ESELA publishes Europe-wide mapping study of social enterprise – December 2015

European Social Enterprise Law Association (ESELA) is delighted to announce the publication of its report into social enterprise in Europe, setting out recommendations for national governments and other policymakers.

The report, which was compiled following a European Commission study into the state of social enterprise across Europe as part of the flagship ‘Social Business Initiative’, recommends that:

• No effort be expended trying to create a pan-European social enterprise legal form
• Each European country be supported to develop a supportive legal environment, including:
  • Developing new social enterprise legal forms, including:
    • Co-operatives with a social purpose
    • Not for profit social enterprises
    • Share companies in which social purpose is primary and profit is secondary
  • Developing new legal statuses for social enterprises, with tax and other benefits
• Model constitutions be developed to help and guide social entrepreneurs when starting-up
• Barriers to social enterprise growth should be removed, including, as far as possible, removing any unnecessary restrictions on:
  • the social purposes which legal forms used by social enterprises may have
  • the ability of non-profit social enterprises to carry out trading activity;
  • the ability of non-profit social enterprises from establishing trading subsidiaries;
  • the ability of directors of non-profit social enterprises to receive compensation; and
  • the ability for non-profit social enterprises to compete in the market.

Jonathan Bland, Managing Director of Social Business International Ltd and one of the authors of the ‘Strasbourg Declaration’ on social enterprise, comments:

“There is growing recognition across the EU of the importance of social enterprise as an important business model that can support economic growth and social progress. Since 2012, the European Commission has been promoting a series of policies on social enterprise under the Social Business Initiative, focused on creating the right eco-systems of support to drive the growth of social entrepreneurship.

In 2014, over 2000 social entrepreneurs and stakeholders from across Europe came together in Strasbourg to take stock and agree some key actions for the future. The Strasbourg Declaration which emerged stated that supportive legal frameworks are key to growing the social entrepreneurship which is urgently needed to respond to our major social challenges, such as an ageing population, youth unemployment, climate change and increasing inequalities.”

Luke Fletcher, a partner at the law firm Bates Wells Braithwaite in the UK, the chair of ESELA and one of the principal authors of the report, explained:

“Legal frameworks play a fundamental part in any ecosystem for social entrepreneurship. They can help to make it relatively straight forward to start-up and grow a social enterprise and raise the visibility of this way of doing business or they can hold people back, forcing entrepreneurs to spend time and effort looking for ways around barriers imposed by the legal system.

This research report makes available a unique and unprecedented treasure trove of information about the relationship between law and social enterprise. It contains profound insights of importance to anyone interested in finding ways to support and grow social enterprise in Europe. It is particularly useful for governments, officials, policymakers and others who want to design legal systems which support the growth and development of social enterprise.

An exciting additional result of this research is that it has led to the creation of a new European network of social enterprise lawyers, legal experts and others with a strong interest in the relationship between law and social enterprise: the European Social Enterprise Law Association.

This new association has the potential to be an important source of knowledge and expertise that can highlight and share good practice, help member states learn from each other and make recommendations about the effect of EU wide laws and policies on social enterprises.”

Click here to download the full study.