Social Enterprise, Business and Poverty
Business Ethics
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Social Enterprise, Business and Poverty
Social Enterprise involves the ability of the company to plough back her profits into activities that benefit people and planet in order to build stronger social connections with her customers, employees and everyone important to the business. It involves investment of income earned in the society as well as contract payments, grants and donations to the society. Social entrepreneurship involves solving of society’s challenges and sufferings. A good business should be able to solve societal problems by having community based objectives such as poverty thus successfully creating a good connection between the society and the company. This writing describes action of SELCO in her social entrepreneurship responsibility.
SELCO has set example in social entrepreneurship both in India and worldwide. The company successfully presented solar electricity for lighting and power to the less privileged persons in the society. SELCO faced several challenges before succeeding in her operations and objectives in helping the poor. It initially grew purposely through gaining of enough capital and experience thus making it to attempt expanding her networks which greatly interfered with her financial status. The company then increased the price of the solar panels thus causing a serious decline in the sales and the general operations of the company. Investors were not impressed by the decline of the business and forced the company to lay off employees and contract the business in 2000s.
In 2008, SELCO acquired finance from the World Bank and International Finance Corporation to streamline the company although the company remained a for profit organization. However, the director of the company was able to obtain new investors who were aligned with the mission of the company thus making the company to keep her sales and service organization intact. The director was also able to boost the morale of the company’s employee who helped it to continue devising innovative solar solutions. The company successfully devised the solar system that could suite specific needs of the needy urban and rural persons. This was indeed a very good way of achieving social entrepreneurship objective of fulfilling the society needs. SELCO was able to design solar panels that exactly met the needs of the society by beginning with a broad needs assessment of specific part or activity of the underprivileged people in the society (Crane and Matten 2010, p. 474-476).
The company ensured that they designed solar panels for street vendors, midwives and even the rural farmers who were in dire of the solar panel. The redesigning process involved many different activities that would ensure that the needs of particular markets were met. The company ensured that her operations were client based thus causing it to restructure and redesign her solar panels. SELCO was able to acquire funds from the World Bank and IMF perhaps due to her social objectives. It also gained publication due to her social entrepreneurship objectives. The company also arranged for financial assistance for the rural people who could not afford to buy even the cheap user customized solar panels. This slowed the company’s growth and made it to earn small levels of profit. The company could also not align her social objectives with the investors needs.
Responsible Investment
Responsible investment is one of the optimistic emerging trends in the financial world that integrates financial goals with positive business values that shapes the society future. Responsible investments vary because some companies may invest in the environmental factors, employees’ welfare or society effects such as smoking. Responsible investment is a very vital area in doing business since sustainable society is crucial to the company’s values. Although it is important for organizations to reconcile society’s needs and the business objectives the main problem is linking the economic, social and environmental advantages with the financial benefits. Responsible investment’s importance cannot be avoided due to different challenges that face the society such as social disparity and climatic alterations.
Responsible Investment strategies include social screening, proactive investing and shareholder advocacy. Screening is the most prevalent responsible investment strategy that involved screening the company according to her socially responsible criteria by the investors before making investment decisions. Investors, after assessing the company’s performance in social and environmental issues, may deliberately remove or include their stocks or bonds in the company.
Social screenings are categorized into positive screening and negative screening. Positive screening includes choosing of companies that would be added in the investment portfolio while negative screening involves avoidance of some companies because they pursue some activities. Investors may decide to avoid companies that have negative environmental impacts such as air pollution or the organizations supplying strategic services and products to repressive governments. Some of the examples of responsible investments applicable in social screening are mutual funds and annuity.
Proactive investing is a responsible investment strategy that is focused in investing in companies or projects with good organizational models that are intended to achieve environmental or social objectives. One of the best examples is investing funds on an institution that provide financial aid to the less privileged persons in the society especially in developing countries.
Finally, the last responsible investment strategy is shareholder advocacy where the investor acquires shares in companies that would otherwise be rejected through screening with an intention of positively influencing the company’s policies. The investor may seek to influence the company’s policies either through proxy voting or via dialogue. This strategy may lead to different changes in management, community and ecology thus improving the company’s operations.
Proactive investing is the best strategy of responsible investment that can effectively improve corporate social and environmental performance of an organization. When investors refuse to invest in a company because of her failure in CSR, the company will definitely not acquire enough funds to operate in that society. It will therefore force the company to actively participate in corporate social and environmental issues so that it can portray a good image to the public and the potential investors (Crane and Matten 2010, p. 474-476). A company that aggressively participates in the corporate social and environmental issues will greatly attract prospective investors thus increasing the company’s fund base which is very essential for her growth and expansion.
References
Crane & Matten , 2010, Business Ethics, 3rd Edn, Oxford University Press, Oxford.
