June 21, 2018

CSRWire.com The Corporate Social Responsibility Newswire

news by category

CSRwire Talkback

| join the conversation

The Challenges of Alternative Economy

Submitted by: Helena Ancos

Posted: Apr 20, 2017 – 06:00 AM EST

Tags: alternative economy, social innovation


This week Nesi Forum, the most important international meeting of the new Economy or alternative economy, will be held in Malaga.

The raison d,ètre of the New Economy or Alternative Economy, that brings together  activities included in the Collaborative Economy, Ethical Finance and the Social and Solidarity Economy, lies in the reframing of our relationship with money, reducing the cycle of production, distribution and consumption, promoting circular economy, collaboration between people and between companies, and rethinking the role of economic activity.

This community of alternative economy is being developed, among other activities, around eco-design, sustainable building and urbanization, affordable and renewable energy, food sovereignty, Smart cities, personal well-being, sustainable fashion, the creation of exchange spaces and local consumption and production.

In the midst of the political chaos in which the world develops, the numinous defense of dominant economic interests, growing inequality, perennial social challenge, the threats of global warming and the scarcity of natural resources, this movement supposes a breath of fresh air and  hope in another form of social and economic coexistence.

The alternative economy is no longer a movement, but a reality supported by well contrasted data:

  • in collaborative economy, according to PwC,  a set of 275 technology platforms analyzed generated revenues of € 3.6 billion in 2015 and a volume of operations worth € 28.1 billion
  • the social and solidarity economy, according to CEPES, has 2 million businesses in Europe and 14.5 million jobs that produce 8% of the EU's GDP.
  • The Global Sustainable Investment Alliance Global Study of Sustainable Investment 2016 reveals that in 2015, $ 22.89 trillion was managed under sustainable investment criteria, an increase of 25% over 2014.

Regarding Impact Investing, the annual report of the Global Impact Investing Network (GIIN), a leading global organization in impact investing, shows that impact investment raised USD 77.4 billion in 2015 with a net return on debt of 5.4% in developed markets and 8.6% in emerging markets; and a return on equity investments of 9.5% in developed markets and 15.1% in emerging markets.

Now, in this ecosystem there are also fraud, expectations and challenges, many challenges that will mark its near future.

Fraud, because as in the worst practices of orthodox economics, the success of some of these initiatives has led to rapid growth, chiselled by marketing blow and abuse of labor rights, or an exploitation to the limit of the existing legal framework.

Expecatations, because the new economy has managed to articulate an attractive story based on its very raison d'être (the democratization of the market, the joint value for consumers, business and society, a universal language where cultural differences are minor and social bonds and strengthening of the fabric of society and respect for the environment as a sign of identity) but can not be carried away by the fashions and isms that are accompanying the development of social responsibility, certifications, audits of scarce guarantees or the legal estructures of the alternative economy such as the B-Corps (until now companies with statutory social purposes and with few controls).

The new economy must rely on sound and comprehensive legal frameworks in order to unlock the potential of its entire ecosystem and maximize its positive social impact in terms of employment and growth.

Challenges. The survival and success of the alternative economy depend on some critical factors:

  • The dependence on disruptive innovations that solve social problems, amid a socioeconomic environment that increases inequalities at a rapid pace, and where the power of large corporations has hijacked democratic values ​​and the potential of technology to overcome barriers of different nature .

  • The challenge of overcoming regulatory and legal resistances that slow down these developments and where damages are rarely repaired in their integrity.

  • The challenge of educating a population in a model of production and consumption that is closer to the essence of human beings and ecology, in a time trial task that will take several generations and where we must necessarily choose between cost and value. Here it is key to improve the visibility of the social economy and its impact on society, in order to guarantee sufficient knowledge to help formulate public policies.

  • The generational challenge. A change of mentality is taking place slowly, but we must know how to instill it in the generations to come, especially taking into account intergenerational cultural differences. The new economy has its social base in people mainly of the X generation  and the oldest of Y generation, but how to inculcate it to the youngst people of the Y generation and the Z generation, for whom the social and employment perspectives are quite different from ours?

  • Finally, the alternative economy is winning the story telling, but lacking more political influence. Up until now, these initiatives have been supported by the public authorities in a testimonial, anecdotal way or by judicial decisions. At European level, the Commission and the Council have taken account of the social economy, social innovation and social investment policies in the framework of the Europe 2020 Strategy and its revision, but there is a lack of clarity in the dissemination of good practices, and support by national and local authorities.

The alternative economy must promote dialogue with political circles so that society can better understand its role while consolidating the building of resilient business and social communities. But above all it has to affect several key issues:

  • It has to pass from the passion of the story telling to the measure of impacts, through universal and non-proprietary KPIs and above all, to influence the distribution of their social value either in their workers, and / or in the communities where they operate.

  • Work with specialists and public authorities in measuring the real contribution of the social economy to the main macroeconomic aggregates.

  • Work with financial institutions for adequate access to financing.

  • And above all, for winning scale, they have to make proactive and transformative alliances, the key to innovation and long-term networks.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

Search The Blog



Issuers of news releases and not csrwire are solely responsible for the accuracy of the content