Celebrating the Social Economy

social economy impact finance green & social

A year ago, the European Commission presented the Social Economy Action Plan to strengthen the social economy sectors in Europe.

On Wednesday 7 December 2022, Social Economy Europe (SEE) held an event to celebrate one year of the Social Economy Action Plan, and ten years of SEE: for an economy that works for people & the planet. This brought together many social economy leaders and EU decision-makers such as European Commissioner Nicolas Schmit, MEPs Patrizia Toia (S&D, IT), Jordi Cañas (Renew, ES), and Katrin Langensiepen (Greens/EFA,DE); State Secretaries in charge of the social economy Marlène Schiappa (tbc, France), Sven Giegold (Germany), and Joaquin Pérez Rey (Spain),

What social economy actors need Social economy organisation matter more today than ever before. They provide a numerous range of services, strengthening our society and our resilience. In turbulent times they are one of the front-fighters in providing practical solutions to everyday problems which the public and the private sector struggle to solve. According to SEE, the social economy movement continues catalysing social and environmental innovation, with over 2.8 million entities, that employ 13.6 million people.

The financing needs of the social economy During the event, it became clear that more social economy actors are needed, but they need the involvement of citizens as well. They also need adequate investments and investors, not only governmental, but also from private sources. The latter needs to be characterized by reasonable financing conditions, especially for the starting phase.

But this is not all. It is crucial that private (impact) investors, are fully in tune with the mission of the social economy organisation they invest in. And finally, these types of genuine, mainly locally-rooted, social impact investments should be recognized and labelled as such in order to differentiate these from other investments. Some progress has been made to do this for environmental investments under the EU Sustainable Taxonomy. Unfortunately, a similar initiative social taxonomy is still lacking despite recommendations for a social taxonomy in three fields which are rooted in human rights: Decent work, Adequate living standards and wellbeing for end-users and Inclusive and sustainable communities and societies. Final Report on Social Taxonomy Platform on Sustainable Finance, February 2022

Green and social, the two sides of the same medal This risks to separate two aspects of the same medal and prioritize green investments (including nuclear and gas...) above social investments. The importance to quickly integrate social elements was recognized by the president of the European Commission, Von Der Leyen when presenting the EU Green Deal: 'We have to be sure that no-one is left behind. In other words, this transition will either be working for all and be just or it will not work at all.

The transition pathway on proximity and social economy Although a social taxonomy is not to be expected soon - at least one involving the European Commission - other options to enhance green and social economy actions have been presented recently. In November 2022, the Commission (DG GROW) presented a plan called 'Transition Pathway for Proximity and Social Economy'.

The stakeholders which were involved in the preparation of the Transition Pathway stressed that social banking (e.g. bank cooperatives, ethical and impact investment firms) and micro-finance institutions can increase local investments for green transition projects with a social dimension. They also stressed the specific role of innovative financial tools such as impact investment platforms, crowd-funding platforms, community finance, foundation and philanthropy sponsorships for innovation and R&D and Social or Green bonds. One of the 30 concrete actions areas selected for the transition pathway is to create incentives for social finance, micro-finance institutions and the philanthropy sector to provide financial and capacity-building schemes for green projects and investments. Apparently the actors which should make this possible are the Member States, the regions and the stakeholders. Still no mention of the EU level, while for instance the EIB could provide an incredible boost to this.

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