This launch event provided an opportunity for policy makers and other stakeholders to share views on the relevance of the OECD Recommendation on the Social and Solidarity Economy and Social Innovation; discuss priorities and opportunities towards effective implementation of its nine building blocks and also explore ways to use it as a strong lever to foster international recognition and global understanding of the social economy.
The Recommendation on Social and Solidarity Economy and Social Innovation was adopted by the OECD Council at Ministerial level on 10 June 2022 on the proposal of the Local Employment and Economic Development Committee (LEED).
The Recommendation promotes the social economy’s potential to pioneer new business models, provide essential services, contribute to a fairer, green and digital transition, engage youth, and build communities. It recognises the diversity of practice and the need for policy tools applicable to a range of country contexts and varying degrees of development of the social economy. The social economy is typically made up of organisations such as associations, cooperatives, foundations, mutual societies and social enterprises.
This Recommendation is timely given the prominent role of the social economy in addressing pressing challenges such as COVID-19 or supporting Ukrainian refugees and, looking ahead, in building long-term resilience.
The Recommendation is built around nine building blocks that provide the conditions for the social economy to thrive and help address challenges that affect, to a greater or lesser extent, social economy ecosystems at international, national and local level in any context. The nine building blocks capitalise on more than two decades of OECD work on the social economy and the guidance provided in OECD/EU Better Entrepreneurship Policy Tool, which is now being used to review social economy frameworks in OECD Member countries, EU Member states, and beyond.
Traditionally, the social economy emerges in places where civil society thrives, civic engagement is encouraged and entities, including enterprises, operate, while serving collective interests. The presence of civil society initiatives clearly indicates the interest of citizens in acting in the general interest.
Most OECD work on the social economy highlights the link between the dynamism and vibrancy of civil society and community-based initiatives with the expansion of social economy organisations and social enterprises.
This principle encourages countries to promote the emergence and expansion of civil society initiatives and the strengthening of local social capital in general by:
a. Recognising the role of civil society and all stakeholders (public and private) in addressing economic and social challenges.
b. Enabling civil society initiatives and providing the possibility for them to transform into social economy organisations in their country context.
c. Raising public awareness of the opportunities to achieve societal goals through different social economy approaches.
d. Encouraging network building, cross-sector partnership development and knowledge sharing as well as communities of practice.
e. Considering inclusion of activities related to the social economy in formal and non-formal learning at all levels, from primary through to postsecondary and adult education.
The social economy cuts across many economic and social sectors. Governments increasingly value social economy organisations as important partners in their efforts to achieve sustainable and inclusive economies and societies. They strive to build conducive ecosystems to support the development and growth of the social economy in different stages of development, and according to the specificities of their business models.
This is why the institutional framework that governs the social economy needs to be co-ordinated across policies and government departments or agencies (horizontally), and across levels (national, regional, local) (vertically). It can typically take the form of a national policy, a strategy, an action plan, a dedicated programme, and/or a dedicated statutory body such as a ministry/department.
The institutional framework is ideally co-created with the stakeholders such as umbrella organisations of social economy entities that are part of the wider social economy ecosystem. Finally, the institutional framework needs to be actionable, and progress against its objectives, and actions should be easy to monitor.
This principle recommends that countries clarify who does what across ministries, public agencies, and levels of government by:
a. Clarifying, when possible, responsibilities among government bodies and across levels of government for better and effective implementation of policies for the social economy.
b. Facilitating wide and inclusive stakeholder consultation, including under-represented groups, in the design and implementation of social economy initiatives.
c. Considering, when possible, the establishment of a “one-stop shop” that serves as a single point of reference and/or simplifying supports at all levels of government for social economy organisations to access information, resources and support services.
d. Designing policies and adopting measures that reinforce and mainstream gender equality, in the social economy as well as highlighting best practices of the social economy in this area that could inspire the wider economy.
e. Promoting when possible an institutional environment, including through the engagement of stakeholders, that facilitates co-ordination, promotes coherence and effectiveness, and helps mainstream the social economy in public policies and across levels of government.
f. Considering mainstreaming and building upon the various contributions of the social economy to support critical policies regarding the green and digital transitions as well as strategic global goals such as the Sustainable Development Goals and the Paris Agreement.
g. Fostering co-operation, collaboration and partnerships between social economy organisations and all levels of government, businesses, social innovators and educational institutions, to the benefit of all stakeholders, when possible.
Legal and regulatory frameworks can have a significant impact on the visibility, recognition, credibility and growth of the social economy. They can also serve as a reference and basis for suitable and targeted public support schemes, notably regarding access to public procurement, as well as financial and non-financial assistance and benefits.
Although their legal and organisational forms differ, social economy organisations often face the same challenges in their development and growth. The main objective of legal frameworks for the social economy is to enshrine in the law definitions, objectives and guiding rules for social economy organisations.
