Projects cancelled as EU scraps social economy unit in key department

At last, the sun has arrived in Brussels. Although the chances are that in between this being written and you reading it, the sun will already have decided to vacate Belgium for the rest of the summer. 

The sun, however, is not the only thing that social economy stakeholders may be sad to see making an exit in May. Following speculation, it has been confirmed that DG GROW, one of the two EU directorates-general leading on the sector, will no longer be directly involved with the social economy – leading to the cancellation of crucial projects and uncertainty about what comes next. 

Directorates-general, or DGs, are the EU’s equivalent to government ministries. DG GROW – which oversees matters related to the internal market, industry, entrepreneurship and SMEs – has been a longstanding feature of the European social economy, complete with a dedicated team undertaking activities, developing policies and designing funding programmes to support social enterprises and their intermediaries through an industrial policy lens. 

• Read more: Can social enterprises show the EU they can deliver what it needs?

In the last few years, since the adoption of the European Social Economy Action Plan, this role has become ever more important – co-leading the delivery of this action plan with DG EMPL (the EU’s equivalent of a ministry for social affairs). DG GROW has spearheaded initiatives such as the Transition Pathway for the Proximity and Social Economy, supporting the evolution of the social economy through the green and digital transitions and leading on topics related to social procurement. So, like many social economy stakeholders, you may be asking: what happens now? 

These moves can all be understood as part of a wider (global) push away from topics like sustainability and inclusion

This change in who will be leading the way forward in the European social economy has come as a total surprise – including to the Commission’s Expert Group on Social Economy and Social Enterprises (GECES), which was not consulted on this development. This development has also seen the cancellation of several expected European projects that would have sought to boost social and circular procurement as well as capacity building for social enterprises and their support organisations. 

Of course the wider context should not be ignored, both within the EU and beyond. The reorganisation of DG GROW to eliminate the social economy unit also follows the move away from a focus on the Green Deal, the EU’s flagship climate policy package, and a watering down of commitments in policies like the corporate sustainability reporting and due diligence directives through the so-called Omnibus Regulation. These moves can all be understood as part of a wider (global) push away from topics like sustainability and inclusion, towards competitiveness and a reprioritisation of funds toward defence.

• Read more: Campaigners' fury at attempt to 'eviscerate' EU sustainability laws

From ‘social’ to ‘impact’?

It’s not all doom and gloom though (I hope). The unit responsible for social economy in DG EMPL will continue to lead the implementation of the Social Economy Action Plan and will continue to work with many directorates-general across the European Commission. This unit has been leading much of the implementation of the action plan thus far and will continue to lead initiatives that bring together the social and economic dimensions of the social economy. DG GROW of course will also go on, just without its own unit dedicated to the social economy. There are further rumours that this may leave room for more engagement in the “impact economy”, a not-so-distant cousin to the social economy. (The impact economy is broader than the social economy with a wider conceptualisation of what counts as ‘impact’ and less clarity around what governance or profit distribution is expected of enterprises in this area.)

While change can be difficult, it is as always a constant – with the European Commission being no different. The Social Economy Action Plan will continue and is currently undergoing its mid-term review. As part of this, you will be able to have your say through the Have Your Say portal – and they really do want to have your feedback so do not hesitate to contribute to the consultation. This will help ensure that the next five years of implementation of the action plan continue to address the priorities of ecosystems across Europe, and in such turbulent times, it is more important than ever that all stakeholders make sure their voices are heard.