University of Makeni – Concepts of Sustainable Enterprise
Sustainable business, green business, or a sustainable enterprise is a business that has minimal negative impact on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line.
Sustainable businesses have progressive environmental and human rights policies. To be considered a sustainable enterprise a business has to reflect the following:
It incorporates principles of sustainability into each of its business decisions.
It supplies environmentally friendly products or services that replaces demand for non-green products and/or services.
It is greener than traditional competition.
It has made an enduring commitment to environmental principles in its business operations.
Put simply, it’s a business that “meets the needs of the present world without compromising the ability of the future generations to meet their own needs.’’
Though no two enterprises are the same, the majority of such businesses practice strategies that include: Innovation, Collaboration, Process Improvement and Sustainability reporting.
- Innovation & Technology
This introverted method of sustainable corporate practices focuses on a company's ability to change its products and services towards less waste production and sustainable best practices.
The formation of networks with similar or partner companies facilitates knowledge sharing and propels innovation.
- Process Improvement
Continuous process surveying and improvement is essential to reduction in waste. Employee awareness of company-wide sustainability plan further aids the integration of new and improved processes.
- Sustainability Reporting
Periodic reporting of company performance in relation to goals.
Triple top-line value production
"The TTL Establishes three simultaneous requirements of sustainable business activities - financial benefits for the company, natural world betterment, and social advantages for employees and members of the local community—with each of these three components recognised as equal in status." Whereas many businesses use the triple bottom line, "triple top line" stresses the importance of initial design and is a term attributable to McDonough and Braungart in their book Cradle to Cradle.
2. Nature-based knowledge and technology
"This biomimicry-based principle involves the deliberate emulation of natural-world genius in terms of growing our food, harnessing our energy, constructing things, conducting business healing ourselves, processing information and designing our communities". We have touched on this before and a visit to
3. Products of service to products of consumption
"Products of service are durable goods routinely leased by the customer that are made of technical materials and are returned to the manufacturer and re-processed into a new generation of products when they are worn out. So, the resource are mostly re-used, requiring less replacement resources.
These products are mostly non-toxic to human and environmental health but toxic materials that are used will be kept within a closed loop type system and not be able to escape into the environment)
Products of consumption are shorter lived items made only of biodegradable materials. They are broken down by the detritus organisms after the products lose their usefulness.
These are also non-hazardous to human or environmental health. This principal requires that we manufacture only these two types of products and necessitates the gradual but continual reductions of products of service and their replacement with products of consumption as technological advancements allow."
4. Solar, wind, geothermal and ocean energy.
"This principle advocates employing only sustainable energy technology—solar, wind, and ocean and geothermal—that can meet our energy needs indefinitely without negative effects for life on earth." Other authors, such as Paul Hawken, have referred to this as utilizing current solar income.
5. Local-based organisations and economies
"This ingredient includes durable, beautiful and healthy communities with locally owned and operated businesses and locally managed non-profit organizations, along with regional corporations and shareholders working together in a dense web of partnerships and collaborations."
6. Continuous improvement process
"Operational processes inside successful organisations include provisions for constant advancements and upgrade as the company does its business. The continuous process of monitoring, analyzing, redesigning and implementing is used to intensify TTL value production as conditions change and new opportunities emerge.
Becoming a Sustainable Entrepreneur
The "first mover" company in any particular product category can often select the environmental attributes it wants to offer and mold consumer expectations so that future competitors must play by the rules established. If your company is not the "first mover" then market research is essential to understand the competition that exists in the marketplace.
Companies can assume the mantle of being sustainability leaders without being completely sustainable. They need only be sincere and sustainable in at least a few substantial ways. Companies can retain market leadership by introducing incremental improvements over time, a strategy sometimes called "greening as we go".
Companies can often create an effective presence in environmental and social markets by putting a number of improvements into a new (or refurbished) product or product line. As improvements are perfected and their consumer appeal tested, the "spearhead" line's sustainability attributes can be cost-effectively incorporated into the company's other product lines. Consumers interested in sustainable products love this approach.
Barriers to competitors' market entry can be erected in the course of establishing a sustainable product. This leadership position can be protected for months or years. Barriers prevent competitor imitation and allow the leader to reap above average returns. Barriers may include patents, distribution rights, and demanding product standards.
Many companies find that an environmentally-improved product, positioned for green-conscious youth, can renew an aging brand. This is important, especially for companies that sell primarily to the aging baby boomer generation. The green improvements of a youth line can also be readily applied to adult product lines.
Manufacturers of products traditionally sold to men can increase sales by marketing green improvements to women. Greener female consumers are increasingly buying items like automobiles and paints and actually purchase the bulk of men's cologne and apparel.
Green market success can be enhanced by tying a product's environmental attributes and message to the life style affinities of target consumers. Millions of hikers, for example, care about protecting wild lands; boaters are concerned about clean lakes and streams; mothers worry about their children's health. Thus, a water sport product manufactured in a way that reduces water pollution carries an innate appeal to many boaters, while green household cleaners that substitute safe ingredients for dangerous chemicals tend to appeal to mothers.
