ESG: A little less conversation a little more action

A world where business is a means, not an end, may seem idealistic, but it’s a model that's already a reality. This is the world of social enterprises, where business is focused on making an impact, not just on profit for shareholders.

Social enterprises operate across every aspect of the community, contributing $21.3 billion to the economy and employing more than 200,000 people.

By generating employment opportunities for marginalised groups in society, addressing specific community needs or donating a majority of revenue to charity, social enterprise proves that profit and purpose are not mutually exclusive.

For corporate Australia, social enterprise presents an untapped opportunity to prioritise social licence and support the communities in which they operate. In other words, it also allows organisations to bring to life the often overlooked ‘S’ in their ESG.

Initially developed as a framework for investors to consider non-financial factors when evaluating company performance, ESG is today at the forefront for many businesses. Customers, employees and investors have come to expect businesses to be living their ESG policies:

Consumers: More than 60 per cent of people base their purchasing behaviours on sustainability and ethical criteria, and this is growing by 10 per cent each year. They’re also prepared to pay more for ethically sourced, sustainably made products. 

Employees: ESG efforts are a potent tool for boosting employee engagement and attracting top talent.

Investors: A global survey by Morgan Stanley found more than three quarters of individual investors globally said they were interested in sustainable investing and 54 per cent planned to increase sustainable investments in the coming year.

The one per cent club

One of the biggest challenges when it comes to ESG is measuring impact. Looking at the ASX100, KMPG found 84 per cent of firms included the social element of ESG in their annual financial report. Of those that reported on the ‘S’, almost all provided a narrative description, but only one per cent provided a quantification of the potential impact.

In other words, corporate Australia has no way of measuring the social impact it is making in the communities in which it operates. 

By spending with certified social enterprises, organisations can measure and quantify their impact outcomes. As the national certifier of social enterprises with the largest source of social enterprise data in Australia, Social Traders reports on this at a company and an industry level. 

Our business and government members spent $237 million with certified social enterprises in FY2023 – the highest yet. The annual growth rate of procurement with certified social enterprises among our members was 36 per cent. By 2030, we envisage 460 business and government members spending $5.5 billion with 2000 certified social enterprises nationally. This is a path to reshape the Australian economy.

Switching your spend for good

Social procurement is a practical solution for addressing the ‘S’ in ESG. This is where organisations actively direct their spending to suppliers such as social enterprises, Indigenous businesses and women-owned businesses. This is money that is already being spent on things like cleaning services, waste management, IT services or even the daily fruit box. By embedding social enterprises into supply chains, organisations can have a social and environmental impact in the communities where they operate. 

Many of our businesses and government members are already doing this today. For example, property company Mirvac partnered with certified social enterprise Mates on the Move, which employs people exiting the justice system, to collect and transport problem waste from 19 of their Sydney office buildings. 

Since 2017, an estimated 695 tonnes of waste have been diverted from landfill. The partnership also supports employment pathways for the Mates on the Move workforce.

The time is now

We’re seeing significant growth in businesses of all sizes making the active decision to use their purchasing power for good. But we are only at the tip of the iceberg. Many opportunities are still being overlooked by Australian businesses. 

Working with social enterprise is not only good for people and planet, it is also good business. It delivers benefits for customers, employees and communities as well as the bottom line.

It is a win-win that has the potential to transform the way we think about business and bring the talk of ESG into reality.