The

Social Enterprises as Agents of Sustainable Development Final Paper

Submitted By Asuncion M. Sebastian For Sustainable Development DVS533P To Dr. Levy Duhaylungsod On April 2, 2012

Abstract
The arguments and discussions in this paper are anchored on alternative development theory, which proposes that development must eradicate poverty, be endogenous and self-reliant, and be in harmony with the environment. The paper then discusses the factors why sustainable development initiatives have not been successful both at the global level and in the Philippines. It also cites the reasons why those that are successful become soone of the key factors is local participation in the implementation of the programs. Although the civil society organizations, primarily the non-government organizations, are at the forefront of sustainable development, not all of these institutions are suitable or capable of implementing the programs effectively. The paper thus argues that social enterprises and similar organizationswith their unique features that can address the program weaknesses or failure factorsmust be tapped as agents of sustainable development and that an enabling policy environment must be created for these social enterprises to grow to advance the countrys environment-related programs.

Table of Contents
Introduction ..............................................................................................................................1 Rationale .................................................................................................................................................................. 1 Research Question ............................................................................................................................................... 1 Contribution of the Study.................................................................................................................................. 2 Theoretical Background........................................................................................................3 Sustainable Development Anchored on Alternative Development ................................................ 3 The Role of Institutions...................................................................................................................................... 5 The Role of the NGOs .......................................................................................................................................... 7 Critique of the Global Sustainable Development Initiatives.....................................9 The Philippine Context ....................................................................................................... 11 The State of Natural Environment ............................................................................................................. 11 Government Response .................................................................................................................................... 15 Issues and Challenges...................................................................................................................................... 16 The Civil Society Organizations in the Country.................................................................................... 17 NGOs .................................................................................................................................................................. 18 POs...................................................................................................................................................................... 21 Cooperatives................................................................................................................................................... 22 Challenges and Limitations of the Civil Society Organizations ................................................ 23 Strengthening Sustainable Development Programs through Social Enterprises.............................................................................................................................. 24 Definition of Social Enterprise..................................................................................................................... 24 Types of Social Enterprises ........................................................................................................................... 26 Unique Features of Social Enterprises Relevant to Sustainable Development ...................... 28 Policy Recommendations to Create an Enabling Environment for Social Enterprises as Agents of Sustainable Development ................................................. 33 Direction for Further Research........................................................................................ 37 Annex ........................................................................................................................................ 39 Works Cited ............................................................................................................................ 41

 Introduction Rationale

The Social Enterprises as Agents of Sustainable Development

Thirty-two years after the World Conservation Strategy in 1980 and twenty years after the launch of Agenda 21, environmental degradation continues to be a problem in the Philippines. The deteriorated state of the countrys environment and natural resources is felt most by the poor, who depend on such resources for their livelihood and are most vulnerable to the consequences of its degradation and depletion. Major urban areas remain polluted, as evidenced by poor air and water quality, and by poor waste management. (National Economic and Development Authority, 2011) Specifically, land use has been a major concern, specially that catastrophes have been damaging the nation, the occurrence of which is mainly attributed to environmental degradationforest, soil, and land overall. For example, the average estimated cost of casualty resulting from typhoons alone averaged Php6.3billion each in damages in infrastructure, loss of lives, and foregone income. This high social cost of poor environmental management compels one to look into the factors that contribute to the success or failure of environmental management and to propose possible solutions.

Research Question
The research question will thus be this: Why has sustainable development remained an issue despite the various initiatives globally, regionally, and locallybeginning 1992? This paper argues that sustainable development, being anchored on the principles of alternative development, needs to address the basic human needs, and be participatory and self-reliant in addition to the inherent ecological orientation of the

program. Thus, among the contributory factors to the outcome of the sustainable development programs and policies, this paper looks into the implementing agents and the implementation process that comes naturally with the organizational nature of the agents. At present, the non-government organizations (NGOs) are in the forefront of Philippine civil societys advocacy for sustainable development. However, NGOs are criticized for being financially dependent on donors (and therefore, not self-reliant) and middle-class-driven (and therefore, not participatory). This paper further argues that social enterprises can be effective agents of sustainable development because not only are they financially independent and do work with grassroots, but they also have the capacity for managerial competencies necessary for program implementation and for technological innovation. Entrepreneurs have the ideal characteristics required to experiment, take risks, and put into practice these elements of the model and move towards sustainability entrepreneurship. Hence, entrepreneurs should not only be considered as contributors in a successful economy, but the driving force of a sustainable society (Tilly and Young, 2009).

Contribution of the Study

If its environment-related policies and programs are examined, the Philippines has not been amiss in this area, what with the 59 laws/degrees/orders passed. The soundness of these policies, however, is one issue; their implementation is yet another. While studies on sustainable development often focus on the quality or content of the programs, as well as on the implementation processes, the outcomes, and the solutions to improve these programs, this paper examines the implementing actors as a contributing factor to the outcomes of sustainable development.

