Millions of dollars are flowing into a sector 'doing good' for society. A new scheme aims to keep things on track

Australians are increasingly seeking out businesses that prioritise social and environmental good, driving a boom in what is called the "social enterprise" sector.

With some large government, private infrastructure and construction contracts now mandating the use of social enterprises for a percentage of multi-million-dollar spends, the sector is growing by providing employment and fixing social problems through its work.

This shift in consumer and company behaviour is being strengthened by the launch of a broad certification system, to build confidence and ensure the money is being spent well.

Social good

Social enterprises are for-profit businesses that tackle social or environmental problems while conducting their operations.

Unlike typical businesses, they are specifically designed to create a positive impact on society or the environment.

They also often do things that are harder — like using environmentally sustainable materials or training staff who have experienced long-term unemployment — that might cost them more, but create a lasting benefit.

As it becomes increasingly common for contracts to enforce a certain amount of spending with social enterprises, certification gives buyers confidence they're getting what they pay for.

Big growth

Social Enterprise Australia (SEA) is the peak body for social enterprise in the country. It reports that there are over 12,000 social enterprises operating nationally, with Victoria leading the way with over 3,500 businesses.

This sector contributes a significant $21.3 billion to the Australian economy annually, according to a report by the peak body.

The group's chief executive, Jess Moore, says the verification system has already had a positive impact on the Australian social enterprise industry because it helps recognise them as businesses with a larger purpose.

"It can give consumers confidence that they're buying products that genuinely put people and [the] planet first," she says.

"Businesses more and more know that consumers want to buy products that do good in this world."

The certification is called People and Planet First.

Released earlier this month, it also aims to connect social enterprises with buyers, funders, global marketplaces and helps owners access free and discounted services.

"There's a whole bunch of applications in process right now," Ms Moore says.

"Organisations are signing up quickly."

Securing sector

While the People and Planet First certification system may be new to the Australian sector, it has already been rolled out across the United Kingdom, parts of North and South America, Asia and Africa.

Businesses can easily get this certification within a few hours, through a simple two-step process costing $130.

However, while user-friendly, protocols are in place to ensure that businesses signing up for the certification are eligible and meet at least five standards.

The criteria for the verification include: businesses existing to solve a social or environmental problem, prioritising people over profit, investing surplus capital towards its core purpose, and its viability.

Once verified, social enterprises need to renew their certification every year to ensure they still meet the five standards — and can keep doing good business, as usual.

Certification test

But it's not as simple as just starting a scheme.

Suzanne Young is a professor at La Trobe University Business School's department of management and marketing and is an expert in governance systems.

"There are many certification schemes operating of different types of businesses and size," she says.

Organisations seeking to give certainty to customers – and seeking the credibility that brings – can submit to processes that bind them to certain actions and ways of working. Some examples include the United Nations Global Compact, the United Nations Principles of Responsible Investment, and the Global Reporting Initiative.

"They certainly operate to build those businesses signing up knowledge and bringing like-minded businesses and people together to build capacity," she says.

It is often the case that the biggest or best-known certification system is the one that "wins out" with the market and the public.

"For stakeholders, there is confusion as to what these are and what they are certifying. Having an overarching network such as the United Nations as the umbrella adds to credibility and authenticity," Professor Young says.

Without robust reporting and confidence in the system, they can add to confusion.

"They can be seen as 'greenwashing,'" she notes, referring to the practice of pretending a product or service is good for the environment.

The best systems are ones that people both trust and understand.

"There should be some objective measures that are transparent and easy to understand," she adds.

"That provides guidance to consumers, especially, as to the level of certification."

At the heart

STREAT, a Melbourne-based social enterprise providing food carts and training for disadvantaged youths, highlights the impact of a business doing good.

Since 2009, it has supported over 3,000 young Australians struggling with employment.

STREAT chief executive and co-founder Rebecca Scott is pleased the certification is being taken up.

"I was really excited about it," she says.

"For us, it was just that excitement that makes it easier and easier for consumers to find those enterprises that put people and planet at the very heart of their business models."

A sign that doing good business is also doing right by people — and benefiting them both.