Growing the Fourth Sector - A Surge of "For-Benefit" Enterprises is needed to reach the SDGs, says the World Economic Forum
New York City, United States, 19 September 2017 – For the world to reach the Sustainable Development Goals (SDGs), a surge of “for-benefit” enterprises that combine profits with purpose will be needed, the World Economic Forum announced today during the Sustainable Development Impact Summit. To accelerate this growth, the World Economic Forum Global Future Council (GFC) on International Governance, Public-Private Cooperation and Sustainable Development in partnership with the
Fourth Sector Group (4SG) announced the launch of a multi-stakeholder collaborative effort, the Fourth Sector Development Initiative (FSDI). Joining the FSDI collaborative, several organizations also announced the launch of new initiatives, including Ibero-American General Secretariat, Oxfam, African Development Bank and CARE Enterprises.
For-benefit enterprises constitute a fourth sector of the economy that has been growing for decades at the intersection of the traditional three: the private, public and non-profit sectors. At the same time, there has been a convergence towards the fourth sector as many traditional businesses have broadened their purpose beyond just profit-making, and governments and non-profit organizations have taken on market-based approaches to achieve their mission. As the fourth sector is new and fragmented, good data on it has not been captured yet (something the FSDI aims to remedy over the next year). There are indications, however, that it could account for as much as 10% of GDP in the United States and Europe and it is poised to grow rapidly because, according to a Global Entrepreneurship Monitor report, there are millions of for-benefit start-ups being launched around the world each year.
“The critical problems the world is facing are not going to be solved unless we make a rapid transition from a suicide economy to a sensible one that prioritizes people and planet,” said Heerad Sabeti, Chief Executive Officer of Fourth Sector Group (4SG) and the FSDI lead on the Forum’s GFC on International Governance, Public-Private Cooperation and Sustainable Development. ”The fourth sector has the potential to play a major role in facilitating such a transition, but it will take massive collaboration for it to succeed. It’s hard to find a more effective platform than the Forum for bringing leading experts and institutions to work together around this critical challenge.”
To succeed at delivering on both their commercial and impact goals, for-benefit enterprises need a strong supportive ecosystem that is tailored to their unique requirements. The FSDI provides a platform for collective leadership and action for strengthening the supportive ecosystem for for-benefit firms globally by advancing a set of mutually reinforcing priorities:
Enhancing knowledge and raising awareness of the fourth sector
Developing more enabling policy and regulatory environments for the fourth sector
Promoting new business and investment models that are aligned with for-benefit enterprises
Increasing educational and training opportunities for fourth sector practitioners and leaders
Developing local and regional hubs to foster collaboration and accelerate fourth sector development in communities
“As the International Organization for Public-Private Cooperation, the World Economic Forum is a leading advocate for two foundational concepts that are today more relevant than ever – the need for businesses to take responsibility for the well-being of their stakeholders, and the need for cross-sector collaboration to solve the global challenges we face,” said Terri Toyota, Head of Philanthropic Organizations and Sustainable Development and Member of the Executive Committee, World Economic Forum. “FSDI integrates both of these powerful forces by bringing together leaders across all sectors to find concrete opportunities for collaboration; driving policy, investment, entrepreneurship, job creation and growth in for-benefit enterprise globally.”
The FSDI and its partner initiatives were launched at a session during the World Economic Forum’s inaugural Sustainable Development Impact Summit in New York on 18-19 September 2017. The summit is dedicated to accelerating progress towards the SDGs and the Paris climate agreement through public-private cooperation and the application of technologies of the Fourth Industrial Revolution.
About the fourth sector and for-benefit organizations: Over the past few decades we have seen many for-profit companies broadening their purpose to pursue social and environmental aims, while many non-profits and governmental organizations have adopted market-based approaches to advance their goals. At the same time, there has been a rapidly growing movement of for-benefit enterprises being created around the world that leverage business to solve social and environmental problems. For-benefits have been challenging the traditional boundaries that separate the public, private and non-profit sectors, giving rise to a new, fourth sector of the economy.
About FSDI: The Fourth Sector Development Initiative (FSDI) is a newly formed multistakeholder initiative of the GFC on International Governance, Public-Private Cooperation and Sustainable Development in partnership with the Fourth Sector Group (4SG). The FSDI brings together public, private and philanthropic institutions committed to catalysing trillions of dollars of fourth sector growth by 2030 through fostering the enabling ecosystem required for for-benefit enterprises to flourish. The FSDI mobilizes collaboration to enhance knowledge and raise awareness of the fourth sector, develop more enabling policy and regulatory environments for the sector, promote new business and investment models that are aligned with for-benefit enterprises, increase educational and training opportunities for fourth sector practitioners and leaders, and develop local and regional hubs to accelerate fourth sector development in communities.
Several organizations have already joined the FSDI collaborative and are launching affiliated projects today, and many more are expected to follow soon:
The Ibero-American General Secretariat (SEGIB) is launching an international project aimed at supporting the development of the fourth sector in Latin America and the Iberian Peninsula.
CARE Enterprises is planning to deploy $30 million through various new investment structures focused on scaling for-benefit enterprises in frontier markets.
Oxfam is launching the Future of Business Initiative, which consists of a portfolio of projects that support fourth sector development.
About the GFC: The World Economic Forum’s Global Future Council on International Governance, Public-Private Cooperation and Sustainable Development exists to promote, syndicate and discuss the latest trends, technologies and solutions at the nexus of public-private cooperation in support of the 2030 Agenda for Sustainable Development.
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