Ākina can confirm it - the future of business is here!
AirDrop: Ākina would like to share their Submission for the MBIE Long Term Insights Briefing
Ākina were asked to provide feedback on The Ministry of Business, Innovation and Employment (MBIE) draft Long-term Insights Briefing (LTIB): The future of business for Aotearoa New Zealand. This involves an exploration of two trends influencing productivity and wellbeing, Purpose-led business and use of blockchain technology. The consultation period closed on Friday, 24 June. Read what we had to say in response to MBIE's questions below.
Do you think that there will be a steady increase in purpose-led businesses? Are there other possible futures you think we should note?
Ākina has long noted that there are changing pressures and expectations from employees, customers and shareholders that are influencing business decisions and practices to ones that are better for the environment, more ethical, more sustainable, or promote wellbeing.
Yes, we believe the number of purpose-led businesses will continue to grow, and should be encouraged, however the number could grow at a much faster rate with Government leadership and support.
Following on from The Impact Initiative, barriers remain for businesses that make it unnecessarily difficult to start and/or scale a purpose-led business, namely:
A lack of system-wide recognition that the positive social and environmental outcomes that purpose-led businesses work towards are consistent with the goals of government and should be encouraged.
These barriers include:
Lack of guidance around legal structures that encourage impact, and in fact no legal structures that do explicitly encourage impact.
Barriers to accessing professional support and capability services - a lack of targeted support for purpose-led businesses.
Barriers to accessing finance and capital.
Barriers to accessing procurement opportunities.
Are there other opportunities or risks that could arise from a steady growth in purpose-led businesses?
Purpose-led businesses contribute to the kaupapa of government and there are significant opportunities that arise from the growth of these businesses.
There is an opportunity for government to consider the importance of consistent reporting and measurement on the impact of business, through using a suite of standardised indicators and measures to measure outcomes (impact). Through doing so, all businesses can report on their impact, which will demonstrate the additional positive social and environmental impacts of purpose-led business and their contribution to government’s goals. This can demonstrate how purpose led businesses are contributing to the economy, and assist to make the case for greater government encouragement and support of these businesses.
“Not all businesses are able to operate like social enterprises but all businesses can and should think about their impact and their purpose; how they can minimise negative impacts like carbon emissions or waste, and how they can maximise positive impact. ”
A steady growth of purpose-led businesses would unleash the following:
Opportunities to accelerate towards and meet emissions reductions deadlines.
Opportunities to contribute to personal wellbeing and community resilience across Aotearoa New Zealand.
Opportunity to help address New Zealand's problems with waste and recycling.
Opportunities to support challenges with mental health.
Opportunities to improve educational outcomes.
Opportunities to reduce social disparities and exclusion and improve social cohesion.
Do you think that there is a greater role for business in contributing to wider societal outcomes? If so, what do you think business needs to be able to do this?
Not all businesses are able to operate like social enterprises but all businesses can and should think about their impact and their purpose; how they can minimise negative impacts like carbon emissions or waste, and how they can maximise positive impact.
Businesses need encouragement to focus on this (carrots and sticks).
There is an increasing risk of organisations ‘impact washing’, which could be due to many factors: lack of capability, lack of organisational capacity, lack of clarity around industry standards or measures (no agreed best practice)
There is a risk of ‘stagnation’ in the number of for-purpose businesses, where businesses cannot scale to the required level to be financially sustainable and therefore fail.
Do you think there is a role for government in enabling purpose-led businesses? What role should or could government play?
Yes there is definitely a role for government to play in enabling purpose-led businesses.
Challenges like addressing climate change, improving mental health or reducing waste, are not challenges that government alone can solve. Purpose-led businesses are already demonstrating their role in addressing challenges like these – often in line with Government’s own goals. However, much more can be done to enable more purpose-led business activity that improves lives and the environment, in order to accelerate the impact they are creating. Government has a role to incentivise the behaviour and practices it wants to encourage, thereby supporting Government’s goals.
Impact businesses sit right across our economy. Some are charities, others are limited liability companies and some use a combination of structures. Some employ Government should have a vested interest in deliberately targeting and growing this ‘impact section’ of our economy for the simple reason that Aotearoa New Zealand would greatly benefit from having more businesses that improve lives and the environment. In our view the lack of a cohesive government strategy for purpose-led businesses is constraining the growth and success of these businesses and reducing their potential.
“Aotearoa New Zealand would greatly benefit from having more businesses that improve lives and the environment.”
All states in Australia have social enterprise strategies, and Australia is actively looking at rolling out a national social enterprise strategy. Aotearoa New Zealand has no such strategy.
Similarly in Australia, there are targeted funds available for purpose-led businesses to access professional services to help them take on investment and grow. Despite the success of a similar scheme in New Zealand over five years, government has not supported this approach.
By not singling out purpose-led businesses for specific support, whether that’s tools, access to funding, support through regulation or something else – Government is asking them to compete with solely for-profit businesses for resources
More information
To find out more about social enterprise, see this tool on The Impact Initiative website What is a Social Enterprise?, or for more examples check out last year’s Impact Investment Readiness Programme recipients, or the The Impact Enterprise Fund portfolio companies.
A note on the term ‘social enterprise’
Ākina has a working definition that describes social enterprises as purpose-driven organisations that trade to deliver positive social, cultural and environmental impact. Not all businesses that could be considered social enterprises use this term to describe themselves. Some might refer to themselves as impact businesses, a for-purpose businesses, a community enterprise, a whānau or Māori business or something else. In this piece we have also used the term purpose-led business to refer to organisations that pursue the creation of positive impact. This term is increasingly used by The Government, notably in the upcoming MBIE Long-Term Insights Briefing.