The Fourth Sector is here to stay
Organizations today are more aware than ever of society’s demands and are adapting, at different speeds, to the changing context of our time. The level of interconnectivity the world has reached is such that citizens demand change. Society wants progress and knows that to resolve these issues we need organizations to abide by social principles while doing business. In such an environment, the Fourth Sector, mission driven for profit organizations, is expanding its reach and establishing itself as the way to do business in the years to come.
A deep dive into the unstoppable growth of the Fourth Sector was presented to all of IE academia by the Center for the Governance of Change, a research institution aimed at deepening our understanding of change and developing strategies to anticipate, govern and promote progress. The School of International Relations at IE University was presenting the initiative as one of its core areas of work. In a roundtable entitled The Fourth Sector & the Future of Social Entrepreneurship panelists shared some practices and experiences on these types of businesses. The conversation was of great interest for students and professors of the Schools of Business, Law and International Relations.
The Fourth Sector, which has moved beyond the antiquated three sector system of government, private sector and non for profit, addresses societal challenges blending the three sectors. It is not driven by profit maximization but conducts business, in all types of industries, with a purpose to make the world a better place. The key factors are that like non-profits, their primary purpose is to advance societal benefit and, like for-profits, they generate a substantial portion of their income from business activities.
There are indications that it could account for as much as 10% of GDP as well as nearly twice the job growth rate as traditional for-profit businesses in the US and Europe, said Heerad Sabeti, head of the World Economic Forum’s Fourth Sector Development Initiative during his intervention. He defended the job creation implications the Fourth Sector could reach and encouraged the furthering of the new system of operating which lies at intersection of the three traditional sectors.
On his behalf Sebastián Gatica, professor in Social Innovation at the Universidad Católica de Chile spoke about the need to further develop a supportive and conductive ecosystem from which the fourth sector could exponentially increase its presence since it’s an approach to see the future, and the world for generations to come, in a positive way. Alejandro Pachecho, Strategic Adviser at the United Nations Development Programme and Antonio Vives, Adjunct Professor at Stanford University, also shared their insights and discussed the challenges and opportunities of this new sector.
The Fourth Sector is a new international project supported by the World Economic Forum (WEF), the Ibero-American General Secretariat (SEGIB), and the United Nations Development Programme (UNDP), that seeks to accelerate the establishment of a tailor-made ecosystem for social economy and for-benefit enterprises across borders. IE University will act as an academic partner in the project.
The Fourth Sector is here to stay. Businesses are transforming and can’t solely concentrate on Corporate Social Responsibility. More is needed and by focusing on the combination of doing good for the planet and having that approach to tackle the challenges we have, the social and economic returns will be noticed by all across the board.
Before closing the session Diego Rubio, Executive Director of the Center for the Governance of Change raised a question that surely left all thinking. If you were to receive two job offers, one working in the Amazon forest on tree preservation and the other working for a tobacco multinational in the US that paid five times more, which one would you take? Food for thought.