THE BLOG

Social Enterprises: Businesses Built on Ethics

19/02/2013 09:55 GMT | Updated 18/04/2013 10:12 BST

When it comes to the business world, the media is usually chock-full of narratives about corporate malpractice, the bonuses of high-level bankers and tax-avoiding coffee outlets. Less common are the stories that occur in just about every town and high street in the country - the stories about businesses that operate by a set of values, and about the people who run them.

According to the Co-operative Group's Ethical Consumer Markets Report, sales of ethical products - sold by companies who operate doubly as businesses and social enterprises - amounted to £13.5bm in 2000. In 2011, the sector was worth £47.2bn, and it is expected to grow.

Even during the worst recession in living memory, ethical sales expanded £11.7bn. Success stories like the Fair Trade brand and the Co-operative point to nothing less than a quiet revolution in the way businesses act towards the natural and social environment, and in the way that people consume products.

To get a better perspective from those on the ground, and to see how these changes are affecting small businesses, I spoke to the owners of two soup companies in Edinburgh.

"People are looking to consume in a way that is more ethical" says JP, who runs Elephant Juice. An "ethical, healthy street food company", Elephant Juice has a "One feeds Two" motto meaning that for every bowl of soup bought by its customers, it gives one away to those in need. I interviewed JP on the one-year anniversary of his business, and found he was highly optimistic about the future of ethical brands.

"I think that ethics are one aspect of what people look for, though you've got to have the full package", he says.

"You've got to have a good quality, good value-for-money product that people want, and when you put ethics with that then people really respond. I think people want businesses that are just a bit more personal, that have personality about them, and ethics is part of that. People want businesses that care, that are aiming to better the world instead of consuming it. I mean, obviously we try to make money, but it's not the focus of the business, it's not what drives us."

"I practiced law for four years, and I was an insolvency lawyer right at the height of the recession, and saw what the real effect of the banking collapse had on people. I saw the consequences of greed, and the real damage it did. So for me, [starting up Elephant Juice] was about finding a purpose and meaning for my life, as much as it was about creating a business."

The Union of Genius soup café, located just a few streets away from the increasingly iconic 'Dumbo1' Citroën van that Elephant Juice operates out of, is an ethical firm that focuses on the environmental impact of their activities.

Part of a Scotland-spanning environmentally friendly supply chain, the café also operates a loyalty scheme that rewards customers for recycling their take-out packaging. The company is hoping to grow further with a Kickstarter-funded expansion.

Elaine, Union of Genius' owner, was unsure about the impact of ethical consumerism. "The bottom line with Union is - if our soup was poor, no-one would buy it, regardless of our green credentials.

"I think things differ within the food trade. It's easy to compare sales of, say, brands of tea, and extrapolate buying trends by comparing sales of Fair Trade and organic brands to non-fairly-traded or non-organic. It's difficult to quantify a cafe outlet in the same way.

"I know that our customers like the 'package' that they get with Union - independent, good food, locally-sourced, handmade, healthy, with a loyalty scheme that encourages them to be green. I like that we try to make our customers think about their packaging waste. Some of our customers have earned loads of free soup by taking part in our loyalty scheme. Others come almost every day and don't want to know."

Even for businesses who find that the social enterprise is not a crucial part of their USP, it's clear that ethical elements are becoming more prevalent in businesses across the UK. And for bigger companies, the examples of the Co-op and John Lewis offer vital case studies. With 50% of consumers now reporting that they are likely to change their purchasing habits if a company's reputation is in question, it would seem that this trend will continue to spread further.

First published here in the International Business Times, 31/1/13.