What exactly is a social business?
It’s a business that considers social problems as part of its business plan. It also aims to generate profit. I co-founded Yunus Social Business in 2011 with Muhammad Yunus and Sophie Eisenmann after seeing the success of a social business model in Bangladesh. I wanted to help spread this idea around the world. We’re different than traditional NGOs because we turn donations into investments within our social businesses, that we reinvest over and over again, multiplying the impact each time. Our Philanthropic Venture Fund grows businesses that provide employment, education, health care, clean water and clean energy to over three million people in East Africa, Latin America & India.
Operating like a business is crucial. We use typical venture capital strategies such as incubators and accelerator methodologies to identify social challenges and then seek local partners and entrepreneurs. This idea was unique when we started and our challenge was to keep adapting to find the right approach. You should be prepared to face different circumstances in diverse countries.
How do you operate?
We give long-term loans to social businesses in Uganda, Kenya, Brazil, Colombia and India. We’ve invested in over 50 social companies that strive to be financially self-sustainable and contribute to solving social challenges. These companies have a clear mission to address one (or several) challenges described in the 17 Sustainable Development Goals (SDGs). For example, in Uganda where nine million people don’t have access to clean drinking water, we saw results within five years from Impact Water, a business we invested in to provide clean water to over 1,200 schools and 800,000 students. The business was so successful it expanded into Kenya. Because they touch on eight of the 17 SDGs, they also deliver much more than just profit.
What’s the idea behind the local partner model?
There’s no better way to support local business than by teaming up with local business leaders as your partners. They already have strong local networks and deep insights into the countries in which they operate. We identify social challenges with these partners and then try and solve them.
How did your idea come about?
A speech by Muhammad Yunus at the London School of Economics inspired me. I was a management consultant at the time but decided I would instead devote my life to social business instead. Our first social business project in Bangladesh was with Danone in 2007. We tried to match the company’s strengths with the social problems we saw around us and developed a simple solution: a joint venture to produce affordable and nutritious yogurt to fight malnutrition in kids. This small project went on to influence Danone’s vision as a business for good and later the creation of Danone Communities, a social business investment fund.
Saskia’s Tips For Becoming a Social Business
- Read Professor Yunus’ book: “A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Net Carbon Emissions.”
- Become a donor to our local funds, help local entrepreneurs in India, Africa and Latin America build their own social businesses.
- Join us for a partner visit to see first-hand how our social businesses create positive social impact in one of our regions.
- Become an advocate for social business in your country or create a local Yunus Social Business chapter.
- Start a social business yourself.
Where did this lead?
After Danone, we were approached by many companies wanting to develop something similar. Our consultancy arm helps large corporations solve a local, social challenge with their business. We help corporates create their social businesses and bring social entrepreneurs together with large companies to foster innovation. Dramatic changes are evident in the global economy and business is not just about making money anymore. It’s about providing value to society: a move beyond shareholder value to stakeholder value.
What about established companies? Can they also create social impact?
Most companies don’t know how to begin, but we suggest starting with a small venture. We all learn by doing, and associating your brand with a pilot project could be the start of something big. This adds a dose of “social business magic” into a company: employee engagement rises, customer loyalty increases and relationships with the community improves. We found that innovation is the number one reason corporate leaders find social business interesting. Look at your business from the perspective of society – do you think in a customer-centric or product-centric way?
What gets you out of bed each day?
I believe in the power of business to solve the greatest problems facing humanity. I see this in the work I do and it keeps me motivated. Corporations are key players in our economic system, playing a decisive role in shaping our world and its social and environmental conditions.
This article was written by Laura Giadorou Koch for “Real Leaders.”