The sustainable enterprise respects the environment by minimizing energy and materials use and by reducing waste generation. These practices reduce the firm's operating costs and liability exposure.
Sustainable entrepreneurs should emphasize these advantages in their business plans by:
- Highlighting the cost reductions, in budgets and cash flow, that are achieved by employing responsible environmental practices;
- Noting practices that will insulate the company against future cost increases (e.g., waste disposal levies or oil prices);
- Explaining that liability risks are reduced by responsible environmental practices.
The nub of the message is that sustainable entrepreneurs can place themselves in a stronger position to raise capital by ensuring that their business plans highlight and incorporate the emerging markets from which the business will profit, the technological solutions the company offers to environmental problems, and the sustainable manner in which the company operates.
The environmental problems that confront the world, from climate change to toxic waste to ozone depletion, are sometimes directly addressed by technological solutions offered by sustainable enterprises. This fact must be communicated to investors. Capital markets are generally not well informed about the scale of environmental degradation and such drivers as global environmental agreements. The economic benefits of technologies such as wind turbines, which are rapidly becoming more competitive, are not often well known to investors.
Sustainable entrepreneurs should:
- Clearly link their technologies and the market potential for their products or services to existing environmental problems and note these relationships in their business plans.
- Quantify the environmental and cost savings their technologies can offer customers;
- Identify the ways their technologies reduce environmental liability and create a cleaner environmental profile for their customers.
The sustainable entrepreneur will find technology a powerful card to play when seeking investment. It has two potentially strong suits:
- When the technology's key selling feature is cost savings, the investor readily understands and appreciates the potential demand and return;
- When there is an opportunity to finance "first on the street" technology, the investor may appreciate getting first dibs.
Social entrepreneurship is an alternative to mainstream capitalism that offers solutions to problems that governments and profit driven businesses have failed to address. Social entrepreneurs fulfill unmet social needs by giving greater importance to their social mission than profit-maximization. According to Nagler (2009), social entrepreneurship creates both social and economic values. These values include job/employment creation, innovation (new goods and services), social capital and equity promotion. Social entrepreneurship is one aspect of the broader Community Economic Development movement. Growing Opportunity, a joint publication produced by SustainAbility and The Skoll Foundation, provides a good assessment of the current state of social entrepreneurship including the opportunities and challenges associated with this field. The following Venn Diagram illustrates the relationship between social entrepreneurship and the private/public/voluntary sectors.
(Source: Venture Pragmatist, 2010)
What is a Social Entrepreneur?
A social entrepreneur is someone who uses entrepreneurial principles to create social change. Through business, social entrepreneurs aim to address the world's most pressing challenges such as poverty, environmental degradation and lack of access to basic resources (health, education, water, housing, etc.). Ashoka (2011) defines social entrepreneurs as “individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps.”
Notable Social Entrepreneurs from Around the Globe
Mark Plotkin and Liliana Madrigal – The Amazon Conservation Team
2008 Skoll social entrepreneurs Mark Plotkin and Liliana Madrigal created ACT in 1996 to preserve the cultures of indigenous peoples of the Amazon and empower them to protect the rainforest. ACT works “in partnership with indigenous people to conserve biodiversity, improve human health and fortify traditional culture in greater Amazonia" (The Amazon Conservation Team, 2009). Key accomplishments include completing ethnographic and land-use mapping for over 60 million acres of Amazonian rainforest lands, training over 125 indigenous persons as park guards and facilitating the national registration of 10 indigenous associations in three Amazonian countries. Collectively, these activities and others have begun to pave the way for better protection of forest lands.
Sam Goldman and Ned Tozun – d.light
Sam Goldman and Ned Tozun co-founded d.light – a hybrid organization focused on providing the world’s poor with eco-friendly, cheap and safe lighting. The story of d.light begins in Benin where Goldman was working with the Peace Corps. While there his neighbour’s son was badly burned by a kerosene fire inspiring Goldman to start d.light. The organizations mission is “to enable households without reliable electricity to attain the same quality of life as those with electricity.” D.light has developed three main products; the S250 a solar lantern and mobile phone charger; Solata S380 a solar task lamp; and the S10 - the world’s most affordable solar lantern. The lights employ the world’s best product design principles and cutting edge solar and LED technology. They are high quality, durable and dependable and therefore suitable for all parts of the world. D.light has sold its solar lights to households off the grid in over 40 countries around the world. Customers who replace a kerosene lamp with a d.light lamp save money by eliminating the need for kerosene, create a better study environment for their children, reduce carbon emissions and have a healthier and safer home. More than 2 million people have already benefited from the lights resulting in 60 million USD in savings for families who no longer rely on kerosene and 65 million USD in increased productivity (Acumen Fund, 2011). By the end of 2015 d.light aims to improve the quality of life of 50 million people.
