Single Market Act

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Towards a Single Market Act

The European Commission's October 2010 communication Towards a Single Market Act makes 50 proposals for action. Among these, three concern what it calls the "social market economy", a conception which seems to bear some similarity to the social economy.

Social Economy Europe response to the consultation on the Act

Excerpts from the proposal follow:

2.4 New resources for the social market economy

Proposal No 36

"In 2011 the Commission will propose a Social Business Initiative in order to support and accomopany the development of socially innovative corporate projects within the single market by means of in particular social ratings, ethical and environmental labelling, public procurement, the introduction of a new investment fund regime and the use of dormant savings."

This "must enable the reserves of talent and financial resources already available in the Member States to be tapped into by bringing together, within the single market, management and finance professionals and entrepreneurs with socially innovative projects which stimulate growth."

Its rationale is: "Over recent years, entrepreneurs acting individually or large companies have set up projects which were very innovative from a social viewpoint. This first decade of the 2000s has revealed across Europe and the world the huge innovative potential of the social economy sector. Without necessarily being non-profit-driven, these projects are the brainchild of a person or group of people who have come up with creative solutions to major socio-economic problems often caused by exclusion (access to agri-food products, accommodation, healthcare, the labour market, banking services, services enabling better integration of disabled people, etc.) as well as by the ageing of the population. The innovation introduced by these new models generates economic growth and has a positive impact on all stakeholders (entrepreneurs, employees, consumers, investors and other financial partners, etc.). The organisation of public and private procurement (private sector procurement policies and corporate social responsibility), better access to finance (through banking or the financial markets, including through the use of dormant savings), the introduction of a new investment fund regime for the financial industry and consumers of financial products, in order to promote and enhance the liquidity of investment in projects with a strong element of social, economic and technological innovation, and the implementation of ad hoc communication tools will be triggers for action."

Proposal No 37

"For several reasons relating mainly to the nature of its financing and the preference of shareholders who support projects with a strong element of social, economic and sometimes technological innovation, the market economy is structured around a variety of different types of legal status (foundations, co-operatives, mutual associations, etc.). The Commission will propose measures enabling the quality of the legal structures concerned to be improved in order to optimise their functioning and facilitate their development within the single market."

Concretely, the Commission will promote European statutes for foundations and associations, and launch a consultation on the existing European Co-operative Statute.

Proposal No 38

"The Commission will launch a public consultation (Green Paper) on corporate governance. It will also launch a public consultation on possible ways to improve the transparency of information provided by businesses on social and environmental matters and respect for human rights. These consultations could lead to legislative initiatives."

Source: Towards a Single Market Act. For a highly competitive social market economy. 50 proposals for improving our work, business and exchanges with one another. COM(2010) 608 final of 27 Oct 2010 http://ec.europa.eu/internal_market/smact/docs/single-market-act_en.pdf

Consultation on Towards the SMA

The 800+ responses are summarised here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2011:0467:FIN:EN:PDF

Review of the Small Business Act

These measures are also referred to in the Review of the Small Business Act for Europe:

3.4 Promoting entrepreneurship, job creation and inclusive growth

[...]

There are also SMEs which follow business models different from the traditional capitalbased companies. This category, known as the “social economy”, includes non profit associations, foundations, co-operatives, mutual societies and similar legal forms. In order to respond to the particular needs of these undertakings, the Commission announced in the Single Market Act a number of actions that will provide a level playing field. These actions would address issues related to cooperatives, foundations and mutuals on the one hand and enterprises pursuing social objectives on the other.

Source: reviww of the Small Business Act for Europe, COM(2011) 78 of 23 Feb 11 http://ec.europa.eu/enterprise/policies/sme/small-business-act/files/sba_review_en.pdf

Single Market Act

Communication COM(2011) 206/4 Single Market Act. Twelve levers to boost growth and strengthen confidence. "Working together to create new growth" of 13 Apr 11 contains the following section:

2.8 Social entrepreneurship

Key action

Legislation setting up a European framework facilitating the development of social investment funds, which would scale up the impact of national initiatives by opening Single Market opportunities to them (access to investment opportunities and to investors from all Member States).

The internal market is based on a "highly competitive social market economy", which reflects the trend towards inclusive, socially fairer and environmentally sustainable growth. New business models are being used, in which these societal concerns are taking precedence over the exclusive objective of financial profit. This trend must be reflected in the single market. A level playing field must be ensured and initiatives, which introduce more fairness in the economy and contribute to the fight against social exclusion, should be supported. The tremendous financial lever of the European asset-management industry (EUR 7 000 billion in 2009) should be used to promote the development of businesses which have chosen – above and beyond the legitimate quest for financial gain – to pursue objectives of general interest or relating to social, ethical or environmental development. In order to ensure a level playing field, the Commission will present a legislative proposal on the transparency of the social and environmental information provided by companies in all sectors.

In order to expand and meet its objectives, the social economy sector in the Single Market should have at their disposal legal models adapted to their needs. The European co-operative sector, for example, is more vibrant than ever[1] – although the slow take-up of the Statute for a European Cooperative Society must be looked into. Mutual societies operate in sectors of key importance to citizens (health, banking, insurance, etc.) but they hardly ever provide their services in more than one Member State. Nonetheless, with a 25% share of the insurance market and 70% of the total number of undertakings in the industry, they cannot be forgotten by the Single Market. Foundations make a strong contribution to the financing of innovative initiatives of general interest. However, they still face difficulties in establishing themselves in other Member States or pooling their assets on a cross-border basis. In order to overcome these difficulties, the Commission will present a proposal for a Regulation establishing a European Foundation Statute.

Some companies, moreover, set themselves the objective of fighting against social exclusion, whilst remaining profit-making. They are often very small undertakings acting locally, although some of them have a genuine growth and job creation potential.[2] Legal instruments[3] should ensure that they view the Single Market as both their breeding ground and an opportunity for growth, instead of limiting themselves within national boundaries.

Within the framework of the European Platform against Poverty and Social Exclusion[4], the Commission will support the development of the social economy as an instrument for active inclusion by proposing, in 2011, a "Social Business Initiative" and by facilitating access to the Union's financial programmes for use in this area.

In 2011 the Commission will also adopt a Communication on corporate social responsibility (CSR) – a wider concept than social business – which encourages all businesses to pursue actions with social or environmental objectives as part of their daily activities.

Footnotes

  1. Cooperative societies alone represent more than 4.8 million jobs.
  2. Employees in social enterprises and the third sector are estimated at 7 million individuals (i.e. 4% of paid employment in Europe.
  3. Public procurement rules, business-to-business relations, especially in the retail and wholesale trade (B to B), access to finance (bank credit, dedicated investment funds, orientation of private savings by initiatives such as the Big Society Bank in the United Kingdom)
  4. COM(2010) 758