The Global Agenda Council on Social Innovation, a group of 20 experts comprised of social entrepreneurs, foundation leaders, bankers, academics and social investors focused its recent discussions at the Global Agenda Summit in Abu Dhabi on the importance of policy for the field of social innovation. During the past decades, many innovative models have been developed by social entrepreneurs around the world to provide financial services, drinking water, renewable energy, education, and job opportunities and many more products and services to the base of the pyramid. However, the Council agreed, if we want to move from isolated models to systemic change, we need to focus on policy.
The European Commission has just announced taking a first big step in the direction of creating a more favourable regulatory environment for social enterprises and businesses in the European Union. Several members of the Council have been advising the EU Commission on its Social Business Initiative, which was launched at a major conference with 1000 registered participants in Brussels on 18 November.
The Social Business Initiative covers eleven priority measures in three main areas. I believe that in particular the following measures can prove to be very powerful:
1) Improving access to funding:
- Access to private funding will be made easier through a new regulatory framework to stimulate the creation of social investment funds and to enable them to work across the single market.
- The EU proposes to set up its own € 90 million fund to facilitate access to funding for for start-up, development and expansion of social enterprises.
- In addition, the Commission has proposed an investment priority for social enterprises in the ERDF and ESF regulations from 2014 onwards.
2) Increasing the visibility of social entrepreneurship and foster capacity building and education:
- By mapping all social enterprises in Europe, including their cross-border growth potential, the Commission hopes to provide a stimulus for best practice models to replicate.
- Learning between the national and regional administrations on how to support, promote and finance social enterprises should facilitated.
- Access to EU education and capacity building programs (such as ERASMUS; TEMPO, HORIZON 2020) will be made easier for social entrepreneurs.
3) Making the legal environment friendlier for social enterprises
- Giving social enterprises better chances to obtain public procurement contracts by making quality and working conditions more important criteria for procurement contracts.
- By simplifying the rules for awarding public aid to social and local services, social enterprises will very likely benefit from enhanced opportunities to get national financial support for their services without infringing upon EU competition rules around state aid.
As I was listening to Jose Manuel Barroso, President of the European Commission and the Commissioners László Andor and Michel Barnier (responsible for Employment & Social Affairs and Internal Market, respectively) voice their commitment to promoting social entrepreneurship, I could not help but think of this 18th November as a historic moment for the field. In the span of ten years, social entrepreneurship went from niche to mainstream in Europe. Just as I was scribbling down this thought for my remarks on the next panel, Nick Hurd, Minister for Civil Society in the UK was actually saying them. We might still be months and years away from seeing many of the measures come into effect, but it is a massive acknowledgement for the contribution that social entrepreneurs deliver for a more inclusive society.
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 supportive framework in place. During my remarks on the panel focused on increasing visibility of social enterprises, 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, at around 45%.This is one area where the proposed set of actions by the EU Commission could lead to far greater cross-country replication of the most innovative and impactful models.
However, social entrepreneurs, in particular Muhammad Yunus and Caroline Casey (Founder of Kanchi) made it loud and clear throughout the meeting that the EU and governments should be like a conductor of an orchestra: not playing any instrument directly, but ensuring that the different musicians have the optimal conditions to play together and produce the best music.
During the closing speech, Commissioner Andor echoed this concern and used the analogy of a “responsible gardener” for the EU’s role in creating a favourable ecosystem for social enterprises in Europe. The principles that guide the work of a responsible gardener, according to Andor include strengthening “those organisms of the eco-system that already play a positive role, rather than replacing their function.” A gardener tries to minimize damages caused by parasites by cultivating other plants and animals and facilitates pollination by cultivating bees. “Gardening also needs to be adjusted to the seasons and the local climate and weather. You cannot apply a “one-size-fits-all approach” for irrigation or fertilising.” Laszlo Andor went on to state that “a community of practitioners and learners amongst the gardeners could speed up and intensify exchange of good practice in nurturing sustainable eco-systems.”
We shall hope that improved regulatory frameworks at for social innovation at national and regional levels may lead to a rich harvest and beautiful music in the coming years!
Head and Senior Director
Schwab Foundation for Social Entrepreneurship