Market News

 March 29, 2007
A New Breed of Leaders Tackles World's Big Problems

 Washington, USA -- Renewable energy, affordable and effective health care, and fighting climate change are just three of the major global problems currently being addressed by a new model of entrepreneurship, according to a new report by SustainAbility, an independent think-tank and consultancy.

Drawing on the results of a survey of more than 100 'social entrepreneurs' -- leaders of organizations whose goals prioritize improving the quality of life for marginalized populations -- the report, "Growing Opportunity: Entrepreneurial Solutions to Insoluble Problems," finds that these organizations have already penetrated deep into industries and markets that large corporations have barely scratched the surface of.

"Individuals from Bonn to Bangalore are seizing the chance to turn challenge into opportunity, in the process pioneering new markets," according to Paul Achleitner, CFO of the financial services company Allianz, which was a major sponsor of the report. "Microfinance, as an example, is now a $9 billion market that is increasingly empowering citizens to realize their full potential in society. Our hope is that collaborating with creative thinkers will help our people realize their full potential -- and to better serve the needs of present and future customers."

Microfinance is an especially fitting example, as Muhammad Yunus, a luminary of the field, was awarded the Nobel Peace Prize this year for his work at Grameen Bank over the last 30 years. The wide success of these small community-based finance projects shows the potential of social entrepreneurship across sectors, according to the report.

The findings from the survey show that although social entrepreneurship is growing quickly, it is still a small field, receiving only an estimated $200 million in financing globally, compared with $200 billion in philanthropic investments each year in the U.S. alone. This lack of access to funding was cited as the primary challenge faced by 72 percent of the survey's respondents, followed by promoting and marketing their organizations.

Social entrepreneurship is fundamentally different from previous, similar enterprises because they are not reliant on funding by governments or foundations to do their work. "NGOs get hooked on a sense of getting when they rely on foundation or non-sustainable funding sources," Keerti Pradhan of Aravind Eye Hospitals told the report's authors. "As a result, people don't apply their brains to different ways to break that barrier of dependency on foundations.... NGOs have huge potential, but huge knowledge gaps exist about how to access market-rate funding sources that could help support non-profit work."

The organizations profiled by SustainAbility differ from most NGOs by their interest in working with businesses to achieve their goals. And the time is right for these kinds of partnerships: the growing global concern about environmental crises is leading to a fundamental shift in how businesses operate.

"Growing Opportunity" describes three phases of business operations with regard to sustainability: an early engagement, often driven by the need to comply with regulations, which the report calls Mindset 1.0; followed by a shift in focus to corporate citizenship (Mindset 2.0); and Mindset 3.0, the coming business trend, ties the growth and success of a business to sustainable operations.

The report's authors identify several reasons why social entrepreneurship is important for businesses to engage. "The world is changing --- and with it markets," the authors write. "Social and environmental entrepreneurs do not have all the answers, but they do see the world and markets differently, and the more innovative are experimenting with new business models that could potentially break out of their niches and help transform key elements of the global economy."

This new "Mindset 3.0" has the ability to, and even at times the express goal of, rebooting entire economic and political systems, replacing inefficient or corrupt practices in exchange for community-tested, market-driven solutions. "Growing Opportunity" looks in-depth at two industries -- health care and energy -- that have already benefitted from an upheaval of social entrepreneurship.

"Social entrepreneurs ... are set to have a profound impact on the world's most complex societal and environmental challenges," said John Elkington, founder and Chief Entrepreneur of SustainAbility. "Their impact may be limited by their current scale, but could be limitless with the right business partners."

The full report, Growing Opportunity: Entrepreneurial Solutions to Insoluble Problems, is available for download from and more information is posted at SustainAbility.com.