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Consumers favour social enterprise over bottom-line business, surveys reveal

Companies concerned about their bottom line are best looking to their conscience, new research suggests.

Consumers are increasingly buying on the basis of a business’s ethical track record and level of social and environmental responsibility, rather than just on ‘good deal’ alone.

The research, released by Social Enterprise UK and the Cabinet Office, has been published ahead of the UK’s first ‘Social Saturday’ tomorrow (13 September) – a day intended to raise awareness of social enterprises and boost the numbers of consumers buying from them.

Social enterprises are businesses that have a positive impact on communities and the environment; factors that British consumers increasingly value. The day also celebrates the fact that the UK has the world’s largest social enterprise sector.

The UK-wide research for Social Saturday surveyed 2,070 British adults and examined how they feel about the behaviour of businesses. The results uncover that many British people have strong views about buying from businesses known to be irresponsible:

• 35% said they feel ashamed when buying from businesses they feel are socially irresponsible – more women than men feel this way (40% vs 30%)
• More than 40% said they don’t feel there are enough socially responsible businesses to buy from in the UK
• Just over a quarter (26%) said that there is a stigma attached to buying from socially irresponsible businesses
• 14% people aged 25-39 said they hide from friends that they buy from socially irresponsible businesses
• 18% said they would be put off a romantic partner if he or she regularly bought products or services from socially irresponsible businesses

The figures are said to show that British people value businesses with a strong ethical and community focus, and such firms represent a sizeable slice of UK economic activity. The Government estimates that there are now 180,000 social enterprises in the UK (15% of SMEs), contributing billions to the economy and employing more than two million people.

Well-known brands include The Big Issue, Jamie Oliver’s Fifteen, Better leisure centres, Pants to Poverty, Divine Chocolate and Belu Water. All are businesses that reinvest profits into a social cause, from employing and training people furthest from the job market, to profits going to support charities.

“A staggering 82% of social enterprises reinvest their profits locally and Social Saturday is an opportunity for people across the country to explore the breadth of this vibrant and growing sector. There is clearly a demand for people to buy social and there are now more ways than ever for people to invest socially as well,” said Brooks Newmark MP, minister for civil society.

Peter Holbrook, chief executive of Social Enterprise UK, added: “Every product and service you buy has a social or environmental impact, so why not make it a good one? The UK’s social enterprise sector is growing fast because consumers care about how their spending decisions affect the world they live in.”

The message, however, appears to be getting through – at least among SMEs – if a survey carried out by Santander is anything to go by.

The majority (79%) of the UK’s SMEs agree that social enterprises have some commercial advantages over traditional businesses.

Again, the research was conducted ahead of Social Saturday. Santander’s findings support the view that social enterprises can have commercial advantages over traditional businesses.

More than six times as many SMEs in the Santander survey agreed (than disagreed) that social enterprises have better relationships with their customers. More SMEs also agreed that social enterprises have an advantage when it comes to recruitment and retention of talent, the ability to offer lower prices and having better relationships with customers and suppliers.

Nearly three times as many SMEs agreed that social enterprises have a commercial advantage over traditional businesses because their potential clients have preferential views towards social enterprises.

“UK SMEs are in agreement that social enterprises have distinct commercial advantages over traditional businesses. The social enterprise model is growing in significance in the UK which can only be good for business, for communities and the economy,” said Steve Pateman, Santander’s head of UK banking.

Nine out of ten (89%) of Britain’s SME businesses that took part in the Santander survey said they had heard of the term ‘social enterprise’. Three quarters of SMEs (74%) became aware of the term ‘social enterprise’ in the last five years, with more than a third (39%) becoming aware in the last 12 months.

“Social enterprises are a growing force with Britain's SME sector – 1 in 7 of all business start-ups are social enterprises,” said Social Enterprise UK’s Holbrook. “They create jobs and stimulate local economies where they’re needed most – 38% of social enterprises operate in the UK’s most deprived communities compared to 12% of SMEs. They're also twice as likely to be led by women – 38% of social enterprises have a female chief executive, compared with 19% of SMEs."

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