Regions and cities want to tap into the potential of social economy and social entrepreneurship to support the transition towards more socially and environmentally sustainable and more resilient economic models in the EU. However, the EU must put in place more favourable framework conditions for the social economy to flourish. This requires tackling the current diversity of definitions and legal frameworks and facilitating access to finance and markets. These are the key messages of an opinion drafted by Ricardo Rio (PT/EPP), Mayor of Braga, and adopted at the European Committee of the Regions' plenary session on 8 February.

In Europe there are 2.8 million social economy enterprises, representing 10% of all businesses in the EU. Almost 13.6 million people – about 6.2% of the EU's employees – work for social economy enterprises. On top of the paid workforce, social economy mobilises volunteers, equivalent to 5.5 million full-time workers.

With this opinion, the European Committee of the Regions brings forward its suggestions ahead of the upcoming European Commission proposal for a Council Recommendation on Developing social economy framework conditions, which features in European Commission 2023 work programme. The Committee underlines the strong local anchorage of social economy and calls for the national authorities to allow local and regional entities to implement measures best suited to the local context to support the development of the social economy on their territory, also drawing on available EU co-funding.

“This opinion demonstrates the strong interest of cities and regional authorities on social economy and acknowledges its importance for the society, recognizing the importance of a vibrant social economy ecosystem for a sustainable development model in all territories”, rapporteur Ricardo Rio stresses. In order to create a favourable environment for social economy organizations, he points out the need for “several legislative initiatives at European and national level concerning taxation, public procurement, state aid, training and education, etc.”.

Mr Rio's opinion underlines the role of the social economy in strengthening social cohesion in regions and cities, in particular in disadvantaged regions and thus helping combat depopulation and the rural exodus. However, the lack of access to finance and markets often prevents social entrepreneurship from prospering. Fostering synergies among funding instruments, providing accessible and tailored support schemes, developing specific fiscal frameworks and State Aid regimes to social economy entities and encouraging socially responsible public procurement are mentioned as supportive measures in this context. There is also a need for single and clear entry points in public administrations to reduce administrative burden.

The opinion also points out a lack of common definitions and data collection methods in Europe, in particular at the local and regional level. The Committee reiterates its call for a more favourable European legal framework for the social economy covering all its different forms such as cooperatives, mutual societies, associations, foundations and social enterprises. To this end, regions and cities welcome that the European Commission is going to present a legislative initiative on cross-border activities of associations in 2023.

Furthermore, complementary to the green taxonomy as a contribution to the implementation of the Green Deal, the European Commission should urgently make a proposal to establish a social taxonomy which would provide potential investors and enterprises with a clear guidance as to what can be understood as "social investment". It is also important to enhance education, training and communication campaigns on social economy, including on financing and on the EU support available for the sector.

Finally, the Committee appeals to all levels of government to create long-term and well-financed strategies to promote the social economy and to establish more informal and accessible support schemes. It also suggests to establish a formal Observatory for the Social Economy in Europe and challenges the EU institutions, the Member States and the local and regional authorities to develop a joint plan for the promotion of the social economy as means to foster its growth to its full potential.

Contact:

Lauri Ouvinen

Tel. +32 473536887

lauri.ouvinen@cor.europa.eu