What is a Transition Enterprise?


Fiona Ward of Transition Network’s REconomy project has written the following to try and answer the question “what would a social enterprise founded on Transition principles be like?  This posted is intended to stimulate discussion, so do comment below.  Over to Fiona…

Why do we need this definition?

This document defines what is meant by a Transition Enterprise (TE). This definition is useful to the Transition Network because it helps us clarify:

  1. The kind of trading enterprises we would most like to see, as they best support the wider aims of Transition, and
  2. Where we should first direct our limited resources (e.g. via the REconomy project).

Other types of commercial enterprises can also help meet the aims of Transition. In fact, we need a wide range of business models in each local economy to provide the diversity that helps build resilience, including privately owned for-profits and ‘regular’ social enterprise. However we wish to focus our efforts on the TEs at this time as they best align with the aims of Transition, and are under-represented.

Transition Initiatives are welcome to refine this definition for use with their own locale, if useful.

Transition Enterprise Definition

A Transition Enterprise (TE) is a financially viable trading* entity that fulfils a real community need, delivers social benefits and has beneficial, or at least neutral, environmental impacts.

* means of exchange other than money may be used, viability is to at least meet costs

Transition Enterprise Characteristics

In order of priority
  1. 1. Resilience  outcome
Will benefit the local community by improving its resilience or wellbeing in some way Produces energy from local assets, provides local food etc. Meets a real need. Resilience outcome as important as economic motive (i.e. provide jobs).
  1. 2. Low carbon
Minimises carbon emissions and so contribution to climate change Minimises energy use of operations, distribution and products. Ideally carbon negative or neutral. Reduces exposure to high cost fossil fuel.
  1. 3. Natural limits
Works within the natural resource (and energy) limits of the planet, including ecosystem services. Works with suppliers that do the same. Considers cradle to cradle design of products, industrial symbiosis etc. Sustainably sourced local materials. Understands our natural systems’ capacity to deal with waste, toxins…
  1. 4. Appropriate localisation
Considers viability of business model post peak oil, and level of independence from globalized corporate macro-economy and its risks. Produces goods and services in demand locally/regionally. Not reliant on export or import markets unless for things unique to place. Virtual e.g. creative/IT goods and services excepted.
  1. 5. Not just for personal profit
Goes beyond distributing profit to individuals, with at least some profits reinvested in the local community. Pays ‘living wage+’, minimises gap between high/low pay levels.
  1. 6. Community assets
Holding public or “commons” assets and wealth in trust for community benefit (can’t be sold by individuals). Land, community buildings, energy resources, public money, major grants etc.
  1. 7. Locally accountable
Independent and accountable to a defined constituency who are democratically involved in governance of enterprise E.g. local people invest in enterprise, then have right to vote directors in/out and helps define strategic direction and use of profits, employee ownership models etc.

An enterprise could operate as any one of different types of legal entity, and still meet most of these characteristics.

‘Regular’ social enterprises today often tend to lack 2-4 (i.e. those factors that are contributing to our environmental problems) and have a ‘social purpose’ rather than a local community resilience-building purpose.

Unlike most private-for-profits and some social enterprise, the trading of TEs should itself contribute to the resilience or wellbeing of the local community (and do no harm elsewhere). For example, it can’t import plastic products from China to sell in a local shop to raise money to fund Transition projects.

We suggest that this is as far as we need to go with this definition at this stage. It’s not yet clear what sort of economy we will see emerging over the next few years, or what types of enterprises will evolve out of Transition. We will revise this definition as appropriate, apply it with caution and develop a means by which we can evaluate against it, as well as its usefulness overall.

The evolution of local economies that have even a small percentage of enterprises meeting these characteristics is a massive shift from our current globalised capitalist economic system. This list is quite possibly unrealistic to find in many enterprises from the outset, and few will be able to meet all of the above.

This should therefore be seen as an aspiration at this stage and we may, for example, say some characteristics are essential, some important and some desirable to better define criteria for offering funded support, for example.

Use of these characteristics

TEs will be able to access the highest levels of funded support and advice that will be on offer via the TN’s REconomy project. Other enterprises that meet the essential characteristics at least may still be able to access parts of the support offer. We will learn more about the needs and how best to allocate our resources as we go.

Outside the scope of the funded support, the part of the TN that works with businesses and organisations (Transition Training and Consulting) will work with any enterprise that wants to make improvements in any of the above, but it will charge for these services.

To re-build a local economy, Transition Initiatives will need to work with other local partners, for example Chambers of Commerce. They may work together to produce a single vision/plan for their new economy, then agree to work on separate parts of the plan. For example, the Chamber of Commerce may wish to run a ‘Shop Local’ campaign which would include the private for-profits that don’t demonstrate any of the characteristics above. So this should not be seen as a means to exclude large parts of the local economy.

Finally… why not use ‘Social Enterprise’ or ‘Transition Social Enterprise’ rather than just ‘Transition Enterprise’?

Because social enterprise is already quite well defined and we don’t want to confuse things. Transition adds to this definition with the resource/environmental aspects and widens it from a ‘social purpose’ to be a ‘resilience outcome’ and insists that the trading itself is part of the solution.

[Reference: some input used from Social Enterprise in Anytown, John Pearce, p31]