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Social Enterprises Get Boost From European Parliament

 3 min read / 

At the beginning of July, the European Parliament voted in favour of creating a label for social enterprises. The 77% majority sends a strong signal that Europe is ready to give further recognition of social and solidarity-based enterprises. The vote came after the European Parliament Committee on Legal Affairs and the Committee on Employment and Social Affairs adopted a motion in support of the set up of a label specifically focusing on identifying social economy actors in Europe. The purpose of this label would be to identify good practices and standards for social enterprises.

A Workable Solution

The member of Parliament who has been leading the process, Jiří Maštálka, a Czech representative from the far left European United Left-Nordic Green Left group, has supported this idea since 2017 when the proposal was still under discussion. The original plan had been for a European wide legal definition, but this was abandoned as unworkable in light of the different legislation present in different member states. A label would instead allow relevant players to identify themselves when applying for funding. Last October, the Committee on Legal Affairs had already delivered a draft report which contained clear recommendations for the Commission in favour of a statute for social and solidarity-based enterprises. The report also specifically highlighted clear guidelines for good practices which include a set of minimum requirements that need to be in place:

  • A consultation processes for the establishment of an effective business strategy.
  • Adaptation to local social needs and to the local employment market.
  • Relations with users and clients and the response to social needs not yet covered by the market or the State.
  • The situation of the enterprise with regard to diversity, non-discrimination and equal opportunities for men and women among their members, including positions of responsibility and leadership.

Previous European Parliament positions included earlier resolutions, like the one in 2015 on ‘Social Entrepreneurship and Social Innovation in Combating Unemployment’, which called for the creation of the necessary framework for a system of social innovation, facilitating access to public procurement, and improving access to funding. Back in 2013, with a resolution on the ‘Contribution of Cooperatives to Overcoming the Crisis’, the Parliament pointed out the resilience of these types of enterprises in the face of the fluctuating economic cycle and their critical role in integrating disadvantaged workers in the labour pool. It was still back in 2013 that the European Parliament had also supported the establishment of EU-level legal forms for social economy actors.

Positive Achievement

Meanwhile, the concept of a social enterprise label had also already been explored by the Expert Group on Social Entrepreneurship (2011-2018) in the GECES report ‘Social Enterprises and the Social Economy Going Forward’, which included recommendations around the development of

“labelling protocols for identifying funds that follow the social model. This could perhaps draw from the EUSEF experience and guidance around defining investment of a social or socially-focused nature as being that which delivers a measurable social impact.”

This is a very positive achievement, good for the industry and the economy and one that the High-Level Expert Group on Sustainable Finance has encouraged. Their final report highlighted how a label that can act as ‘identifier for social enterprises in the euro area’, leading to official recognition of the social economy and social enterprises, could help empower these players.

Flavia Micilotta is a member of High-Level Expert Group on Sustainable Finance.

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