Blake Mycoskie – TOMS Shoes
Blake Mycoskie founded TOMS Shoes in 2006 after a trip to Argentina where he witnessed the hardships faced by children in poor villages without shoes. The business was built on a simple premise - for every pair of shoes sold, TOMS donates a matching pair of shoes to a child in need. The shoes are manufactured in Argentina, China and Ethiopia and have been donated to children in 23 different countries around the world. The shoe design was inspired by Argentina’s alpargata shoes. By providing shoes to some of the world's most needy people TOMS hopes to improve health (by protecting children from infection and soil-based diseases) and give more children the opportunity to go to school (in many countries shoes are required to attend). To date, over one million pairs of shoes have been donated. In 2007, TOMS Shoes received the People's Design Award and in 2010 the company was named one of the top ten most innovative retail companies by FastCompany.
Ambrosius Ruwindrijarto & Silverius Oscar – Telapak
Ambrosius and Silverius founded Telapak in 1997 to raise awareness of illegal logging in Indonesia’s national parks. Since then, Telpak has led efforts to shift toward community-based logging and has become the first organization in Southeast Asia to receive group forestry certification for logging cooperatives. The organization sustains itself through its cooperatives and community enterprises in printing, mass media, organic agriculture and sustainable fisheries and forestry. Telepak is now engaged with eight communities that collectively have the potential to certify more than 200,000 ha of forest land. The organization is not opposed to development, but instead promotes sustainable resource extraction. In 2010, Ambrosius and Silverius received the Skoll Foundations Social Entrepreneurship Award.
Jeroo Billimoria – Aflatoun
Aflatoun provides children aged 6-18 with social and financial education in 76 countries. Through education Aflatoun aims to empower children to make positive changes in their lives - breaking the cycle of poverty. Aflatoun delivers its programs both in and outside of schools and uses an activity-based curriculum. Activities include story-telling, song and dance, games, savings clubs and financial and community improvement enterprises. Aflatoun children save either individually or as a group in collaboration with local institutions and then use these savings to invest in community projects, school outings and school materials. At the end of 2009, Aflatoun had over 250,000 children actively saving and supported 976 social enterprises around the globe. Jeroo Billimoria has been named a fellow by Ashoka and by Schwab Foundation for Social Entrepreneurship. She has also received the Social Entrepreneurship Award from the Skoll Foundation.
Awards, Prizes, Assistance and Support for Social Entrepreneurs
Increasingly, international development organizations and other institutions are promoting and supporting social entrepreneurship. These organizations recognize the value of using entrepreneurial principles to address some of the world’s most pressing environmental and social issues. Here is a list of some of the organizations currently offering support:
- Schwab Foundation for Social Entrepreneurship – Selects social entrepreneurs to be a part of their community that fosters peer-to-peer information exchange
- Ashoka – Selects successful social entrepreneurs with innovative ideas to be fellows. Fellows received a living stipend for an average of three years so they can fully focus on building their organizations.
- Draper-Richards Foundation – Funding and mentorship opportunities for social entrepreneurs starting a non-profit organization.
- Echoing Green – Issues 20 cash prizes/year in seed funding to social entrepreneurs
- European Awards for the Environment (EBAE) – An excellence award for pioneers in green innovation.
- The Social Innovation Awards – An opportunity for companies to highlight their social and environmental initiatives
- New Ventures - Provides support to sustainable enterprises in emerging economies (Brazil, China, Mexico, Indonesia and India)
- Skoll Award for Social Entrepreneurship – A financial award for social entrepreneurs who have been operational for at least three years. Recognizes the most innovative and sustainable approaches to resolving the world's most urgent social issues.
- Whitley Fund for Nature (WFN) – Grants eight awards/year for up to £30,000 to outstanding nature conservationists
- SEED Initiative – Annually grants SEED Awards to exceptional social entrepreneurs. Recipients receive direct support from SEED and its partners.
- ALCAN Prize for Sustainability – Donates a total of US$1 million annually to not-for-profit, non-governmental organizations working on sustainable development around the world.
- Goldman Prize for the Environment – An award honoring grassroots environmentalists (does not accept unsolicited nominations).
- The World Challenge - An award for individuals or groups that make a difference through enterprise and innovation. Winner receives US$20,000 award from Shell for their project and two runner-up each receive $10,000.
- The Development Marketplace (DM) – Funds early stage projects with high potential for development impact. Recipients also receive technical assistance.
- The Business in Development (BiD) Challenge – Awards prize money (min. 5,000 max. 20,000 euros/person) to entrepreneurs to execute business plans that will improve living standards in developing countries at a profit.
- Ashden Awards for Sustainable Energy - Financial awards for sustainable energy solutions in the UK and developing world.
- Hong Kong Social Enterprise Challenge - An inter-collegiate social ventures business competition
- Social Capitalist Awards - A yearly ranking of the top 15 to 25 noteworty social enterprises by Fast Company
- Unreasonable Institute  – Fellows participate in a 6 week program where they receive mentorship, training and exposure. All expenses are paid.
- Acumen Fund  – The Acumen Fund has a Global Fellows Program and an East Africa Fellows Program. It is a full-time one year fellowship focused on leadership development.
Resources on Social Entrepreneurship