This principle recommends that governments set up suitable legal frameworks for social economy organisations by:
a. Engaging with social economy organisations to better design legal frameworks for them, including their members.
b. Identifying areas where existing legal frameworks disadvantage social economy organisations, compared to other types of economic actors.
c. Recognising and promoting different legal forms for social economy organisations, when appropriate, especially for newer types of social economy organisations such as social enterprises.
d. Advancing efforts to harmonise definitions for social enterprises in particular, and exploring opportunities for mutual recognition through the use of appropriate labels and certifications or criteria with which social enterprises should comply.
e. Encouraging internationalisation strategies of social economy organisations through information sharing, international co-operation, and regulations that facilitate trans-border activities and partnerships with international firms.
f. Developing regular evaluation requirements to improve and update laws and policies to evolve with the needs of social economy organisations and including stakeholder feedback as well as qualitative and quantitative evidence.
Access to finance and funding is a critical policy lever for the social economy to thrive and grow. Social economy organisations primarily pursue a social mission, while often operating in the market. However, they often face barriers in accessing finance. The social economy also faces a common lack of understanding and knowledge among finance providers regarding the risks and returns associated with investing in social economy organisations. Therefore, traditional funders (e.g. banks) may not be ready to fund them.
With this in mind, it is important to take into account the role of the public sector in terms of: (i) purchasing services from social economy organisations; (ii) acting as an investor in social innovation by financing social economy organisations that experiment with new solutions that can be replicated and scaled; and (iii) developing de-risk mechanisms (e.g. guarantee schemes) to facilitate social economy organisations’ access to mainstream finance. The role of the private sector, for example through institutions such as ethical banks, is as important and can provide a major source of funding for the social economy.
This principle recommends that governments set-up the mechanisms needed to support the development of access to finance and funding by:
a. Developing and pursuing, where possible, a comprehensive public funding strategy for the social economy, in compliance with regulations regarding aid to enterprises, to improve the long-term financial sustainability of social economy organisations.
b. Identifying barriers and supporting access of social economy organisations to existing mainstream financial instruments and support schemes at all levels to expand their access to finance, including options such as direct loans, guarantees, venture capital or equipment financing.
c. Boosting the financial competencies and investment readiness of social economy organisations through training and educational opportunities tailored to their needs, or by allocating funds directly to them so they can identify and address their specific investment readiness needs.
d. Encouraging the use of innovative and alternative financing mechanisms such as collaboration with ethical finance, credit unions, social and savings banks as well as crowdfunding.
Access to public and private markets is a powerful tool to support the social economy development and growth. In 2017, public procurement made up on average 11.8% of GDP across OECD countries, totalling to more than USD 674 billion across the OECD. Approximately 63% of procurement occurs at the sub-national level, with almost 134 000 authorities from across the OECD at local and regional level. More and more of this spending is being done in a socially responsible manner.
However, for both public and private markets, it remains unclear how much social procurement actually involves social economy organisations or social enterprises, what their participation and success rates are, etc. Through public procurement, the public sector can buy goods and services from social economy organisations that deliver social and environmental value, thus becoming a vehicle to meet social, environmental or economic objectives, such as work integration of people from vulnerable groups or promotion of the circular economy. Governments strategically can choose to procure goods or services from social economy organisations that have expertise in delivering the required social and/or environmental benefit.
This principle recommends that governments facilitate access to public and private markets by:
a. Facilitating access, when appropriate, of social economy organisations to public procurement opportunities.
b. Encouraging the use of social and/or environmental considerations and clauses in public procurement through clear national or local procurement strategies and through legislation.
c. Developing the skills and capacity of procurement officials (private and public) as well as their market knowledge and contacts with social economy organisations, including through dedicated trainings.
d. Encouraging social economy organisations to use private markets as a source of financial sustainability through the development of partnerships with the wider business community.
e. Supporting social economy organisations to use opportunities that new technologies offer to access both public and private markets through online market places.
f. Developing support materials, such as training programmes and technical guides, which help social economy organisations learn more about how to access public and private markets.
Access to skills and business development support is a central policy lever in supporting the social economy. Social economy organisations might not have all the necessary expertise and capacities to operate and develop in a financially sustainable way. They can benefit from training, mentoring, consulting and business development support in all stages of their development.
While there is increasing programme support for social economy organisations, more is needed to help them professionalise and scale their impact. The accessibility in both urban and rural areas, support structures and content tailored to their specific nature, as well as the affordability of these services are all considerations when setting up support measures for social economy organisations. Public and private actors both have a role to play in developing and funding such support programs.
