New EU initiative aims to boost social entrepreneurship

By Mirjam Schöning, Senior Director, Schwab Foundation

During the past two decades, social entrepreneurs have developed many innovative models to provide the poorest people in society with anything from financial services to drinking water, renewable energy, education and job opportunities. As the members of the Forum’s Global Agenda Council (GAC) concluded, however, we now need to focus on policy reform should we want to move from isolated models to systemic change.

The European Commission has just announced an important first step in the direction of creating a more favourable regulatory environment for social enterprises and social businesses in the European Union. Last week in Brussels, it launched a groundbreaking Social Business Initiative, which drew on the expertise of several members of the GAC on Social Innovation.

The Social Business Initiative has the potential to drive systemic change in the sector in the European Union. The initiative covers 11 measures in three areas: improving access to financing, increasing visibility for social entrepreneurs and helping them to build capacity, and improving the legal and regulatory environment. Some highlights include:

• A 90 million euro fund to develop and expand social enterprises
• New regulations for impact investment funds to work across the single market
• Comprehensive mapping and a multi-language database of social enterprises in Europe to facilitate their growth across national borders
• Adding criteria to public procurement guidelines to make social enterprises more likely to win contracts
• Simplification of state aid rules so that national support for a social enterprise does not risk infringing EU competition rules

While today’s best-known social entrepreneurs made their way without a supportive legal or financial framework, we should be optimistic that we can unleash much more social innovation with such a framework in place. During my remarks, I pointed out that only 15% of the European-based social enterprises in the Schwab Foundation community have been able to expand into other countries, whereas the figures for Latin America and Asia are significantly higher – around 45%. The proposed set of actions by the EU Commission could lead to far greater cross-country replication of the most innovative and effective models.

As I listened to President Jose Manuel Barroso of the European Commission stating his commitment to promoting social entrepreneurship, I could not help but think of this 18 November as a historic moment for the field. Over the course of 10 years, social entrepreneurship has gone from niche to mainstream in Europe. We might still be months or years away from seeing many of the proposed measures come into effect, but it is a massive acknowledgement of the contribution that social entrepreneurs make towards building a more inclusive society.