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Social Enterprise Regulation, step one for the brand new economic system

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This text was translated from our Spanish version utilizing AI applied sciences. Errors might exist on account of this course of.

Opinions expressed by Entrepreneur contributors are their very own.

A lot has been mentioned a few new economic system , about forgetting outdated fashions or discovering a new manner of doing issues . It is because lots of the present issues –local weather change, inequity, over exploitation of assets– have been attributed to capitalism and particularly to corporations.


The pandemic solely uncovered all these issues much more, igniting the dialog in regards to the financial fashions that triggered them and about whether or not the system of consumerism underneath which we have now lived is the reason for lots of the social issues that we have now to face at this time.

However, simply as companies are a part of the trigger, they’re additionally an necessary a part of fixing the social issues we face. At the very least that’s how we imagine these of us who’ve wager on a brand new financial mannequin through which corporations play a key position in creating not solely financial worth but additionally social worth.

From Nobel Prize winners like Muhammad Yunus, who promotes social capitalism, to enterprise consultants and lecturers like Michael Porter imagine that from the identical corporations and profiting from the identical mechanisms of capitalism – market legal guidelines, personal capital, scalability, competitiveness, and so forth. .– Social issues may be solved.

This imaginative and prescient has been growing for a number of years through which a brand new sort of corporations has been conceived that not solely search to generate wealth, however have additionally prioritized producing well-being, that are often known as social corporations .

This imaginative and prescient contradicts many discourses in regards to the evil of corporations, the abuse of energy, the exploitation of individuals and pure assets, the disinterest within the surroundings and the social decomposition that they will create. And it isn’t that corporations like this don’t exist, however there are numerous which have determined to alter the methods of doing issues.

Mexico catches up

In lots of nations, the mannequin that promotes social enterprises has been put to the take a look at, betting on a brand new economic system, due to the creation of a authorized regulatory framework that defines each the authorized determine and the rules in order that they will function and above all prosper. Solely in Latin America Colombia, Ecuador and Peru have already got a social enterprise legislation and in Argentina, Chile and Uruguay it’s already being mentioned in congresses.

However in Mexico up to now there aren’t any “formal” discussions or proposals for a social enterprise legislation, though there are companies that, on account of their actions and never due to their authorized kind, have been outlined as social. They’ve needed to function across the authorized and financial elements as every one in all them has thought of and what has impacted the way in which through which they generate earnings or receive financing.

This has restricted its development by not having legal guidelines that facilitate its operation and supply advantages to proceed producing influence or to draw enough capital. These legal guidelines, which must be thought of from the authorized determine, in addition to the rules on their operation and tax incentives or advantages, are step one to maneuver us to a brand new economic system.


The challenges we face to have a social enterprise legislation in Mexico

  1. The primary problem to create a social enterprise legislation in Mexico is the definition of what’s social enterprise, since there is no such thing as a consensual definition that encompasses the completely different fashions that present social enterprises observe. Some know them as purpose-driven companies, others as triple backside line companies or simply plain social companies. However past the identify, there is no such thing as a single definition that may embody the completely different fashions. Nevertheless, what does exist are sure elements that have to be thought of, accepted by a lot of the actors, the principle ones being: the measurement of influence, the aim of revenue and the use that’s given to the income of the corporate.
  2. Influence measurement is mainly the component that defines social enterprises: for a social enterprise, producing influence is a part of its purpose for present, of the outcomes it should ship, and never simply an space or duty, being the era influence generated as necessary as revenue era. However this influence have to be measured and recorded to verify that it’s being met. And though many social corporations have their measurement strategies, an exterior entity can also be needed that may verify this influence. That is the place we discover the second problem to outline the entity – public or personal – in addition to the methodology that might certify that the influence measurement is suitable and that the corporate is complying with the era of the optimistic influence in order that they are often thought of as a social firm.
  3. The third problem is to reconcile the revenue motives with the social nature of the corporate. This primarily as a result of that is the place the obstacles are to outline the tax incentives that they may have. Simply as civil society organizations, foundations and NGOs have tax advantages akin to tax deductibility on their bills or entry to funds and grants, particularly contemplating their social work, social corporations ought to have comparable concerns. However the truth that they’re for revenue is a barrier to that. And though it isn’t mentioned that they need to have the identical advantages as foundations, they shouldn’t be handled the identical as different corporations. The problem of defining tax advantages or incentives will be the watershed for extra folks deciding to create or develop into a social enterprise.
  4. Lastly, there may be the dialogue of the distribution of income . In conventional enterprise fashions, income are shared amongst companions, however in social corporations, it’s sought that the income are reinvested to proceed producing influence. However you ask like how a lot share of income must be reinvested? How can you make sure that this occurs? If there aren’t any income for the companions, would it not be enticing to spend money on social enterprises? In some nations with social enterprise legal guidelines, a share of the income that have to be reinvested has been outlined, leaving a margin for the shareholders, however some additionally recommend that the income serve to pay solely the preliminary funding of the companions, however not for generate further revenue for them. Now, this will probably be key for social enterprises in Mexico to be enticing to draw funding.


