Social and solidarity-based enterprises are part of the social economy, combining wider social, environmental and community objectives with entrepreneurial activity. One of the main challenges in this area is to ensure more visibility, better-tailored funding and appropriate legal frameworks.

Social enterprises can take a variety of legal forms and statuses, ranging from existing legal forms (i.e. associations, foundations, cooperatives, mutuals, share companies), to new legal forms exclusively designed for social enterprises. Existing legal provisions at EU level include the 2003 Regulation on the Statute for a European Cooperative Society (SCE). The subsequent Commission proposal on the Statute for a European mutual society of 2006 and the 2012 proposal for a Regulation on the Statute for a European Foundation (EF) have been withdrawn, as they did not receive sufficient support.

The proposed initiative on a Statute for social and solidarity- based enterprises would offer an opportunity to establish a broader EU-level legal basis for various types of social economy actors. The European Parliament launched an own-initiative procedure for a Statute for social and solidarity-based enterprises, with Jiří Maštálka (GUE/NGL, Czech Republic) as rapporteur and the Committee for Legal Affairs (JURI) appointed as lead and Committee for Employment and Social Affairs (EMPL) as associated committee, with Heinz K. Becker as rapporteur for opinion.

The EP resolution of July 2018 acknowledged the diversity and innovative character of the existing legal forms of social enterprises. It called on the Commission to introduce a ‘European social economy label’ to be obtained by social enterprises optionally on request and upon meeting a set of criteria, regardless of the legal form in the national legislation. The resolution proposed criteria for the ‘European social economy label’ (e.g. private law entity independent of authorities, focused on general interest or public utility, with a socially useful purpose and at least partial constraint on profit distribution, a democratic governance and decision-making model), a mechanism for the certification, supervision and monitoring of the label (with the involvement of the Member States) and recognition of the label in all Member States, as well as reporting obligations. It also recommended establishing guidelines of good practices, a revisable list of legal forms in Member States and a revision of existing legislation to create a more coherent and complete legal framework in support of social enterprises. The resolution also called on the Commission to actively promote the European Social Economy Label, ensure that EU policies reflect a commitment to create a favourable environment for social and solidarity-based enterprises and to carry out, in cooperation with Member States and the social enterprise sector, a comparative study of the various national and regional legal frameworks throughout the EU, and of the operating conditions for social and solidarity-based enterprises and of their characteristics, including their size and number and their field of activities, as well as of the various national certification, status and labelling systems. In the context of the Expert Group on Social Entrepreneurship and in cooperation with Member States, the EP called on the Commission to continue collecting and sharing information on existing good practices, and to analyse both qualitative and quantitative data on the contribution of social and solidarity-based enterprises both to the development of public policy and to local communities. It also called on the Commission and Member States to take steps to increase public and private funding needed by social and solidarity-based enterprises and suggested that the Commission could examine the possibility of establishing a line of financing to support innovation in enterprises based on the social economy and solidarity. It also called for strengthening the social dimension of existing Union funding in the context of the next Multiannual Financial Framework (MFF) 2021-2027.

On the basis of Article 50 of the Treaty on the Functioning of the European Union, the EP called on the Commission to submit a proposal for a legislative act on the creation of a European Social Economy Label, following the recommendations set out in the Annex to the EP resolution. The Commission provided its response on 8 November 2018. While it agreed with the need to give more visibility to social economy and social enterprises, it pointed out to the mixed results of existing national labelling systems and the need to take into account sometimes significantly different national traditions and contexts. It proposed that the feasibility of creating an EU-wide label should be further discussed with stakeholders. In the context of support for social enterprises, the Commission highlighted a number of initiatives already undertaken, which it believes address many of the EP resolution’s recommendations. These include the mapping exercise of the existing national systems (to be updated in mid-2019), the ‘Start-up and Scale-up’ initiative of 2016, the ‘Better Entrepreneurship Policy’ tool, the ‘European Social Economy Regions’ project and the renewal of the mandate of the Commission Expert Group on Social Entrepreneurship to provide further analysis and collect data also in the context of the role of social economy and social enterprises in the implementation of the European Pillar of Social Rights. In terms of funding opportunities, the Commission pointed to the resources available under EaSI, EFSI, EIB, ESF and ERDF as well as the EuSEF (European social entrepreneurship funds) regulation. Moreover, the new MFF proposals of May 2018 take into account the Parliament’s requests to give more prominence to the social dimension and strengthen existing programmes for social economy enterprises, with the most prominent example being the proposal to create a ‘social window’ under the InvestEU programme.

References:

• EP Legislative Observatory, Procedure file on the Statute for social and solidarity-based enterprises, 2016/2237(INL)
• European Parliament, European Parliament resolution of 5 July 2018 with recommendations to the Commission on a Statute for social and solidarity-based enterprises, 2016/2237(INL)

Further reading:

• European Parliament, EPRS, Statute for social and solidarity-based enterprises, European Added Value Assessment (EAVA), December 2017
• European Parliament, IPOL, A European Statute for Social and Solidarity-Based Enterprise, Study, February 2017
• European Parliament, EPRS, EU support for social entrepreneurs, Briefing, March 2017
• European Parliament, IPOL, Social economy, Study, March 2016
• European Commission, A map of social enterprises and their eco-systems in Europe, Synthesis report, 2015
• European Commission, Social economy and social entrepreneurship, Social Europe guide, 2013
• European Commission Expert Group on Social Entrepreneurship (GECES), Social enterprises and the social economy going forward, October 2016

Author: Agnieszka Widuto, Members' Research Service, legislative-train@europarl.europa.eu

Visit the European Parliament homepage on Social Europe.