There are three potential problems with a social enterprise label for Europe
The Guardian, by Filippo Addarii
One of the thorny issues being debated in Brussels as part of the Social Business Initiative is: what is a social enterprise? The European Parliament is examining a voluntary label system for social enterprise. Who wants one?
Philippe Boulland, a French MEP for the European People’s Party, is convinced that a label could enhance the competitiveness of European industry by motivating responsible consumers, attracting investment and fostering a European social welfare model. He is keen to secure funding for a feasibility study (up to €5m) to assess the impact of a label on enterprises’ commitment to tackle unemployment and poverty, how it might shape member states’ policies and how it would reach the general public.
The label would not be mandatory, but enterprises of any size could opt in without increasing red tape.
However, despite the commendable purpose of the initiative, it seems doomed to fail for three reasons:
First of all, the proposed pilot reads as if there would be no difference between social enterprise and the corporate social responsibility of companies in business for profit. Social enterprises must have a social goal as their primary purpose. Corporate social responsibility (CSR) is an optional extra and many companies donate a percentage of profits after the shareholder dividend. While a number of big companies are racing to get their brands associated with social enterprise, hoping to revolutionise the social sector and boost local development, it cannot be an add-on to their CSR strategy.
Secondly, the initiative takes social enterprise as a type of economic activity that works the same way across Europe. But it doesn’t. Compare, for instance, Italy and Hungary. In Italy, social enterprise is embedded in the long history of the co-operative movement; in Hungary the term is associated with collectivisation and compulsory volunteering under the communist regime.
Thirdly, it is a top-down solution and seems to ignore the successful case studies on labels such as Fairtrade and organic food, which were rooted in the demand of the market, are valued by consumers and were developed by practitioners.
The starting point for thinking about a label should be demonstrable impact. Initiatives and enterprises that are able to prove their success and show that they not only have the right values but deliver good value for the public, rather than a commitment to abstract standards.
What any initiative on labels must avoide is putting a straitjacket around an emerging industry and killing experimentation. The commission wants to encourage social entrepreneurship across Europe. There may be models that have not been invented yet: so let’s not set legal boundaries or be fooled by vested interests.
Most important of all let’s not get left behind by wrangling over definitions, but stick to the commission’s plan before making another financial commitment. Two studies on the state of play on social enterprise across Europe are in the pipeline and the results should be out next spring. Let’s wait for the results. But if there is any spare European cash to be invested, focus it on helping social enterprises trade across Europe. This is a real challenge and would be the best way to celebrate the 20th anniversary of the single market.