17 March 2022

Mobilising the Full Potential of the Social Economy in Europe

According to the European Commission (EC), the social economy “includes a variety of businesses, organisations and legal entities, such as social enterprises, cooperatives, mutual benefit societies (a specific type of collective insurance), non-profit associations and foundations. They put people and the environment at the centre of their mission and reinvest most of their profit back into the organisation or a specific social cause. They are governed in a participatory and inclusive way.

At the end of 2021, the EC adopted a new Social Economy Action Plan to support the sector to thrive. Entitled “Building an economy that works for people: an action plan for the social economy”, the document, in a nutshell, states European Union’s policy and approach for unleashing the sector’s economic and job-creation potential, enhancing its contribution to a fair and inclusive recovery, and boosting the green and digital transitions.

Built on the results of the 2011 Social Business Initiative and the 2016 Start-up and Scale-up Initiative, and preceded by extensive dialogue with stakeholders and civil society, the Action Plan proposes 38 concrete measures to be implemented in a nine-years horizon, between 2021-2030. Three main priority areas stand out – business environment and favourable conditions; start-up/scaling-up opportunities and building capacities; awareness and recognition of the sector’s potential – and specific actions range from stimulation and reinforcement of appropriate legal frameworks dedicated to the sector, to enhancing access to funding instruments for social entrepreneurs and collection of specialised data.

Despite the fact it does not sufficiently address certain subjects that are key to a thriving social economy sector, such as external action and public procurement, the Action Plan and the efforts surrounding its conception are a very important and positive milestone for social economy organisations and social entrepreneurs based in Europe.

Our network’s take on the Social Economy Action Plan

Impact Hub, we believe that the social economy provides a paradigm where shared responsibility is at the core of a financial and societal model that allows for maximisation of human dignity and protection of our ecosystems. When talking about social economy, these are the basic principles that should set the policy framework for defining the job market, as well as for boosting social and economic well-being through social and sustainable entrepreneurial initiatives and preserving nature.

For over a decade, the Impact Hub Global Network has been working to shape the social and impact entrepreneurial ecosystem, supporting social impact-makers on local rooted communities around the world. As part of our commitment, we have engaged in several initiatives across our global network that are leading the way in creating a more resilient, sustainable and inclusive social economy sector. 

Better Incubation LIAISE, for instance, is an inspiring programme we are part of and which has been highlighted in the Action Plan as an inspiration for all European business incubators and accelerators that are willing “to extend their support to social economy entities and improve business investment readiness support opportunities”. Better Entrepreneurship Policy Tool, an initiative dedicated to improving inclusive and social entrepreneurship policies of which Impact Hub has been an Ambassador to for the past couple of years, is also mentioned in the plan as a good practice to be adopted.

Bringing the direct experience of Impact Hub’s 24,000+ community members and practising social entrepreneurship around the globe, we delivered our concerns to the European Commission when the new Action Plan for the Social Economy was being drawn up. One of our recommendations addressed specifically the importance of the European Union (EU) as an institution with the capacity to propose and drive the necessary economic paradigm shift we need. How? By ensuring that diverse voices and experiences are present and being heard at the decision-making spaces related to the sector, by providing financing instruments to social businesses that comply with international standards of Human Rights and Sustainable Development (and sifting through those who do not), by promoting key partnerships among different actors involved in the industry and advocating for pragmatic solutions.

Additionally, with the new Social Economy Action Plan, the EU is in the position – and, therefore, should lead the way – to support social economy ecosystems across member states, specially those that demand more public support to thrive. Besides allocating resources to these areas, promoting fiscal incentives and developing legal frameworks and policies that address their specific needs, Impact Hub believes that it’s also essential to focus efforts on stimulating entrepreneurial culture and advancing education around social economy topics.

What’s next?

It goes without saying how positive it is that the European Commission has launched an updated set of actions to promote the Social Economy in the region. Switching to a fair, sustainable and resilient economic model has become an even greater urgency with the Covid-19 pandemic. Supporting and encouraging the development of the social economy sector, as well as providing access to funding – which has been considered one of the biggest challenges for organisations working in this field – is a way to begin that transition. 

However, let us not forget that the implementation of this strategy should not replace the greater ambition of mainstreaming social economy principles – “solidarity, the primacy of people over capital, and democratic and participative governance” (OECD) -,  to the economy as a whole.   

When looking back to the past years’ progress and then ahead, Gabriela Gandel, Impact Hub Global Network’s former Executive Director and current Impact Hub Association Board’s Policy Director, is surgical in stating that implementing the new Action Plan “requires much more collaboration to make it happen”. Coming from an intermediary’s point of view – that is, an organisation that supports the social entrepreneurs -, she reinforces that “we need to facilitate access to finance and markets in order to mainstream the social economy”.