What is social entrepreneurship?
Social entrepreneurship is a business model used by companies to help solve some of the world’s greatest problems.
Where the traditional model has largely focused on the generation of profit, social entrepreneurs focus on bringing about positive social and environmental change, while also generating a profit.
“Social entrepreneurship is really about developing business opportunities that have positive impact. It’s using your business as a force for good, looking at the company’s role in this world and the ways the business can influence positive change,” says Michelle Reid, Advisor, Corporate Sustainability and B Corp, BDC.
Social entrepreneurs may target social issues, for example:
- reducing barriers to employment for disenfranchised groups/individuals
- the elimination of homelessness in the community
- the minimization of the company’s or industry’s impact on the environment
- improved health outcomes for members of the community
These entrepreneurs weave this social and environmental focus into the core of their business, and as a result track the social value and environmental impact generated, alongside the profit created by the company.
How to get started with social entrepreneurship
For entrepreneurs looking to test their interest in using, or moving to, a social entrepreneurship model, Reid suggests completing the B Corp Impact Assessment. Completing the assessment will provide you with a baseline which can help you quantify your impact in relation to your goals.
“It looks at a lot of different areas such as governance, workers, community, customers, and the environment, and within that there are impact business models, so if an organization is curious about how to initiate this—it’s definitely a place to start.”
Beyond aligning the work you do in your business with your values, social entrepreneurship can also be a competitive advantage. This type of business model can often help you stay ahead of the curve in terms of government regulations, and in attracting and retaining employees and customers.
“One of the biggest benefits that we’re seeing is employees wanting to work for an organization that has a purpose behind it,” says Reid.
“People are really flocking to those companies and really want to work for, support, and stay with these companies. It’s something that is a huge benefit and a competitive advantage.”
B Corp and social entrepreneurship
Many social entrepreneurs work to become B Corp certified companies.
B Corps are businesses that use a social entrepreneurship model. Companies that earn the B Corp certification (the “B” stands for beneficial) have demonstrated they meet exacting standards of accountability, transparency and social, workplace and environmental responsibility.
B Lab, a non-profit corporation, grants the certification. BDC became the first B Corp certified Canadian financial institution back in 2014.
The growth of social entrepreneurship
Tracking the number of companies using a social entrepreneurship model can be challenging because the model is often integrated into companies’ existing business models.
Tracking the growth of B Corp certified companies, however, is much easier. The number of B Corps has seen fairly dramatic growth in recent years. There are currently 4,600 B Corps worldwide, up from just 500 ten years ago. Over the past two years another 6,000 companies have begun the process of applying for B Corp certification.
Canada is home to 330 B Corp companies, with another 100 currently in the process of accessing B Corp certification.
“It’s exciting because it’s not such a novel idea anymore. Companies are becoming aware that this is where business is going. It’s something many more organizations are now looking at,” explains Reid.
Reid believes the social entrepreneurship model will play an increasingly large role in businesses of the future.
“What’s really exciting is that there are so many business owners and leaders saying, ‘this is what I want to do, this is what I believe.’ The social impact and sustainability world used to be kind of a lonely place. In the past couple of years, it has definitely seen an upsurgence in support, and that’s really exciting,” she says.
The role of social entrepreneurship in sustainable development
The overall goal of social entrepreneurship is to facilitate sustainable development.
Whether the company’s focus is on improving access to employment of disenfranchised individuals or reducing their carbon footprint, the focus on improved social outcomes targets sustainable development for communities.
“A lot of companies are already doing this and are actually working toward certain sustainable development goals without even realizing it,” says Reid
“There are companies that are making decisions to reduce their environmental impact and others working along the lines of poverty reduction because they feel it’s the right thing to do.”
What’s the difference between social entrepreneurs and other entrepreneurs?
Social entrepreneurs differ from conventional entrepreneurs in the goals they hope to achieve. While traditional entrepreneurs typically focus on the creation of commercial value or profits, social entrepreneurs work to create social value—where society or the community benefits.
However, with the rise of environmental, social and governance (ESG) criteria in finance and management, businesses of all kinds are increasingly being asked to consider their impact on society and the environment. As such, the difference between social entrepreneurs and other entrepreneurs has been diminishing.
What’s the difference between social entrepreneurs and non-profits?
Social entrepreneurs and non-profits can have similar goals, but they differ in how they are structured and funded. Social entrepreneurs are business owners who can make profits, share dividends and attract investors. Non-profits, as the name implies, cannot profit from their activities and as such are often funded through donations, grants or government funding.
Take the next step
Try the entrepreneur self-assessment tool to see if entrepreneurship could be right for you, or complete the B Corp Impact Assessment to benchmark your company’s social and environmental impact. You may also be interested in hearing social entrepreneurs talk about their journey in our B Corp Effect podcast.