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Social entrepreneurship has become a popular vehicle and development model to address various social issues. In the Philippines, it has gained ground as poverty alleviation mechanism. However, there is little discussion on how this model can be used in sustainable development, hence this paper. The theoretical foundation of this study, as well as most case studies that will be cited, shall be based on literature written in the West/North where social entrepreneurship is more developed and sophisticated; the application and analysis, however, shall be done in the Philippine context and in the case of sustainable development.

Theoretical Background Sustainable Development Anchored on Alternative Development

While poverty and social justice have been the center of development efforts for centuries, environmental concerns started receiving global attention beginning only in the 1970s, with the Founex Report of June 1971 identifying development and environment as 'two sides of the same coin' (United Nations Environment Program, 1981). In 1974, the members of a symposium of experts Cocoyoc, Mexico came with the Declaration (which later became popularly known as the Cocoyoc Declaration of 1974) that was considered influential in changing the attitudes of leading environmental thinkers: A people-centered development in harmony with the environment, requiring a more self-reliant effort than in the pastself-reliance through full participation in a system that perpetuates dependence. (Cocoyoc Declaration, 1974 cited in Friedmann, 1992)

In 1975, the Dag Hammarskjild Report proposed another development strategy that had the following characteristics: 1) geared to the satisfaction of needs, beginning with the eradication of poverty; 2) endogenous and self-reliant; and 3) in harmony with the environment. This proposition was in response to crisis of development at that time: mass poverty in Third World countries, unequal relations between dominant and dominated countries, institutional crisis, and

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environmental problems. (Hammarskjold, 1975) This is perhaps the earliest work that legitimized and universalized the alternative development concept. According to Martinussen (1997), alternative development is different from other theories in terms of goals and agents. Alternative development redefined development goals from economic growth to human development, and focused on the civil society as development agent. As for the methodology, Nederveen Pieterse (1998, 2010) emphasized alternative developments being participatory, endogenous, self-reliant, and ecologically sustainable. These contours are hard to measure but the whole point of development as proposed by the alternative development is to go beyond getting standards and numbers as was done in the previous economic growth-driven strategies. He furthered that development is not about growth but about social transformation and came up with a comparative table of growth-centered and social transformation-centered growth models (see Figure 1). Figure 1: Development Models (Nederveen Pieterse, 1998)

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Other definitions are as follows: Development is a process by which the members of a society increase their personal and institutional capacities to mobilize and manage resources to produce sustainable and justly distributed improvements in their quality of life consistent with their own aspiration. (Korten, 1990) A theoretical framework outside the well-known neoclassical and Keynesian doctrinesan ideology that rejects a system driven by relentless competition, forced to expand production continuously regardless of cost, while bringing ever-new technologies on the market. (It) addresses the condition of the poor directly(and) argues for their involvement in actions that will lead to their own empowerment. (It) therefore pursues structural changes at the national level as well as local meliorative action. (Friedmann, 1992) As a society-led theory, alternative development is often associated with community development, local economic development and micro regional development...alternative development has also been linked to the idea of de-globalization or de-linking local economies to the global economy and the return to indigenization. (Bello, 2002) Consistent with Polanyis (1977, in Martinussen) argument that economic relations and economic activity are deeply embedded in the matrix of social and cultural relations, Friedmann (1992) asserted that: 1. Societal relations are more important determinants of human behavior than incentive structures of mainstream economists. 2. It is necessary to probe into the social-cultural institutions of the civil society, beginning with the household.

The Role of Institutions

For while the establishment and strengthening of autonomous local communities are both a means to promote human wellbeing and as an end in itself (Korten, 1990), these autonomous local communities cannot be created and sustained without the state collaboration (Friedmann, 1992). Alternative development cannot walk away from the role of the state. Education, health care, and infrastructure cannot be left to local alternative development.
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Economic development requires state action. More recent alternative approaches argue that a strong civil society needs a strong state (Brohman, 1996 in Friedmann 1992). Bebbington and Bebbington (2001) also argued that the state could provide the legal environment and structure that encourage alternative development, such as decentralization of power to local government, at which level the groups can better participate in the planning and implementation activities. Nederveen Pieterse (1998, 2010) also emphasized the role of institutions in alternative development. He supported Kortens (1990) argument that the heart of development is institution and politics, and Sanyals (1994) point that alternative development has not found institutional support because agencies, bureaucracies, and ministries cannot handle sharp discontinuities in principles and practices. (Nederveen Pieterse, My Paradigm or Yours? Alternative Development, Post- Development, Reflexive Development, 1998) With the recognition of the role of state in alternative development, this paper equally acknowledges its role in sustainable development; that regardless of who the implementing agents are, the state or government still is crucial in sustainable development. Bebbington and Bebbington (2001) also brought the market back into development. They argued that economic development remains important to the communitiesin fact, collective actions were said to be more sustainable in areas where group participation was coupled with economic development (in the form of access to markets and/or capital). They suggested that this phenomenon could probably be explained by accumulation of wealth or capital preventing migration. In essence, the authors did not see the exclusivity between growth and social transformation, as presented by Nederveen Pieterse in Figure 1.

