Understanding Barriers and Needs of Eco-enterprises

In 2009 SEED conducted an extensive 3-year study, which consisted of following SEED Winners from 2005-2011 as well as applicants of the SEED Awards 2010-2011 and looking in detail at:

  • the social, economic and environmental targets they set
  • the extent and rate at which they met those targets
  • the support they needed
  • the barriers to their success and how initiatives like SEED could contribute to their growth.

There is little doubt from the data collected over the three years of the study that the majority of enterprises within this community of social and environmental enterprises are changing the model of how to deliver sustainable development on the ground. The SEED winners in particular are demonstrating significant capacity to establish and deliver on social, environmental and business targets and indicate a level of progress beyond that of the survey group as a whole. Below is an overview of the fourteen findings relevant to policy and decision makers:

1.) There is a need to bridge macro strategies with implementation at the local level: 

There is a disconnect between the macro level approach to building the Green Economy and the micro level actions of social and environmental enterprises. The many frameworks, strategies, policies and implementation mechanisms being developed for the Green Economy need to bridge actions at the national level with what is being implemented by SMMEs on the ground.

2.) The Green Economy must be people centred and have poverty alleviation as a prime goal: 

In developing green economy policies, governments need to consider the impact of those policies on the poor.  Green economy financial mechanisms may be warranted that will ensure economic benefits are realised by the poor and negative economic impacts are mitigated. These pro poor considerations should be supported with research and aid coordination. Efforts in particular are needed to define indicators for the Green Economy that are sensitive to measuring pro poor outcomes.

3.) The contributions of social/environmental enterprises to poverty alleviation and economic development may be undervalued: 

The majority of social and environmental enterprises supplement the income of community members.  It is difficult, however, to quantify and validate this contribution to economic development and therefore more consideration is needed on methodologies to capture and report on this data in national economic analyses.

4.)The social issues addressed by these enterprises are wide ranging and complex: 

Social and environmental enterprises can play a critical role in strengthening resilience in their communities and beyond. Many of the enterprises recognise that in order to meet environmental and economic objectives, deeper systemic problems must be addressed, such as population pressures, illiteracy, infectious diseases, and widespread poverty, effectively turning these enterprises into specialists in local community management, networking, training, institution building, and policy influencing. 

5.) These enterprises are front-line environmental service providers

The presence of national environmental legislation and regulations appears to be one of the top four enabling factors for eco-enterprises such as SEED Winners. While in most cases there are environmental laws and rules in place at the national level, one of the most significant barriers for these enterprises is the absence of local level environmental monitoring and enforcement.  As a result, eco-enterprises frequently find themselves investing heavily in community environmental education.  There is a clear role here for policy makers to help these small and micro enterprises with community awareness-raising, and to focus on monitoring and enforcement.

6.) Public environmental education is not just values driven – it is a business issue for SMMEs. 

Public demand for social and environmental enterprise goods and services must be fostered.  Changing consumer purchasing choices through public awareness-raising will be a necessary lever to help social and environmental enterprises grow their businesses.  People’s mindsets need to shift to increase demand for social and environmental goods and services. 

7.) Innovation and investment are essential components for moving to the Green Economy. 

Research into new processes, the development of intellectual property (IP) and the use of IP as assets to attract investment need enabling policy environments. While social and environmental entrepreneurs value open source approaches and innovation networks, in which new ideas and solutions can be recognised and protected through group rules and standards, access to advice on registering patents may also be needed.

8.) The green economy requires a wide variety of skills: 

The need for having access to skilled people at the local level cannot be underestimated. The lack of technical knowledge in particular is a significant barrier in getting products to a certain quality to be competitive in the marketplace. A leading barrier for SMME success is the lack of skilled people at the local level. As a result SMMEs take it upon themselves to provide significant levels of in skills development and training at the local level. However, the study shows that the single most significant barrier to success was lack of access to funds for training.

9.) New hybrid entities and business models are emerging, and reliance on traditional development assistance is shifting to a mix of revenue streams: 

Over the three years of the study, there has been a demonstrable shift in whether these SMMEs consider themselves “for profit” or “not-for-profit”.  They demonstrates a flexibility in operating models, ranging from those that are registered as not for profit entities, to those that are clearly established as for profit businesses; as well as those that are hybrids, with not for profit status in some jurisdictions but with specific business ventures the success of which will require mainstream investment, business planning and marketing skills.  

10.) However, the financial viability and sustainability of these enterprises is uncertain: 

There continues to be a gap in capacity for these small and micro enterprises to adopt more business oriented approaches for managing and financing their work. The study shows that these enterprises are looking for ways to secure loans and lines of credit, but the lack of access to these financial services is one of their most significant barriers to success. Not-for-profit entities in particular face real barriers in the lack of legal frameworks that define social entrepreneurship, and allow non-profits to access not only traditional grants, but also loans and investments for for-profit initiatives. It is important to note that start-up social enterprises do not meet typical requirements for loans and often cannot provide the required operational track record of four to five years.

In the case of most SEED Winners however, it is important to highlight that winning an award has helped the enterprises gain credibility with those in positions to provide financial resources. 

11.) Monitoring, reporting and adaptive learning are essential mechanisms for building the Green Economy: 

Triple Bottom Line planning, at its simplest, is the ability for an enterprise to set goals and monitor progress across all three dimensions -- social, environmental and business. The small and micro enterprises, while all have passionate aspirations for making a difference in the world, can be challenged on the question of setting clear and measurable targets across all the dimensions of their work. Without clarity, and without realistic and measurable ways to assess whether they are in fact making a difference, many of these enterprises will not be able to engage their communities, investors, markets or decision makers.

12.) Organisations seeking to promote the scale up and replication of success need to understand the necessary preconditions and critical factors for success: 

Central to the success of any enterprise is its leadership and its ability to focus. The strongest enabling factor for enterprises in the SEED study has been the collaboration with organisations that have good standing in the community, following closely by the endorsement of local governments. This speaks to the importance for SMMEs of working in communities where there are other organisations that they can collaborate with, and building relationships with those organisations and with local authorities.

13.) Partnerships are essential to achieve policy coherence and effective implementation on the ground. 

Public policy is a key lever for the green economy, and there are now examples of countries starting to implement policies to support the emergence of a green economy. However, in most countries, there is a need to strengthen capacity for policy development at the environment and economy nexus:  this can be achieved through interdepartmental coordination, institutional relationships and partnerships between states. 

14.) Potential gender based barriers in the Green Economy must be recognised: 

Policy makers will need to find ways to remove gender-based barriers in the Green Economy.   If new jobs are created, particularly those involving new energy and agriculture technologies, they should not just be going to men; and that old jobs are not being removed in ways that adversely and disproportionally affect women.

For more detailed information, please visit the SEED publications below:

SEED Research Reports 1SEED Research Reports 2SEED Research Reports 3SEED Research Reports 4

© Copyright 2017 adelphi research gGmbH. All rights reserved