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In recent years, a new wave of entrepreneurship has emerged, driven not only by the desire for profit but also by a deep commitment to making a positive impact on society. Social Impact Businesses are gaining momentum as individuals and businesses recognize the importance of combining profit with purpose.
Social Impact Businesses (SIB) are commonly understood as enterprises engaged in business activities with a commitment to creating positive social and environmental impacts. Balancing social/environmental objectives with a commercial model enables them to address social and environmental challenges sustainably.
SIBs Gathering organized by UNDP, Global Affair Canada and hosted by BizCare
How Social Impact Businesses Are Changing the World?
1. Driving Change Through Purpose and Solving Social and Environmental Challenges
Social impact businesses are revolutionizing the way we think about entrepreneurship and business. Unlike traditional for-profit companies, these businesses prioritize their social and environmental impact alongside financial success. By aligning their purpose with a greater cause, social impact businesses are changing the world in profound ways.
One of the typical examples of social impact businesses is ECOSOI, a supplier of high-quality pineapple fiber for the fashion and garment industry. This simple yet profound business model has reduced thousands of tons of CO2 emissions per year from burning pineapple leaves, created hundreds of livelihoods for farmers, and enhanced the value of Vietnamese pineapples.
Pineapple fiber production process at ECOSOI. Source: ecosoi.com
2. Fostering Sustainable Practices, Inspiring a New Generation of Entrepreneurs
The rise of social impact businesses has also brought attention to the importance of sustainable practices. These businesses prioritize environmental sustainability and strive to minimize their impact on the planet. Perhaps one of the most significant impacts of social impact businesses is their ability to inspire a new generation of entrepreneurs. By demonstrating that businesses can be a force for good, these companies are inspiring young entrepreneurs to prioritize purpose alongside profit.
Coolmate, a men's clothing company, is renowned for its commitment to sustainability. Coolmate not only produces high-quality products, but also actively works to reduce its environmental footprint. Through initiatives such as the "No Plastic Inside" campaign - no plastic use in packaging, using environmentally friendly materials and production technologies, and encouraging customers to reuse clothing, Coolmate has promoted a more sustainable approach to consumerism.
Products from Coolmate. Source: Coolmate.me
The Challenges Faced by Social Impact Businesses
1. Balancing Social Impact and Profit:
Striking a balance between social impact and profit presents a significant challenge for social impact businesses. Focusing too much on social impact might hinder the ability to generate sufficient profit for sustainability, while emphasizing profit could lead to neglecting social objectives.
To navigate this challenge, social impact businesses need a clear definition of their mission and goals. Building sustainable business models ensures they can generate enough profit to thrive while still achieving their social objectives.
2. Accessing Funding Sources
While there are numerous angel investors and investment funds willing to invest in social impact businesses globally, selecting those in the early stages is relatively rare. Unlike non-profit organizations, social impact businesses are evaluated not only based on their social values but also on their financial potential. Investing in a social startup often comes with high risks.
Recently, IIX (Impact Investment Exchange) has officially become a partner of BizCare in its journey to support social impact businesses, ready to invest in social impact for businesses in Vietnam. IIX has been transforming impact investing for over 14 years, leading in sustainable investing and gender-lens investing, successfully raising over 281$ million for over 400 social enterprises around the world, and providing in-depth knowledge for over 9,000 experts through training programs. IIX promises to be a solid foundation for businesses in Vietnam.
In conclusion, social impact businesses bring significant advantages to community and environmental improvement. However, they also face considerable challenges. Thus, for sustainable development and the preservation of their mission, these businesses require significant effort and innovation.
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