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Supporting Bebbington and Bebbingtons argument, this study shall likewise consider economic development, or at least meeting of basic human needs, in the analysis of the effectiveness of agents of sustainable development programs.

The Role of the NGOs

According to McIlwaine (1998 in Willis), while there is little precise agreement as to which activities should be included within civil society, particularly in terms of political and economic associations, they generally refer to voluntary organizations, community groups, trade unions, church groups, cooperatives, business, professional, and philanthropic organizations, and a range of other NGOs. Although civil society is usually defined as made up of these various groups, there has also been a tendency to view NGOs as primary vehicles or agents of civil society. The NGOs are often regarded as the answer to the perceived limitations of the state or the market in facilitating development. Since the NGOs work with the grassroots, they can provide services that are much more appropriate to the local communities. They can also easily draw on locals knowledge and use local materials, when necessary. Finally, since the NGOs are embedded in the communities, empowerment, participation, and democratization are more likely to happen and accountability to the locals, enforced. (Willis, 2005) While the number of NGOs has increased rapidlydue to the amount of funds channeled to them and due to lack of other support mechanisms for communities in needdetermining their number is quite difficult. This is because there are varying registration practices across the globe. In 2000, however, the United Nations Development Program estimated that there were 145,405 NGOs worldwide. (Willis, 2005) Korten (1990) came up with general typology of NGOs:

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1. Voluntary organizations that pursue a social mission based on shared values 2. Public service contractors that are market-oriented nonprofit businesses serving public purposes 3. Peoples organizations representing members interests 4. Governmental non-governmental organizations that are into creations of government and serve as instruments of government policy. Likewise, Friedmann (1992) drew his own typology of NGOs: 1. Popular organizations that are non-profit, non-political groups from within the civil society of the poor, mostly funded by the membership dues 2. Professional groups composed of educated staff working on disempowered communities and funded by private donations 3. Private voluntary organizations that are well-funded foreign NGOs with global operations 4. Non-profit, socially oriented, business organizations, which designs, manufactures, and sells village technologies. On the other hand, Bebbington and Bebbington (2001) came up with two types of NGOs: 1. The informal civil society groups that emerged from bottom up, are more inclusive, and are thus more often viewed as the source of alternative development 2. The formal NGOs that normally employ top-down approachsomething that led the authors to emphasize that not all groups can be vehicles to alternative development Based on these various typologies, it is therefore not sound to assume the all NGOs are equipped or inclined to promote development, as not all are meeting the basic needs and are endogenous, self-reliant, and ecologically sustainable.
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Critique of the Global Sustainable Development Initiatives

As a result of sustainable development initiatives, international environmental law, providing the appropriate muscle necessary to encourage compliance, has been written; environmental institutions across public and private sectors, and civil society grew in number; and ministries or departments of environment are now common in all regions. Technological change has helped to relieve some environmental pressures: lower material intensity in production; a shift from materials and energy supply to the provision of services; a modest boost in renewable technology; and a significant clean-up in some regions in previously 'dirty' industries. It was recognized that poverty reduction, economic development, and environmental stability should be mutual goals, breaking the old thinking that regarded environmental protection and economic development as conflicting aims. (United Nations Environment Programme, 2002) While sustainable development campaign has had considerable achievement, there still remain some problematic areas. The International Institute of Sustainable Development (2007) considered the 10 years since Rio a lost decade, marked by the collapse of leadership and a failure of the rich countries to deliver on their 1992 promises and programs had become donor-driven. The impact of local development projects was more apparent in social and economic terms than in resource use or the natural environment, mainly because of poor policy support. Further, although a new theoretical understanding of the benefits of ecosystem services emerged, in practice information and policy instruments to protect these have been lacking or sporadic. Many of the policies had either no clearly defined and specific performance criteria or the criteria are not readily related to environmental performance. Although some of the policies have significant links to environmental issues (in some cases, they are key drivers of environmental change), their built-in evaluation criteria are usually limited to economic performancesomething that made evaluation particularly challenging from an environmental and sustainable
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development perspective. (United Nations Environment Programme, 2002) The International Institute for Sustainable Development (2007) proposed that economics and the environment needed to be brought into line, with the environment often being short-changed. It is then argued that more supportive policy frameworks must be designedto include funding mechanisms, support structures, and greater recognition of the value of community-focused programsto have a more effective sustainable development program. (Vickers, 2010) Kirrin (2000), in his report on the Metropolitan Environment Improvement ProgramWorld Bank's efforts to address the environmental concerns of Asia's major cities where Philippine projects were studiedalso identified community involvement as one of the key factors associated with better project impact. He also concluded that learning by doing and monitoring progress improves insight and performance and so do technical and management skills, and documentation of process and experience. Finally, institutionalization of projects, he noted, occurs through partnership, dissemination, and changes in programs and policies. The abovementioned issues may be grouped according to policy administration process:

