Social Business, towards socially useful entrepreneurship

© CreditAgricole SA/CAPA Pictures/Nicolas Axelrod.

For more equitable access to wealth creation, the Grameen Crédit Agricole Foundation calls for a more responsible capitalism that embodies a new “social contract.”

A pragmatic observation

With its experience as a pioneer investor in Social Business companies, and supported by a detailed assessment, the Grameen Crédit Agricole Foundation notes that social entrepreneurship is, most often, rapidly beneficial for society, but that it takes much longer to reach its financial equilibrium threshold.

Social Business

A social business aims to provide a solution to a societal problem while also seeking to achieve financial profitability. This business model is therefore classic in its financial aspect, but very different because social utility is its primary goal. Profitability is only one means to achieve it sustainably. Its way of creating value does not lie in its ability to meet a market need, preferably with a competitive advantage, but in the pursuit of its social mission, the project of collective utility at the origin of its creation.

A White Paper, seven proposals

In its White Paper, the Grameen Crédit Agricole Foundation sets out seven concrete proposals to improve the effectiveness of social business. From identifying success factors to structuring the social performance of projects, the Foundation presents a unique economic approach.

1. Create the status of a “social utility contract” company

For the Grameen Crédit Agricole Foundation, a social enterprise cannot exist without a contractual act that commits to the societal objectives of the projects.

2. Value social utility to integrate it into the social enterprise's income statement

Valuation would consist of identifying and estimating the social and environmental impacts of the company in order to be able to transcribe them in the form of units of account.

3. Tax-support the development of associations into companies with social utility contracts

Social businesses need to resort to hybrid financing (donation/debt combinations) because the particularly low margins of their economic models generally cannot cover investment costs.

4. Create public-private partnerships in rural areas for access to essential goods

A social enterprise established in a rural environment can perfectly act as a relay for public action and make itself eligible for a suitable PPP format.

5. Disseminate low-tech patents in open source

Open source (royalty-free) low-tech patents are one of the keys to the development of modest and local economies in emerging countries.

6. Use of deconsolidating financial arrangements in agricultural value chains

Developing a relationship of trust through contractualization strengthens and structures the agricultural value chain.

7. Rely on local relays

The Foundation recommends relying on a local investor member on the board of directors. Their presence will facilitate operations and governance.

“Social and Business: two words that, on the surface, are complete opposites. In the old economic paradigm where individualism was triumphant and its consequence, precariousness, widespread, they resonated as a contradiction, a paradox. An idealist's whim. And yet, their meeting, however singular it may be, is a way forward to rethink and redefine a more responsible capitalism and a deliberately inclusive economy.” Eric Campos, General Delegate of the Grameen Crédit Agricole Foundation.

To download the Social Business White Paper: White paper - Social business - BD