How business can break the cycle of disadvantage

Social Traders was conceived from the idea that social enterprise offers a significant opportunity to use business to address social problems and reduce social disadvantage in Australia. Jonathan Jackson speaks with Managing Director David Brookes about the growth of Social Traders and the leadership role it is playing in connecting social enterprises with government and businesses around Australia.

Earlier this year, the Victorian Government  announced that it was committing $10 million to help develop the social enterprise sector. This was good news for the more than 5000 social enterprises (businesses that exist to generate positive social impact) set up in Victoria including Thankyou Group (bottled water), STREAT (coffee and catering) and Green Collect (recycling).

Currently Victoria leads the way with these enterprises employing an estimated 75,000 people across the State, however there is much more to do to bring recognition to this nascent industry.

The Victorian Government initiative is a big step forward.

The Victorian Government’s Social Enterprise Strategy is the first-of-its-kind in Australia and has been developed to improve and expand on existing support for the sector and to position Victoria to lead the country in driving employment participation and inclusive economic growth through social enterprise.

Operating for nine years, Social Traders has taken a leadership approach in the social enterprise sector. A cornerstone of Social Traders’ success has been the ability to translate the ‘big issues and opportunities’ into practical services and tools for social enterprises. This ‘grass-roots’ approach coupled with facilitating cross-sector collaborations has positioned the organisation as the de-facto “voice” of Australian social enterprise and increased the awareness of social enterprise with the public, private and philanthropic sectors. Social Traders has been able to do this work through seed funding from the Victorian State Government, on top of funding it has received from the DARA Foundation, a private philanthropic foundation.

Social Traders works hard in linking government and private enterprise with social enterprises to facilitate partnerships.

“We’ve led and nurtured the growth and awareness of social enterprise in the country, and I think played a very significant role in putting social enterprise on the map,” says Social Traders MD David Brookes, who has worked in local government, and with a major employer industry association in New South Wales as well as with Rio Tinto, Toyota and Amcor.

Brookes wanted to draw on his experience of leading community investment programmes and initiatives, and developing more strategic and meaningful relationships and partnerships with the community sector, to make a positive contribution within the not-for-profit community sector. It just so happened he landed at one that was taking a pioneering approach to the field of social enterprise.

“Since inception, I think we’ve been quite pioneering. We’ve collaborated and partnered with others to deliver a range  of successful social enterprise programmes and initiatives.” Essentially Social Traders identifies business to business social enterprises, certifies them and then engages and educates them about emerging corporate and government procurement opportunities. There are currently 200 Social Traders certified social enterprises that are being put forward for suitable contracts.

On the demand side, Social Traders is actively recruiting and engaging with private sector and government and now has in the order of 20 buyer members with whom it works with to incorporate social enterprises into supply chains.

According to Brookes, Social Traders has been first to market in many areas including research in collaboration with the Queensland University of Technology, and more recently with Swinburne University. The business has also pioneered a start-up accelerator program for social enterprise that’s been going for seven years alongside an innovative patient capital and business support initiative for early stage enterprises.

Interestingly there is no legal definition for social enterprises in this country, however Social Traders defines them (consistent with international standards and definitions) as organisations that:

  • Are led by an economic, social, cultural, or environmental mission consistent with a public or community benefit
  • derive a substantial portion of their income from trade
  • reinvest the majority of their profit/surplus in the fulfilment of their

In essence, social enterprises are trading businesses, not charities, and should be treated as such.

They use the market to trade, but are motivated to exist for social impact rather than profit.

“They trade intentionally to tackle social problems, improve communities, and provide people with access to employment, training and to help the environment,” Brookes says.

Social enterprises can take a variety of different legal forms such as company limited by guarantee, incorporated association, community owned, cooperative or in some cases proprietary limited.

As such Brookes doesn’t view the lack of legal definition as an impediment. In fact, it may well have worked to the company’s advantage.

“For us, the legal form that a social enterprise takes should be based on the market and financial operating model of the enterprise. In the absence of a specific legal form or national accreditation system, Social Traders has been providing its own certification essentially to assist corporate and government buyers wanting to make social enterprise procurement decisions.”

Social Traders certification gives businesses and government peace of mind that the goods and services they are procuring from these enterprises are genuine and that these social enterprises can demonstrate significant trading activity and profit redistribution to support a social cause.

For social enterprise operators, certification is the gateway to gain access to new market opportunities with corporate and government buyers.

Such is the strength and trust built up by Social Traders that buyer members such as Westpac, Australia Post, Lendlease, AMP, Boral, L’Oreal, John Holland, Nestle, Coca-Cola Amatil and other big name companies have bought into the vision.

Part of that trust is also down to the very experienced, high-calibre and dedicated Social Traders team working hard to deliver, and help social enterprise deliver, quality products and services that can be incorporated into corporate supply chains.

“One of the objectives,” Brookes says, “is to get more of the large leading companies interested in the area of social procurement, and understand that for a very small change to their existing procurement processes they

can deliver huge social impact. We’ve got some great buy-in and connection with these companies and the team is endeavouring to bring in more like-minded buyers of social enterprise products and services.”

Brookes sees procurement as a motivating factor for businesses to connect with social enterprises.

“The next challenge for us is really to unlock that massive potential of social enterprise procurement. Procurement in Australia is currently valued at over $600 billion and we believe that buying from social enterprise represents the greatest untapped potential in generating positive social impact and change.

“We’re not saying that all of that $600 billion is going to convert to social enterprise. That’s just not possible or reasonable, but with a small change in procurement policies and buying practices we can create a huge social impact.

“So it is in the area of connecting social  enterprise  to new market opportunities with business and government – helping them  to  win  and  deliver on  new  procurement  contracts as a way to build revenue, sustainability and impact – that I see Social Traders looking to play a much bigger role in the future.” That would be a big win for Social Traders. It would certainly be one of many the company has had over the course of its nine year lifespan including getting the Victorian government on board (with potentially other governments to follow) and procurement successes.

“In the last 12 months, we’ve been involved in a brokering role in helping social enterprises win $20 million dollars’ worth of new contracts.

“By 2022 we’re hoping to have 125 corporate and government buyer members and over 600 Social Traders certified social enterprises.”

With revenue in hand, the goal for social enterprises is to increase their positive impact, including employment of disadvantaged people and environmental aims.

Ultimately, the biggest win has been to bring recognition to social enterprise.

Now, as Social Traders continues to collaborate and partner with others, including government, philanthropic organisations and the private sector, it feels it can bring social enterprise into the mainstream.

“We want social enterprise to become a bigger part of the mainstream, recognised for its significant and growing contribution to the economy and our communities. As part of that, we want to see more social enterprises employing more disadvantaged Australians, as we continue to support engagement by the business sector and governments.”

Further engagement with corporate and government buyers wanting to put social enterprises into their supply chains is a challenge Social Traders has whole heartedly accepted. BFM

Business First is a peer-to-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.

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