three implications for this generation: consumption as access rather than possession, consumption as an expression of individual identity, and consumption as a matter of ethical concern. Coupled with technological advances, this generational shift is transforming the consumer landscape in a way that cuts across all socioeconomic brackets and extends beyond Gen Z, permeating the whole demographic pyramid. It seems that Gen Z consumers are willing to spend more on products and services from companies that are committed to social and environmental responsibility. 

The landscape for social entrepreneurs and impact investors is evolving to prioritise impact and good. A company’s values and actions must permeate the entire stakeholder system. By making social responsibility a priority, entrepreneurs and investors can demonstrate that they are committed to making a positive impact on society. It is no longer enough to provide quality products and services; companies need to demonstrate their commitment to social responsibility to attract a new generation of conscious consumers.