Mon, Jul 17, 2017 - Page 6 News List

EDITORIAL: Social enterprises need recognition

Social enterprises are an unfamiliar subject for most Taiwanese. Although the government in 2014 initiated the Social Enterprise Action Plan (社會企業行動方案) with the goal of creating a better ecosystem for such businesses, a survey released earlier this month by DBS Bank found that the public’s awareness of social enterprises remains low at 19.9 percent.

In 2015, a poll found that 18.8 percent of respondents were aware of the existence of social enterprises, which means that the public’s awareness rose by merely 1.1 percentage points over the past two years.

A social enterprise endeavors to improve the well-being of people and the environment, and pledges to behave in a socially responsible manner, despite being a business entity that applies commercial strategies to generate profits.

Research abroad has found that the use of business principles by such companies can help solve social and environmental problems more effectively than traditional businesses. Moreover, the development of social enterprises helps boost local employment.

Compared with social enterprises in Hong Kong, Singapore and South Korea, those in Taiwan are only starting to gain traction following a series of issues like food safety, pollution and the urban-rural divide that raised concerns about corporate ethics.

As fewer than 20 percent of Taiwanese have heard of social enterprises and even fewer have any idea about what they do, there is still a lot of work to be done.

Still, the survey provides valuable insights. For example, when the business models of and the products and services provided by social enterprises were explained to respondents, 78.6 percent said they identified with the entities’ emphasis on both turning a profit and addressing social issues. That ratio was 77.9 percent two years ago.

Respondents in the 20 to 49 age group have the highest level of understanding about social enterprises, suggesting strong support from this age group, which has the largest purchasing power, according to the survey.

The poll also found that 57.9 percent of social enterprises in Taiwan are less than five years old, 21.2 percent are from six to 10 years old and 20 percent are more than 10 years old.

More than 30 percent of social enterprises said their annual revenue is less than NT$3 million (US$98,629), 10 percent said their annual revenue exceeded NT$20 million, while 60 percent said they operated near break-even point or made a small profit, according to the survey.

The poll suggests a need for increased efforts from the public and private sectors to improve public communication to increase awareness and understanding about social enterprises and their goals.

While the government, non-governmental organizations and universities have worked in deregulation, networking, financing and incubation since the launch of the plan, it cannot be said the current environment is conducive to their establishment.

The proposed amendments to the Company Act (公司法) regarding social enterprises aim to address the problems about funding, investment, corporate governance and shareholders’ rights, but the government can promote social enterprises through incentives such as tax breaks or public procurement.

Programs linked to social enterprises offered by local universities should also be expanded to help young people gain a deeper understanding of the social context of the nation.

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