The street traveled

Till at this time, there have been many working and dialogue tables each with political actors and with some authorities to advertise the legislation. For a number of years the Affiliation of Entrepreneurs of Mexico (ASEM) included the legislation of social enterprises inside its Emprendecálogo , the compendium of legislation proposals needed to advertise entrepreneurship in Mexico.

With the Entrepreneurship and because of fixed work with the “entrepreneurial caucus” made up of 10 senators from completely different events, a number of legal guidelines have been superior, such because the “one-day enterprise creation legislation” or the “re-entrepreneurship legislation.” Nevertheless, no less than six proposed legal guidelines are nonetheless pending, together with the legislation on social enterprises.

In flip, the Alliance for Influence Investing, shaped by a gaggle of organizations and firms in favor of selling moral and sustainable investments, has additionally carried out efforts to establish alternatives to create public insurance policies that promote influence funding for not solely to make sure the expansion of social enterprises in Mexico but additionally to draw overseas capital in search of moral and sustainable investments to the nation.

Equally, Sistema B México has taken on the duty of selling the social enterprise legislation within the area and advising governments in order that it might probably see the sunshine of day. Specifically, its certification device has been a benchmark for measuring the optimistic influence of corporations.

And this 12 months the Secretary Basic of Ibero-America with the help of the United Nations Growth Program and the Worldwide Growth Analysis Middle (IDRC) of Canada in addition to related actors of the social entrepreneurship ecosystem have labored and introduced one of many investigations extra full on the topic entitled “Corporations with a objective and the regulation of the fourth sector in Ibero-America” that can undoubtedly be a watershed in drawing the way in which ahead to attain a Regulation of Social Enterprises in Mexico.

Energy in Mexico

As I discussed in the beginning, a lot has been mentioned lately a few new economic system, however it’s one thing that has already been constructed for a number of years within the nation.

In 2020, an effort was carried out to hold out a census of social enterprises, through which 305 social enterprises have been recognized, though there have been almost 1,000 corporations that participated by recognizing themselves as social enterprises. We are able to additionally contemplate as a superb signal the expansion of licensed B corporations in Mexico, which have been growing 12 months after 12 months and at this time are near 100.

Mexico has seen a development in applications and research associated to social entrepreneurship and social enterprises, with incubators, accelerators, funding funds that over the past 10 years have wager on this new manner of doing enterprise, creating corporations, and positively impacting the world.

Because of this, at this time social enterprises in Mexico have managed to influence multiple million folks with entry to fundamental and high quality providers, elevated earnings, housing development, minimal impact on the surroundings, whereas producing shut of 100 thousand direct jobs and attracted multiple billion pesos in investments.

The potential to generate fast-growing corporations that, along with creating financial worth, additionally generate social worth and thereby contribute to the answer of social issues in Mexico is gigantic. And the nation is in a scenario of social and financial elements conducive to advancing a legislation on social enterprises.

The significance of getting a authorized framework and regulation on social enterprises in Mexico is not going to solely serve in order that these which are already working may be extra environment friendly and develop, but additionally in order that present corporations or new corporations can contemplate taking the trail to develop into social enterprises and assist drive a brand new economic system.

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