An idea whose time has come

Janice Warman

20 December 2008

Janice Warman says ventures that address social problems rather than chasing profits can thrive in a recession

On my walk from Charing Cross station each morning I see Steven outside Boots, rain or shine, his outstretched arm holding the latest Big Issue at eye level for passing commuters. He’s part vendor, part performance artist. Many, like me, stop to buy; others look down and hurry on.

Though passers-by might pretend he’s invisible, the company that helps to get him and other homeless people back on track by selling magazines is part of a quiet revolution whose impact is only just beginning to be felt. The social enterprise sector — run for social or environmental purposes (or both) rather than for shareholders’ profit — is a tiny part of business in Britain. Its 55,000 companies have a combined turnover of £27 billion a year and employ 5 per cent of the workforce. With its green tinge, its social conscience, and its ability to make consumers feel virtuous, this sector would seem an unlikely candidate for success in a recession.

Yet parts of the sector have shown resilience thus far. People Tree, a ‘Fair Trade’ fashion company, has racked up 10 per cent growth against plummeting high-street sales. Research from YouGov shows the majority of people believe that social and environmental issues are more important than ever before; 42 per cent say having more social enterprises would help ensure a sustainable economy, ahead of government institutions and traditional businesses.

And now the sector has received a welcome fillip. Tucked in amongst all the bad financial news comes the launch of the Bridges Social Entrepreneurs Fund, backed by city stars including Harvey McGrath, former chairman of the Man hedge fund group, and Nigel Doughty, co-founder of the private equity firm Doughty Hanson. Other investors include 3i, Deutsche Bank and former US vice-president Al Gore’s Generation Foundation.

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