Mr. László ANDOR EU Commissioner responsible for Employment, Social Affairs and Inclusion " Using social business to improve the European economy" Social Business Initiative Conference Brussels, 18 November 2011

SPEECH/ 11/779

Mr. László ANDOR

EU Commissioner responsible for Employment, Social Affairs and Inclusion

" Using social business to improve the European economy"

Social Business Initiative Conference

Brussels, 18 November 2011

Ladies and Gentlemen,

At the end of a long day, it is time to conclude and have a look forward.

We have had a set of very encouraging discussions, marked also by excellent contributions by President Barroso, Professor Yunus and several Ministers.

The motto of the Social Business Initiative, reflected in the title of the Commission’s Communication, is “Creating a favourable eco-system for social enterprises”.

You might have wondered why we talk about an eco-system. Well, an ecosystem is a concept used in biology to denote a community of organisms interacting with each other and with their environment: This interaction involves exchange of energy and flows of matter.

Since a few years, this ecological metaphor is used to explain how a firm is embedded in, and interacting with, its business environment – and its environment in a broader sense.

The metaphor helps to understand how firms co-evolve with other companies, and how companies develop mutually beneficial relationships with customers, lead producers, suppliers, stakeholders, governments, and even competitors.

Let me use this metaphor to reflect on what we heard and discussed today.

Essentially, we share the view that the eco-systems of social enterprises are different from the ones of traditional SMEs, and that their eco-systems reflect their specificities.

These specificities are, in particular: the social mission; the way social enterprises operate and are managed; and their embeddedness in social innovation networks and initiatives.

But these eco-systems also show certain weaknesses that prevent social enterprises from fully exploiting the benefits of symbiosis.

This is where the role of the responsible gardener comes into the picture. Gardeners that are enablers rather than movers, shakers or shapers. Gardeners that understand the dynamics of the eco-system, and the interlinkages between its organisms.

They do not try to change the basic rules of evolution, but rather seek to strengthen the endogeneous mechanisms and forces that govern the eco-system.

Principles that guide the work of responsible gardeners would be:

• First, to strengthen those organisms of the eco-system that already have a positive role, rather than replace their function. For example, to minimize damages caused by parasites, use other animals; and to facilitate pollination, cultivate bees.

At EU level we would say: Work in partnership with stakeholders and governments, and respect the principle of subsidiarity.

• Second, be specific and adjust gardening to the seasons and the local climate and weather, and do not apply a "one-size-fits-all approach" for irrigation or fertilising.

In other words, align public support to the actions of other promoters and civic society actors, and meet the specific needs of the different stages in the life cycle of social enterprises.

Third, establish a community of practitioners and learners amongst the gardeners to speed up and intensify exchange of good practice in nur turing sustainable eco-systems.

There is a clear added value of acting at EU level to stimulate the development and sharing of best practice. The Union can help social entrepreneurship to develop where it is not developed, strengthen it where it already works and mobilise additional actors.

• And finally, stimulate the linkages between the various organisms of the eco-system, notably between the drivers of evolution and change.

For the world of social business this would translate into simple procedures and easy ways of identifying and recognizing social enterprise, and also in strengthening synergetic links of social businesses with civic and community organisations that promote social innovation.

Ladies and gentlemen,

The Social Business Initiative is about creating and strengthening sustainable eco-systems for social enterprise.

This Conference has been a first step in working with stakeholders and governments, and encouraging and empowering them to join the Commission's initiative.

• The first session focused on the metabolism and energy exchange of the social enterprise with other organisms of its eco-system, and with its larger context.

More specifically, discussion showed that:

• After the crisis, going back to business as usual is not an option: we need social innovation.

• Social businesses are a great source of social innovation. And a lot of young people are attracted by the idea that social impact and business are compatible. But more than that, they also prove this in their business activities.

• Social business has a big role to play in the fight against poverty and in helping the society to address other major challenges, such as demographic ageing.

• In order to tap the innovation potential of social businesses, we have to change our system:

• Social business sh ould enter the curricula of schools and universities, and should be supported through entrepreneurship training programmes;

• But more broadly, public bodies have to assume an active role in building trust and keeping a long-term, structural view on econo my and the society.

The Commission is trying to do just this by bringing out the idea of a social market economy and by supporting the pluralism of business models in Europe.

• The second session discussed how to improve the availability of water and fertilizer for social business to develop and grow.

• It highlighted the role of the public sector in providing long-term support, including through financial instruments, to catalyze private and charitable funding for social entrepreneurship.

• But social enterprises need "patient funding". Innovation support needs to allow some space for failure – but at the same time it is also crucial to complement financial instruments with capacity building and sharing of best practices so that the failures are minimized. We need to work both on the supply and on the demand side.

• We also need to establish new collaboration networks between the public and private sectors and civil society. We need to "break the walls" and make use of the specific strengths of all players.

• The focus of the third session was on planting and incubating, nurturing and pollination.

A number of proposals were made of how the tasks of encouraging and empowering governments, stakeholders and social entrepreneurs can best be organized.

The Commission will build on this by starting a dialogue, in the coming months, with national and regional governments on how best to use the Structural Funds for developing support services, infrastructures and networks to facilitate the start-up and development of social businesses.

• And finally, the fourth session looked at the regulatory environment and at how to create a level playing field between social and other enterprises. The Tunisian example, presented by Minister Ayed, shows us that when policy-makers are committed to tacking the challenge, regulatory improvements can be delivered rapidly.

• It confirmed that a social enterprise is defined mainly by its social mission. But it stressed the value of having European statutes for certain forms of social enterprises and a framework for social investment funds.

• It also emphasized the need for practical simplifications in the application of state aid rules at the national and local levels.

• And it highlighted the potential of public procurement. This is of course a key demand-side instrument where the public sector can stimulate social impact. The Commission is working on ways of strengthening quality focus in procurement rules.

Reviewing the day, I think that this Conference has achieved its objectives:

• First, by bringing together political and economic leaders in Europe, we have raised awareness on the social value generated by social enterprises, and the contribution they make to the Europe 2020 strategy. It is of course important to continue awareness raising, also at national level.

• Second, by explaining the rationale and actions of the Social Business Initiative, we demonstrated how promoting social enterprises fits and contributes the wider policy frameworks of social innovation, the single market, and employment and social inclusion.

• And, most importantly, by providing space for discussion with representatives from member states and regions, stakeholders and social enterprises, we started action to implement the Social Business Initiative at all levels.

Ladies and gentlemen,

When we designed the Conference, I had not expected such a great interest, and such a broad range of institutions and organizations to be present. This encourages us to keep the ball rolling, and to quickly follow-up the issues raised today in the future work of the Commission.

It is now up to the Commission to implement the actions under the Social Business Initiative in partnership with the Member States. This process will be followed, monitored and supported by a multi-stakeholder group on social business which will be made up of Member State representatives, local authorities, social entrepreneurs' organisations, the banking and finance sector and the academia.

The Social Business Initiative is an invitation to national and regional governments and stakeholders to develop eco-systems for social enterprise, to strengthen efforts at national and regional levels, and to make best use of the structural funds and other available sources of support.

The way to respond to this invitation is to develop comprehensive strategies to support social entrepreneurship.

The key elements are capacity building, networking, mobilising private and public funds and integrating social enterprises in pacts for employment and social inclusion initiatives.

I thank you very much for your active participation today and I look forward to our joint work which, I hope, will lead to a rich harvest.