This principle recommends that governments strengthen skills and business development capacities of social economy organisations by:
a. Leveraging, when possible, public funding instruments to facilitate access to dedicated education and training programmes on the social economy within and alongside schools and universities.
b. Providing access to coaching as well as affordable and adapted mentoring programmes for social economy organisations and social entrepreneurs.
c. Facilitating access to capacity and business development support for social economy organisations in all places (urban and rural) tailored to their needs and affordable.
d. Allowing, where appropriate, social economy organisations to access existing business development services.
The purpose of social economy organisations and entities is to pursue social or societal goals and, by doing so, generate social impact, whether for society at large, the environment, or specific target groups.
They face growing requests to demonstrate their market and non-market impacts. An increasing number of public and private funding and support programmes are calling for efforts to measure and monitor social impact. This trend is complemented by social economy organisations’ continuous need to measure, monitor and improve their activities and impact, with usable metrics that go beyond measures of short-term monetary value creation.
While there is no broad-based consensus on impact measurement and reporting techniques or metrics best suited for social economy organisations, there is consensus that dedicated tools and methods are needed to capture the complexity of social economy organisations adequately and remain user friendly. Widely-used approaches like Social Returns on Investment (SROI) are often deemed to fall short in addressing social economy needs.
This principle recommends that governments encourage impact measurement and monitoring for social economy organisations by:
a. Promoting the development of indicators and criteria for social impact measurement in public policies and programmes.
b. Encouraging social economy organisations to use part of the resources they receive from public authorities in the form of subsidies or contracts for social impact measurement.
c. Supporting the design and dissemination of guidance on social impact measurement methods tailored to the social economy.
d. Promoting the measurement of the non-market value, in addition to market value, of social economy organisations to better analyse their performance and assess their social impact, including on well-being.
e. Supporting capacity to conduct social impact measurement by offering dedicated funding or training from specialised intermediaries and by mobilising other resources, including networks of expertise.
Providing reliable and comparable statistics is a strategic challenge for the social economy. Although the social economy has gained prominence, there is a lack of data production and collection to measure the scale, scope and progress of the social economy in OECD countries and beyond. The diversity of legal and working definitions of social economy organisations in countries represents a challenge to develop statistical definition. The lack of official national registries that would separately identify these organisations is another major challenge.
Policies need an evidence base, national statistical authorities could consider developing and implementing satellite accounts aimed at establishing the effective contribution of the social economy to economic growth and social cohesion. Data collection and production could also help measure the various impacts of the social economy as well as the market and non-market value of social economy organisations.
This principle recommends that governments support the production of reliable data and evidence on the social economy by:
a. Promoting methodologies and guidelines to data collection and production as well as fostering a common understanding of international approaches to produce comparable statistical information on the social economy at the international, national and regional/local levels.
b. Collecting evidence on the social economy in official statistics by building on existing data and statistical business registers, observatories or launching dedicated surveys (census or sample surveys) and supporting dedicated satellite accounts.
c. Exploring complementary data sources that may be outside the scope of official statistical business registers, such as annual surveys conducted in collaboration with networks, and registries created by representative social economy organisations.
d. Encouraging co-production of statistics through working groups composed of governmental bodies in charge of statistics or national statistical institutes, universities and research institutes as well as users.
Social innovations have proven effective in identifying, designing and implementing new solutions to social and environmental problems. They seek to increase socially desirable outcomes, such as well-being and health, quality of life, social inclusion, solidarity, citizen participation, environmental quality and the efficiency of public services.
Social innovation brings together private, public and non-profit actors with citizens to develop innovative solutions to societal challenges. In addition, in practice, because profit is not the primary motive, social innovation differs from traditional innovation, through finding solutions to problems via collective knowledge and resources of a variety of stakeholders, including social economy organisations. “Buy Local” or green movements for example, have shown how social innovation can be a driver to transition to more sustainable and responsible practices. They have helped identify new sustainable and responsible ways of producing and consuming products and services originating from local communities.
This principle recommends that countries promote social innovation as a means to unleash the full potential of the social economy by:
a. Developing an understanding of social innovation at the national and local level, including the factors that help social innovation ecosystems emerge and scale.
b. Setting up policies and evaluating them, encompassing demand-side measures (aimed at creating a market for social innovations) and supply-side measures (aimed at increasing the number and the quality of social innovations).
c. Promoting social innovation through incubators, competence centres, training, and collaboration with public authorities and higher education institutions to encourage experimentation and upscaling.
d. Capitalising on the potential of social innovation to enhance local development and the resilience of marginalised and peripheral areas.
e. Harnessing existing networks in local communities to support social innovation in places.
f. Encouraging social innovation to promote social and sustainable practices in line with the Sustainable Development Goals agenda.
g. Considering social innovation within broader innovation policy, including for agendas such as the green transition and digitalisation.
h. Supporting social innovation to reduce the negative externalities of economic activities through partnerships between social economy actors, businesses and social innovators.