02.11.2017 | Sustainable finance
Social business is an alternative business model which prioritizes a positive impact on society or the environment over profit targets. It is an innovative and dynamic concept, the growth of which is linked to new financing methods. We review the origins, current state and future perspectives of social business.
Social business promises to breathe new life into the economy by prioritizing human beings as the central business concern rather than profits.
Notably promoted by Muhammad Yunus, the 2006 Nobel Peace Prize laureate and pioneer of microcredit, social businesses aim to provide solutions to social and environmental issues, all while being economically sustainable, regardless of their legal status (non-profit organizations, cooperatives, companies…).
To square this circle, social businesses cover their costs and sometimes generate profits, which are then reinvested. They do not, however, seek to maximize profits for redistribution as dividends but rather to develop their actions and support their beneficiaries. For investors or lenders, the success of a social business is therefore measured by its impact on the environment or the lives of those who benefit from its actions, rather than returns on investment.
By proposing a viable alternative model, social businesses constitute a real catalyst for change. They bring economically sustainable solutions to major societal problems like hunger or malnutrition, food waste, accommodating and integrating refugees, as well as access to drinking water, electricity, medical care, financial services, housing, education for people who drop out of schooling systems, etc.
In France, according to a Bpi study, companies in the social and solidarity economy (SSE) accounted for nearly 2.4 million jobs in 2014, or one in eight private sector employees! What’s more, the sector saw a 24% employment growth rate between 2000 and 2014, compared to 4.5% for non-SSE employment! This trend is expected to continue, as nearly 600,000 jobs are set to be renewed by 2020.
This healthy economic outlook is confirmed in other countries: according to data from Social Enterprise UK, more than half of companies active in the social sector saw their turnover increase in 2014, while 28% kept it constant.
Here are a few examples:
For the Global Social Business Summit event, which took place on the 7th of November 2017 in Paris, Jean-Laurent Bonnafé, Director and Chief Executive Officer of BNP Paribas, has spoken on partnerships between the Social Business and Bank.
BNP Paribas is currently the sole commercial bank with a structured international strategy to support social businesses on several continents. At the end of 2016, the Group's support to social businesses amounted to 641 million euros, a 38% growth compared to 2015 on a like-for-like basis. More than 930 social businesses (both customers and partners) in seven countries have already benefited from the Group's support.
When including microfinance, the Group's total support amounts to 890 million euros.
Recent BNP Paribas initiatives include:
BNP Paribas aims to be an innovative Group in its financial offer while helping society as a whole. Social businesses offer an alternative model that can reconcile economic profitability with a positive impact on society.