Thursday 28. May 2020
#146 - February 2012


European Commission focuses on social entrepreneurship


“Social business is a good example of an approach to business that is both responsible and contributes to growth and jobs.[...]”, observed European Commissioner Michel Barnier at the presentation of a package of measures to support entrepreneurship and responsible business last autumn in Brussels. The ‘Social Business Initiative’ is part and parcel of this package of measures.


What is a social business? This was the opening question for the Commission, addressed on the first few pages of the Communication. Unfortunately, no-one has as yet been able to come up with a uniform definition of the term ‘social entrepreneurship’, making it hard for anyone to get to grips fully with the issue. This is why a 2010 OECD study on SMEs, Entrepreneurship and Innovation rightly uses its chapter on social entrepreneurship to call for greater clarity when it comes to defining concepts in this relatively new field.  Here, we learn that the way terms are set down depends on the context, given that geography and culture each have a role to play. The winner of the 2006 Nobel Peace Prize, Muhammad Yunus, used a high-level expert conference on 18 November 2011 in Brussels to put forward several proposals, including his definition of a social business. In his view, a social business is an altruistic business which aims to solve a given social problem.  Any revenue generated is not withdrawn but is rather immediately reinvested. The Commission, however, is not completely satisfied with this definition. It may well describe a social business as one whose core activity lies in achieving a charitable goal for the good of society. This often also entails a high degree of social innovation. The profits are for the most part reinvested in these companies. Moreover, according to the Commission, this goal ought to be reflected in the organisational and ownership structure.


When it comes to giving examples of social businesses, it cites companies which provide services for society (housing agencies, access to health services, care for the elderly or people with disabilities, integrating socially vulnerable people, child care, etc.) and/or those who, in the production of goods or the supply of services have a social objective in mind (e.g. social and professional rehabilitation). But here the Commission is right to state – albeit with regard to this context only –that it has no plans to establish a normative definition for this multifaceted sector, preferring to take its cue from the political, economic and social diversity in the 27 EU Member States and simply to propose a description. It will hardly be an easy task for the Commission to provide both a precise description and, at the same time, also scope for the myriad innovative forms that a business may take such as, for example, the social businesses involved in free public welfare (Caritas and others). In their latest statement, entitled ‘A European Community of Solidarity and Responsibility’ COMECE bishops welcome the fact that the free form of solidarity offered by these kinds of institutions has received greater attention in the most recent EU initiatives on making the European Single Market more dynamic.


Short-term action plan in the ‘Social Business Initiative’

The goal of the Communication ‘Initiative for Social Entrepreneurship’ lies in the setting up of a short-term action plan to promote the founding and development of social businesses. The planned agenda is divided into various key areas, such as ‘Improving access (for social businesses) to funding’. The Proposal for a Regulation of the European Parliament and of the Council on European Social Entrepreneurship Funds, presented by the Commission on 7 December, 2011, is intended to lay the foundations for an EU market for social investment funds designed to ease access to funding for social businesses. The Commission Initiative is also looking more closely at ‘Increasing the visibility of social entrepreneurship’ and ‘Improving the legal environment’. When it comes to the latter, the Commission has in mind the simplification of the Regulation on the Statute for a European Cooperative Society or the proposal for a Regulation on the constitution of a European Foundation. But, during the abovementioned conference, the majority of stakeholders rejected this idea with regard to the European Cooperative Society, which failed to find acceptance as a legal form; this may perhaps be explained by the small number of foundations established. Even though creation of the conditions for a European Foundation had been rejected by participants at the expert conference, the fact that the Commission is gently moving towards a European Foundation on this issue proves that it is paying due attention and goodwill to the various initiatives and forms in the Single Market.


Anna Echterhoff


Translated from the Original German

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