Strasbourg event: taking stock of the Social Business Initiative – Frequently Asked Questions
European Commission - MEMO/14/11 15/01/2014
Other available languages: none
Brussels, 15 January 2014
Strasbourg event: taking stock of the Social Business Initiative – Frequently Asked Questions
As part of the follow-up, on 16 and 17 January 2014, the European Commission, the European Economic and Social Committee (EESC) and the City of Strasbourg will host a large European interactive event on social entrepreneurship and the social economy (see also IP/14/20) in order to:
How is the Strasbourg event different from other events that have taken place on the same topic?
What is a social business?
The Commission uses the term 'social business' to cover an enterprise:
Due to the lack of comparable statistics for social enterprises that would give a detailed picture on the scale and dynamics of social entrepreneurship activities in the European Union, the Commission often uses data on the social economy, which includes many social businesses and which employs more than 11 million EU citizens, 4.5% of the total number of people employed in the EU.
Do you have any concrete examples of social businesses?
What was the Social Business Initiative about?
The growth potential of the social business model in the Single Market was not being exploited fully. Social businesses were finding it difficult to gain access to funding. There was a low degree of recognition for their work and the regulatory environment did not take into account their specific characteristics.
The mission of social businesses is to generate significant social, environmental and/ or community impacts, thus contributing to the realisation of the European Union’s objectives by:
- Generating sustainable jobs and facilitating social and work integration, improving the quality of social and healthcare (thus contributing to inclusive growth)
- Introducing efficient ways to reduce emissions and waste, and to use natural resources and energy more efficiently (thus contributing to sustainable growth)
- Focussing on innovation and the participatory use of the internet (thus contributing to smart growth).
The Commission's objective was to create an ecosystem conducive to developing social businesses and to facilitating their access to funding.
The Social Business Initiative identified three strands of action to make a real difference and improve the situation on the ground for social enterprises:
Since then, a lot has been achieved. The EU institutions have delivered in all three areas. The event “Social Entrepreneurs – Have your Say!” is the platform where we take stock of what has been achieved so far and where useful actions for the future will be identified.
Here is an overview over what has been accomplished:
1. IMPROVED ACCESS TO FINANCE FOR SOCIAL ENTERPRISES:
More details on all initiatives to improve access to finance: http://ec.europa.eu/internal_market/social_business/index_en.htm
2. MORE VISIBILITY FOR SOCIAL ENTERPRISES:
More details on all initiatives to enhance visibility: http://ec.europa.eu/internal_market/social_business/index_en.htm
3. OPTIMISED LEGAL ENVIRONMENT:
More details on all initiatives to improve the legal environment: http://ec.europa.eu/internal_market/social_business/index_en.htm
How will public authorities be able to use more social considerations in public procurement?
The new public procurement rules which are set to be formally adopted in February 2014 will introduce a life-cycle cost concept, which will encourage public authorities to consider the full life-cycle of products in their purchasing decisions.
Contracting authorities may take into account criteria linked to the production process of the goods or services to be purchased (important for work insertion companies or co-operatives).
They will have the possibility to require that works, supplies or services bear specific labels certifying social characteristics, as long as only the criteria and characteristics of the label which are linked to the subject-matter of the contract are required and that equivalent labels are accepted.
More specifically on social inclusion, the current contracts' reservation in favour of sheltered workshops (which are social enterprises) has been broadened:
Many social enterprises provide social services. How is the regime proposed for social services being simplified in the new public procurement rules?
Social services already benefited from the simplified regime applicable to the so-called "B" or "non-priority" services". As they generally have a limited cross-border dimension, social, health and education services will now benefit from a specific and simpler regime.
They will be subject to a higher threshold (€750,000).Below this, EU rules do not apply. Even above the threshold, Member States will have the possibility to determine the procedural rules applicable, while respecting the basic principles of transparency and equal treatment. The only obligations shall consist in the publication of a contract notice and of a contract award notice.
State aid reform: why reduce thresholds from EUR 30 to 15 million? How is it going to help social enterprises?
The lowering of the threshold for notification is there to balance the extension of exemption for almost all social services. Since all state aids to social services are now exempted from notification (even those with a high threshold), it does not make sense to keep a high EUR 30 million threshold. Already with 15 million, there can be a cross-border effect as set out in the Decision on public service compensation: "Given the development of intra-Union trade in the provision of services of general economic interest, demonstrated for instance by the strong development of multi-national providers in a number of sectors which are of great importance for the development of the internal market, it is appropriate to set a lower limit for the amount of compensation which can be exempted from the notification requirement".
These reforms serve the objective of a more proportionate (lowering of the threshold) and more differentiated approach (extension of the scope for the exemption of notification).
In addition, Member States will have to make sure that contracting authorities may take into account inter alia all quality and continuity criteria they consider necessary for the services in question. Member States may also eliminate the price as the sole award criterion for such services.
What is the difference between the Social business initiative and other Commission initiatives in the field of corporate social responsibility (CSR)?
Corporate social responsibility is usually defined "as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis."
The Commission's policy is to promote and encourage CSR, which ultimately remains a voluntary initiative of companies. Of course, all companies concerned by the Social Business Initiative will probably have very high standards of Corporate Social Responsibility.
SBI will try to provide those companies with the appropriate tools that will fully take into account their needs and specificities, and enable them to make better use of the Single Market opportunities.
Social enterprise, social economy, social innovation, social responsibility, companies, corporate governance – what is the link?
To avoid confusion, the terms social enterprise and social business are often used interchangeably, taking into consideration the variety of social business models and conceptions across Europe.
For consistency reasons, legislation on the new EU-level financial instrument supporting the development of social businesses (EU Employment and Social Innovation Programme (EaSI3) and the Regulation on European Social Entrepreneurship Funds (EuSEF4) only refer to “social enterprises”.
The key characteristic of social businesses is their primary social, environmental or community purpose, set up under a variety of legal forms, and the entrepreneurial and innovative way in which social entrepreneurs are striving to make a significant impact on society, economy and the environment.
Traditionally, the common thread for social enterprises had been ownership and use of the essential surpluses in the interest of their members or in the general interest, but not distributed to investors. These criteria are common characteristics of cooperatives, mutual societies, foundations, and associations, often termed as social economy enterprises.
Social innovation is an organised initiative of a variety of actors to tackle societal challenges when the market and public sector do not respond to these challenges in a suitable, sustainable and acceptable manner. It is about developing new forms of organisation and interactions between public, private and third sector actors and contributing to reshaping society in the direction of participation, empowerment and learning.
Social entrepreneurs have been pioneers in re-engineering supply chains and distribution networks, or developing, promoting and establishing business standards and norms for inclusive and sustainable development.
Further background and examples are available in the European Commission's "Social Europe Guide" on social economy and social entrepreneurship.