Social enterprises for Europe’s transition

January 2022

The future of European cohesion and the just and green transition of Europe is not just up to public policies and large businesses. Social enterprises and the social economy might hold the potential to shape some of this. However, for this they might need a gentle push.

Social enterprises and the social economy

Increasingly businesses are not just about generating profits. To be attractive to employees and customers they also committee to wider societal purposes. This can be in the fields of environment helping to deliver on the UN sustainable development goals, in the fields of social inclusions supporting diversity e.g. concerning gender balances, social and cultural backgrounds, sexual orientation, or in other societally relevant fields.

While many enterprises add a layer of social or environmental responsibilities to their original economic purpose, social enterprises go one step further. They combine societal goals with entrepreneurial spirit to achieve wider social, environmental or community objectives. This means, their main objective is to have a social impact rather than make a profit for their owners or shareholders.

Social enterprises can take various legal forms including cooperatives, mutuals, associations, foundations and social enterprises among other forms that can be specific to each country. Together some 2.8 million social economy enterprises are active in the EU. That corresponds to roughly 10% of all enterprises in the EU. They form the backbone of the social economy.

However, a European social economy is still in the making, as there are significant differences between national, regional and local contexts in Europe. There is a need to build capacity at local and regional level and tackle the specific needs of cross-border social economy organisations in rural and peripheral areas.

10 years EU Social Business Initiative

To support social enterprises and an emerging social economy in Europe, the Social Business Initiative (SBI) was launched in 2011. It introduced a short-term action plan to support the development of social enterprises, key stakeholders in the social economy and social innovation, and prompted a debate on possible avenues to be further explored. In December 2021 this was followed up by an EU Action Plan for the Social Economy

This gives a further push to the social economy in Europe and draws on the lessons of the 10 years Social Business Initiative. Since 2011, a lot has been done to enable and improve conditions for the development of social enterprises and the social economy in general.

Over the past 10 years the EU Social Business Initiative has contributed to a favourable social economy ecosystem in the EU and beyond. The initiative has raised awareness, and visibility opened doors at national and regional and helped to get access to funding. Overall, it is seen as a game changer. Some of the key achievements and impacts from a recent impact study are summarised in the infographic:

  • 21 countries with legal frameworks. Legal frameworks are essential, but adapting them to the needs of the social economy is not an easy task. Indeed, social economy entities often find it complicated to choose a legal form from diverse options not fully tailored to their needs. Since 2011, 21 Member States have put in place targeted legal frameworks and support tools concerning social enterprises and/or the social economy. Such tools include the creation of specific ministerial units, structures and departments at the central (e.g. in Luxembourg and Slovakia) or regional/municipal level (e.g. Denmark and the Netherlands) in charge of promoting social enterprises or a broader set of organisations, such as the social economy (e.g. France and Spain).
  • 1,388 million EUR Cohesion Policy support. The inclusion of the social enterprises in the ESIF Regulation was crucial to promote the allocation of ESIF and national funding to social enterprises. During the 2014-2020 programming period, the European Social Fund spent approx. EUR 986 million on the topic of “promoting the social economy and social enterprises/ entrepreneurship”. Furthermore, the European Regional Development Fund spent approx. EUR 403 million on “support social enterprises”. The countries with the highest amount provided for the topic of social enterprises were Italy, UK, France, Czech Republic and Germany. A large amount was also channelled via the European Territorial Cooperation programmes.
  • 76 European Social Economy Regions have been established in the context of the European Social Economy Regions initiative (ESER). Through a multitude of events and activities, they raised awareness and increased capacities at regional and local level. They also developed ideas for future collaboration and co-creation of policies in and for the social economy together with the Commission.
  • 55 national and regional networks increase representation and visibility of a certain sector, as well as fostering learning and capacity development of their members. Indeed,pre-existing communities, information platforms, national networks and organisations like P3-People, Planet, and Profit in the Czech Republic, as well as places to meet like the ‘Maison de l'Economie sociale et de l'innovation sociale’ in Luxembourg, Impact Hubs or co-working spaces are critical for increasing awareness.

While a lot happened to support social enterprises, the ecosystem of the social economy has become more complex. More players, ideas and initiatives broadened the spectrum in Europe.

As for the future

With the launch of the EU Action Plan for the Social Economy, the social economy will be further pushed in the years to come. This will strengthen its potential to contribute to local and regional development, address social and societal needs, create and offering jobs in the community, promote social innovation and develop a rational for Europe’s economic and social transition. If everything works out, social economy enterprises will account for more than 10% of all enterprise in the near future.

For this to happen, it is important to build capacity at local and regional level. Place-based solutions are needed to strengthen the social economy in our highly diverse national, regional and local contexts. The European Social Economy Regions (ESER) initiative can be an effective instrument to do so, but social economy initiatives can also be supported by many other EU instruments and funds. Local partnerships between regional and local authorities and the social economy need to be strengthened. Cross-border networking will create further opportunities to exchange ideas and solutions.

Strengthening the social enterprises, and in doing so, the social economy in Europe is not a means in itself. It is an important instrument to necessary transitions to a green and just Europe and building on place-based approaches will also contribute to social and territorial cohesion.

More insights are available in the impact study of the European Commission’s Social Business Initiative.

by Kai Böhme and Silke Haarich

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