Social and green enterprises – how to create enabling frameworks to increase their contribution to sustainable development?

Over the last four years SEED has hosted a series of unique multi-stakeholder fora focussed on the Green Economy and Africa - the SEED Symposia - where each year innovative and promising start-up enterprises, that won a SEED Award for their remarkable efforts to address social and environmental challenges at the grassroots, are presented. This year was no exception and while strolling through the Symposium Expo – a display of over 50 social eco-enterprises – in Nairobi last month, I could not help but notice how the 2014 SEED Winners again confirmed that innovation, working in partnerships and inexhaustible commitment to solve local social and environmental challenges contributes significantly towards sustainable development.

The keynote speeches, panel discussions and solution sessions, which attracted over 320 participants from 30 countries, clearly denoted the growing opportunities in Africa for small social and green enterprises, especially for young people.

Beyond the single bottom line; how social eco-enterprise are a way forward to sustainable development.

It is no secret that small, micro and medium enterprises (SMMEs) play a critical role in developing countries by driving innovation, spurring economic growth, creating jobs, and facilitating the provision of goods and services, but above all they play a unique part in reaching the most vulnerable members of the population at the grassroots.

Yet in these times of enormous pressure on resources, global impacts of climate change and ever-increasing social disparities, SMMEs should work towards a combination of social, environmental and business targets, i.e the triple bottom line (TBL). Many grassroots enterprises already embrace environmental and social considerations in their business model; for instance 2014 SEED Winner, greenABLE, in South Africa, has found an innovative solution for recycling empty printer cartridges, as much as 305,690 per year which equals to approximately to 220 tonnes of waste diverted from landfills; reducing carbon emissions by 263 tonnes each year. The recycled plastic and metals are then sold, generating a steady flow of income and creating employment opportunities for previously unemployed people with disabilities. So far greenABLE has created 15 direct jobs lifted 28 disabled persons, primarily single mothers, out of unemployment by offering them education.

What may be even more relevant is that in order to meet their environmental and economic objectives, these SMMEs address more complex and deeper systemic problems, effectively becoming specialists in local sustainable resources management, institution building, and policy influencing. Fundación Huellas Verdes, in Colombia is a good example: the enterprise helps to protect communities at risk of landslides by planting tiva and at the same time provides a carbon offset mechanism for enterprises and institutions. Their activities not only reduce the risk of landslides that impact infrastructure, homes, and can lead to loss of life, but also generate a source of income by contracting the affected community and strengthen the capacity of local civil society organisations and government institutions to adapt to climate change. Furthermore through planting vetiver grass on degraded slopes they prevent soil erosion and contamination of water sources, and they make a positive contribution to drought management.

Creating enabling frameworks and multiplying good practice

These are only a few examples of what those burgeoning SMMEs can achieve on the ground but for real long term changes to happen, they need assistance in overcoming recurrent obstacles and scaling up their impact. Our research has shown that the following interventions have the potential to help:

• Assistance with technology transfer and developing skills at community level will enable the creation of quality products that are competitive in the marketplace.

• Support for research & development is critical for success and bridging the gaps between SMMEs, especially those led by women, to research and innovation bodies will facilitate innovation.

• Women tend to have more difficulties in gaining access to business development skills, to markets, to finance, and to research and technical experts. Recognition and removal of those gender-based barriers is imperative to achieve inclusive business.

• Nationally / internationally recognised reporting mechanisms suitable for these types of start-up enterprises to plan and monitor their TBL progress could help them significantly to convey progress and achievements, which is crucial in raising finance.

• New approaches to providing financial resources need to address the ‘missing middle’ by adjusting the requirements of traditional assets and long track records, which normally guarantees loans, and by accommodating and encouraging hybrid – not-for-profit/for-profit – enterprises.

• By adopting business approaches and skills, NGOs and CBOs can move into the social and environmental entrepreneurship space, bringing their development skills to the benefit of communities.

• Integrated tailored approaches where both financial and non-financial support, such capacity building and technical assistance, are combined and which are tailored to the particular stage of development of an enterprise, will foster more targeted scale up.

What is next?

While SMMEs provide a paradigm for development and for empowerment that reaches down to the grassroots, it is obviously unrealistic to expect them all to move towards a triple bottom line. A push in that direction would however have a significant impact although it will require action at national and international levels to create more enabling frameworks and incentives, as well as to provide assistance to those budding entrepreneurs.

As far as we are aware, there is still too little data available that quantifies the impact of TBL enterprises so a first step would be for international actors and policy makers to develop appropriate measures and methodologies to capture and report on this data and give those approaches the appropriate recognition in national and international economic development models.

Furthermore institutions and practices need to build in interventions at the national and international level to create supporting frameworks that tackle the persistent challenges these types of small enterprises face in their scale up.

Finally, building strong partnerships, particularly throughout value chains, between small businesses and larger companies, as well as fostering private-public dialogue, will be an important part of the solution.