Valerie Mukangerero (53 yrs) walks to her pinapple farm in Rwamurema village, Eastern Rwanda, Kirehe District. Valerie is a member of Tuzamurane cooperative."When I joined the cooperative, we were trained, we learned and I felt relieved that I would have a good life one day.” Credit: Aurelie Marrier d'Unienville / Oxfam

The missing piece of the puzzle is the fourth sector

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What kind of business can help take the world to a fairer and more sustainable future? Today Oxfam is launching the Future of Business Initiative at the UN General Assembly in New York. Here Erinch Sahan explains why we’re calling for investment in the ‘fourth sector’.

Valerie Mukangerero (53 yrs) walks to her pinapple farm in Rwamurema village, Eastern Rwanda, Kirehe District. Valerie is a member of Tuzamurane cooperative."When I joined the cooperative, we were trained, we learned and I felt relieved that I would have a good life one day.” Credit: Aurelie Marrier d'Unienville / Oxfam

Valerie Mukangerero (53 yrs) walks to her pineapple farm in Rwamurema village, Eastern Rwanda, Kirehe District. Valerie is a member of Tuzamurane cooperative. Credit: Aurelie Marrier d’Unienville / Oxfam

The 21st century brings us challenges at a scale we haven’t encountered before. Poverty, inequality, unemployment, gender discrimination and climate change are causing a perfect storm that means our economies and society need to adapt fast.

Sadly, our current mix of sectors hasn’t been up to the task and it is now time to reimagine our economy, look at what is needed for an economy that distributes wealth more equitably, delivers the products and services we depend on, and takes us back from the brink of our ecological crisis. While we’ve tried to patch up the cracks, by stretching the purpose of each sector as far as it could go, the gaps remain stark. An economy populated only by profit maximising companies, alongside states that regulate them, alongside non-governmental organisations filling in the gaps has produced an incomplete puzzle. The fourth sector is the missing piece of the puzzle.

The fourth sector would operate at the heart of the economy, encapsulating businesses engineered to balance social, planetary and commercial concerns
The fourth sector would operate at the heart of the economy, encapsulating businesses engineered to balance social, planetary and commercial concerns. Critically, these businesses would be geared towards mission primacy, not shareholder primacy.

We don’t need to imagine the fourth sector, we can already see it. Look at fair trade businesses partly owned and governed by farmers groups (e.g. Divine Chocolate), companies that are employee-owned (e.g. John Lewis) or share all their profits with their workers (e.g. Huawei), enterprises with governance models that prioritise a social mission (e.g. Fairphone), social businesses focused on how they impact consumers (e.g. Grameen-Danone Foods) and businesses owned and controlled entirely for the benefit of millions of farmers (e.g. Amul). The fourth sector exists, but we need it to spread rapidly.

we need to think of this as a new sector, with a market and policy ecosystem that is designed to see it flourish
This discussion may not seem new. The discussion around social enterprise, equitable business structures, cooperatives and for-benefit businesses has raged for years. And the challenge of inequality has especially brought into light models of business that are structured to distribute value most broadly, bringing employee-ownership, community-ownership and innovative cooperative models into vogue. What is new is a recognition that we need to think of this as a new sector, with a market and policy ecosystem that is designed to see it flourish. Mission-led enterprises cannot thrive if they are competing in the same capital markets for finance, treated the same way by tax codes and regulated the same way as other businesses. The ecosystem must now catch up with the enterprises that are making it work, despite the barriers.

it’s time to build the ecosystem that will foster and spread these models far and wide
Over the years, Oxfam has founded and supported a number of such businesses. This has included founding now thriving enterprises such as Cafe Direct and supporting dozens of community-level enterprises around the world through programmes such as the Enterprise Development Programme. Through our role in the Fair Trade movement and as a founder of the Fairtrade Foundation, we have always promoted models of enterprise that distribute risk, reward and power more equitably. Now it’s time to redouble these efforts, and build the ecosystem that will foster and spread these models far and wide. And Oxfam is now joining forces with the Fourth Sector Group, and the Fourth Sector Development Initiative to do so.

Today, Oxfam is launching its Future of Business Initiative. The initiative advances a portfolio of projects supporting the kinds of businesses we need to see a thriving fourth sector. Through research, pilots, convening and advocacy, we hope to support both the enterprises, and the market and policy ecosystem that must surround them. We hope to join with others to ensure this economic vision becomes a reality. The challenges we face mean we must all be bold and shape the future of our economies. The fourth sector is key to delivering this.

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Author
Erinch Sahan

Erinch Sahan

Erinch leads Oxfam's Future of Business Initiative. Erinch’s current work spans both Oxfam’s enterprise development work and campaigns. Most recently, Erinch led Oxfam’s private sector team, working on collaborative partnerships and campaigns to bring about solutions to the most challenging social issues linked to global business. He also led Oxfam’s work scoring the food companies in the Behind the Brands campaign and subsequently Oxfam GBs Food and Climate Campaigns and Policy Team. Prior to joining Oxfam in 2011, Erinch worked in business, including as a market strategy manager at Procter & Gamble and in government, as a development advisor to Australia’s trade negotiation team in Indonesia. He holds both law and business degrees and has worked across Asia and Africa. Erinch is also an associate lecturer at Oxford Brookes and regularly lectures on sustainable business at various universities, including Cambridge and Exeter.