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The Philippine Context The State of Natural Environment

The countrys environment and natural resources continue to deteriorate. According to the Philippine Development Plan 2011-2016, only 45 percent of classified forestlands remain; the quality of land resources has been reduced by erosion, pollution, and land conversion; critical watersheds continue to deteriorate, which is likely to affect water supply; biodiversity resources are also among the most threatened; and coastal and marine resources have been declining as a result of coastal development and unsustainable fishing practices. Major urban areas remain polluted, as evidenced by poor air and water quality, and by poor waste management. The impact of environmental degradation is felt most by the poor, who depend on such resources for their livelihood and are most vulnerable to the consequences of its degradation and depletion. (National Economic and Development Authority, 2011) The quality of land resources has deteriorated steadily because of erosion, pollution, and land conversion. Twenty-one percent of the countrys agricultural lands and 36 percent of nonagricultural lands are moderately or severely eroded. Soil erosion has affected the productivity of land, limited the rehabilitation or restoration of degraded lands, lowered the quality of surface water, and modified hydrologic conditions. Moreover, the changing weather patterns have brought about prolonged droughts and excessive rains. (National Economic and Development Authority, 2011) Of the countrys total land area of 30 million hectares, 47 percent (14 million hectares) has been classified as alienable and disposable lands while 15.9 million hectares (52 percent) are classified as forestlands. Some 2.7 million hectares of total classified forestlands have been either established or considered as protected areas, making up a total of 238 protected areas. Of the forestland, only 6.43 million hectares or 41 percent were still forested in 2003, a significant decline from the 17

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million hectares recorded in the 1930s. Figure 2 shows the decline in forest cover from 1934 to 2003. An analysis of satellite-based maps elaborated by the European Unions Joint Research Centre in 2007 revealed that possibly, only 19 percent of the countrys land area (or 5.7 million hectares) remains forested. (National Economic and Development Authority, 2011) The main threats to Philippine forests come from the collection of fuel wood, settlements in forestlands, conversion to agricultural uses, kaingin and forest fires, and illegal logging. There are approximately 20 million people living in upland watershed areas, half of whom are dependent on shifting cultivation for their livelihood. Inequitable land distribution, insecure tenure, and rural poverty are often cited as causes of deforestation and forest degradation in the Philippines, which, in turn, are linked to increases in rural populations both as a result of high fertility and in-migration. Deforestation has made many poor communities more vulnerable to natural calamities such as of typhoons, flash floods, and landslide. (National Economic and Development Authority, 2011) The mining industry, despite its social and environmental threats, is being promoted and revived due to its possible contribution in inducing economic growth, attracting investments, and reducing poverty in the countryside. However, challenges remain on the emerging framework of responsible mining specifically on corporate

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accountability, voluntary compliance among companies, and giving of due recognition to local autonomy and indigenous peoples rights. Of the countrys 30 million hectares of land area, 9 million hectares (30 percent) is considered as having high mineral potential. Only 2.7 percent of this high-potential area is covered by mining permits or contracts and only 0.32 percent is in the development or operating stage. In separate researches, it was found that mining permits or contracts were within half the number of titled and claimed ancestral domains. A number of mining projects, however, have been alleged to have caused environmental degradations, physical displacement of indigenous peoples, and cultural dislocations. (National Economic and Development Authority, 2011) In 2005, a European Union (EU)-commissioned study reported that legal and illegal mining operations posed serious threat to the forest and to local rivers because of forest clearing and the release of toxins. Metallic mine waste generated from 1990 to 1999 amounted to 131 million metric tons (MT), while mine tailings were about 136 million MT. Many of these concerns stem from the failure of many small and large-scale mining companies to adhere to stringent, globally defined standards for responsible mining. (National Economic and Development Authority, 2011) Land use has been a major concern specially that catastrophes have been damaging the nation, the occurrence of which is mainly attributed to environmental degradationforest, soil, and land overall. Gathered from various sources, the following figure shows the estimated cost of casualty resulting from select typhoons from 1991 to 2011, with each averaging Php6.3 billion in damages in infrastructure, loss of lives, and foregone income (Figure 3).

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