Social enterprises are unique because they exist to create impact through trade. Purpose is at the heart of the social enterprise model, but it can be hard to quantify or explain. Certification provides confidence that the social enterprise model really does create social or environmental impact through trade.
This is our first position statement in a series focusing on different business aspects of social enterprise. We aim to unpack tricky subjects, debunk myths and where applicable, highlight any of our relevant policies.
Social washing can be described in a number of different ways. Stakeholders across social procurement purchasers, social enterprise, and non-social enterprise entities may be variably implicated in social washing.
Social Traders considers social washing as the practice of:
- A non-social enterprise entity taking unfair advantage of a social enterprise, and/or
- Misleading use of the Social Traders certification logo.
These practices may be used to make claim to, misrepresent, and/or exaggerate social outcomes that would otherwise be achieved through the procurement of products or services from a genuine Social Traders certified social enterprise. A misrepresentation of social outcomes can relate to either a transaction in the marketplace or the nature of the organisation in question.
Social Traders principles for mitigation of social washing
Social Traders facilitates a marketplace of social enterprise suppliers and business and government buyers (members), to enable transactions between them, and in-turn driven positive social change in Australia. We refer to this as social procurement. Where goods or services are purchased through a genuine social enterprise, deliberate and positive social outcomes can be achieved.
The primacy of social purpose (as opposed to personal or shareholder gains), embedded within the strategy and operations of a social enterprise indicate that achieving social outcomes through the business is a priority concern.
We emphasise the following principles in the social procurement marketplace:
- The intention of social procurement is to create positive social outcomes through the purchase of goods and services from a social enterprise.
- Social Traders certified social enterprises and business and government members engage in transactions with the above intent.
- It is best to identify genuine social enterprises through Social Traders certification status which is a world class social enterprise certification, providing assurance that a business is operating with primacy of social purpose.
- While buyers are encouraged to find ways to spend with certified social enterprises, where demand cannot be met, buyers should look to other suppliers rather than engage in unethical practices.
Examples of what social washing is:
While not exhaustive, the following examples are instances that Social Traders considers social washing:
a. A contract is awarded to a certified social enterprise who then subcontracts the full value of works to a non-social enterprise entity, where no or limited social outcomes are generated. Each - the purchaser, non-social enterprise supplier, and certified social enterprise may be implicated in the transaction.
b. A non-social enterprise entity leverages the social enterprise status of a certified social enterprise via an official or non-official partnership, and/or shared branding without generating social outcomes.
c. A non-social enterprise entity proposes to collaborate with a certified social enterprise to gain market advantage in a tender application. Once awarded the contract, the non-social enterprise entity circumvents the collaboration.
d. A Social Traders certified social enterprise that may have met certification criteria, changes either ownership, governance, or operations within the certification period in a way that compromises its social enterprise status, and has not notified Social Traders as required in the Terms & Conditions for certification.
e. A Social Traders certified social enterprise with the primary purpose of employing and/or training disadvantaged individuals underpays employees based on minimum legal requirements, or otherwise disadvantages its employees, meaning it compromises its primary social purpose and therefore no longer complies with certification criteria.
Examples of what social washing is not:
(specific examples not indicative of social washing)
a. A certified social enterprise subcontracting work to non-social enterprises where it does not have the capacity to deliver on the full contract, as standard sub-contracting practice.
b. A products manufacturing and distributing social enterprise that outsources manufacturing of products.
c. A disability employment and training, certified social enterprise paying employees a supported employment award, calculated with legislated productivity-based wages tool/s. While paying lower than regular rates, wages under productivity-based tools are legal award rates.
d. A certified social enterprise that proposes to donate a percentage of its profits that hasn’t yet made any profits to donate. Some social enterprises may take several years to reach profitability before a donation is made. However, the social enterprise should be aware of false advertising on this basis.
e. Non-performance or compromised quality on the delivery of a contract.
Contact us
If you are aware of any instances of social washing you would like to bring to our attention, contact certification@socialtraders.com.au
While we are not always able to fully investigate each situation, we address instances where we have access to facts and evidence from all parties involved and in particular where a social enterprise’s certification status is implicated.