Salvatore Ferragamo’s new collection made with orange fibre shows how brands are realising they will only make an impact if they pair up with social enterprises with radical business models, says Raffaella Cagliano
Once upon a time, there was philanthropy. It wasn’t only the richest company founders – think Gates or Zuckerberg – that devolved parts of their wealth to the cause, but increasing numbers of companies were spending revenue on social enterprises. Sometimes this was through foundations that worked separately to their business, with the support of an NGO, or through a partnership with a non-profit organisation. Yet philanthropy and charity consume resources, both money and man-hours, and often operate with businesses in the short-term. These kinds of arrangements are not sustainable solutions to dealing with the big societal challenges that we face.
So where does the solution lie? Certainly not in the business-oriented investments of large companies that are trying to seem more sustainable. As is the case for traditional innovation, sustainability-oriented or social innovation is more difficult for these incumbent companies, which are often locked into investments, systems, markets and cultures that were built around capitalist, resource-consuming business models.
However, at the other end of the market, new social ventures built around radical, new, sustainable business models, are emerging. Compared to traditional ventures, which relied heavily on the support of grants or funding/donations, these new enterprises are trying to merge the economic and social value of business practices. Their aim is to make social value economically sustainable.
Yet these new social ventures, as with many small companies, are often limited by a lack of resources and find it difficult to scale up their businesses. This often limits their potentially important contribution to the overall large-scale challenges of sustainable development. Thus the paradox of truly sustainable business models: those that have the resources don’t have enough motivation, creativity or freedom to radically redesign their business models to make them sustainable, while those that are ready to do this don’t have the resources to scale-up.