State-run policy think tank Philippine Institute for Development Studies (PIDS) is pushing for clearer definitions, stronger institutional support, and more inclusive policies for social enterprises (SEs), warning that gaps in the ecosystem are limiting their role in driving inclusive growth.

In a discussion paper titled “Towards a Clearer Ecosystem for Social Enterprises in the Philippines: Identity, Certification, and Policy Implications,” published last Tuesday, March 17, PIDS said the country’s SE sector remains “underdeveloped, fragmented, and loosely defined,” despite its potential to address poverty, inequality, and other development challenges.

The paper was authored by PIDS senior research fellow John Paolo R. Rivera, Ritsumeikan Asia Pacific University (APU) organizational behavior and international management professor Lailani L. Alcantara, and De La Salle University (DLSU) Carlos L. Tiu School of Economics lecturer Kimberly Christie S. Vergara.

According to the authors, one of the biggest challenges facing SEs in the Philippines is the absence of a formal or legal definition, which creates uncertainty for both enterprises and policymakers.

The paper noted that “the lack of a harmonized definition and inclusive certification system hinders trust-building and policy integration,” making it difficult for SEs to access financing, government support, and investor confidence.

This ambiguity also opens the door to “social washing,” or the misuse of the SE label by firms that claim social impact without clear accountability mechanisms.

As a result, SEs—despite their role in job creation, innovation, and community development—are not fully integrated into the broader Philippine economy.

PIDS emphasized that strengthening the SE ecosystem is closely tied to improving the country’s ease of doing business environment.

The think tank found that many SEs face regulatory burdens similar to traditional firms, despite operating with limited resources and pursuing social objectives. This complicates business registration, taxation, and compliance, particularly for micro, small, and medium enterprises (MSMEs), which dominate the sector.

Moreover, low awareness of government programs and fragmented support systems further constrain SE growth, highlighting gaps in coordination among agencies such as the Department of Trade and Industry (DTI) and the Securities and Exchange Commission (SEC).

The authors stressed that without reforms, SEs will struggle to scale and contribute meaningfully to national development goals such as job creation, inclusive innovation, and poverty reduction.

While global models such as B Corp certification offer a way to strengthen credibility, PIDS noted that uptake in the Philippines remains limited due to cost, capacity constraints, and lack of localized standards.

Certification, the think tank said, can enhance transparency and investor trust, but only if it is accessible and adapted to local conditions.

Otherwise, it risks excluding grassroots and community-based enterprises that lack the resources to comply.

To unlock the sector’s potential, PIDS recommended a multi-pronged policy approach.

First, the think tank called for a nationally recognized and inclusive definition of SEs to anchor legitimacy and guide policymaking.

Second, it urged the development of tiered and voluntary certification systems that balance credibility with accessibility, particularly for smaller enterprises.

Third, the authors highlighted the need for stronger government support, including improved access to finance, streamlined regulations, and targeted capacity-building programs.

Finally, PIDS emphasized the importance of integrating SEs into broader economic and innovation strategies, ensuring they are recognized not just as niche actors but as contributors to the country’s overall growth.

The paper underscored that SEs are not merely charitable or small-scale initiatives but hybrid enterprises capable of generating both economic and social value.

However, without a coherent ecosystem—supported by clear policies, better ease of doing business, and institutional backing—their impact will remain limited.

By addressing these gaps, PIDS said the Philippines can build a more inclusive, accountable, and innovation-driven economy where social enterprises play a central role.