Why Scotland’s Community Wealth Building Act is big news for social enterprise – and the national economy

With the passing of the Community Wealth Building (Scotland) Act 2026, Scotland has become the first country in the world to legislate for community wealth building as a national economic framework. This is big news for all social enterprises, the social and solidarity economy, and for all who wish to see an economy that truly works for people, place and planet. It signals not only recognition of ‘inclusive and democratic business models’ (often referred to as IDBMs, and which include social enterprises, co-operatives, development trusts, community-owned firms and employee-owned firms), but an invitation and an expectation that these models will help shape the future of Scotland’s economy

The legislation marks a milestone in a global story about the need to reclaim economic agency in an era defined by mutually reinforcing crises: climate breakdown, a shifting global geopolitical landscape and economic insecurity. Fragmenting supply chains, and widening inequality are no longer abstract trends, they are lived realities, exploited by a growing far‑right politics feeding on fear and dislocation. IDBMs — including social enterprises — have long been at the frontline as a progressive antidote. The Act elevates their role from marginal to structural

Community wealth building is a common‑sense response of communities and a country grappling with the real world of the 2020s and a growing recognition that our economy and the old way of doing things are not working – for us or the planet

And in this we should not perceive community wealth building as just another programme, regeneration, an isolated policy preference or a technocratic exercise. Neither should it be seen as some visionary ‘alternative’ conjured up by lofty elites or the progressive chattering classes. Community wealth building is something far simpler and far more powerful: it is a common‑sense response of communities and a country grappling with the real world of the 2020s and a growing recognition that our economy and the old way of doing things are not working – for us or the planet.  

If anything, Scotland’s community wealth building legislation signals a collective recognition that patterns of wealth, policy and economic development must change, shifting from a narrow focus on growth and external investment attraction to a deeper mission: building local economies that are resilient, democratic, and rooted in (and strengthening of) place.

However, the legislation in Scotland is not the sum total of activity. It does not stand as a top-down legal nicety, conjured up by a government. It is deeply practical and comes on the back of seven years of work. North Ayrshire Council became the first Scottish local authority to progress community wealth building in 2018. Subsequently, five other local authorities have taken up community wealth building, initially supported by the Scottish Government, with many more developing community wealth building plans and implementing actions. 

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Furthermore, there is already a movement building across IDBMs, civil society and the public sector. Social enterprises have been key delivery partners in local town centres, community energy, circular economy initiatives, social care models and new employability pathways. Furthermore, campaign networks, anchor institutions (including health boards), local businesses, national agencies and public bodies are advocating for and embedding community wealth building principles in their own strategies and operations. There is also accompanying movement‑building activity including the Community Wealth Building Centre for Excellence, an emerging national support infrastructure providing practitioner development and shared learning. We are building an ecosystem, not just an individual collection of projects.

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The significance for social enterprise

To understand the significance of this legislation for social enterprises, it is important to convey what the intentionally simple and enabling Act actually does.

First, every local authority must work across local social, public and private sectors and with national economic agencies to produce and implement a Community Wealth Building Action Plan. This alone is transformative: community wealth building is now the organising principle of local economic strategy, not an optional initiative taken up by the most progressive councils. This creates a clear route for places to grow and support IDBMs as key economic actors, not just peripheral partners distinct from mainstream ‘business’.

Community wealth building is now the organising principle of local economic strategy, not an optional initiative taken up by the most progressive councils

Second, the Act requires Scottish ministers to prepare a national Community Wealth Building Statement that sets out the measures they are taking to reduce wealth inequality with alignment with the UN Sustainable Development Goals. Crucially, the Act specifically highlights the development of inclusive and democratic business models as key mechanisms for transforming ownership in Scotland’s economy. This emphasis is reinforced by an independent review into IDBMs, and the Scottish Government setting up an economic democracy group.

Finally, it places a duty on the Scottish ministers to produce guidance in relation to both the production of action plans and the inclusion of community wealth building measures in strategic planning by public bodies. This Act therefore creates statutory foundations, signalling long‑term commitment, and offers a platform for deeper transformation over time. 

The potential of public procurement

For social enterprises, this statutory anchoring of community wealth building has significant implications. Social enterprises are already essential contributors to Scotland’s economy, but they have often been positioned as secondary actors within broader economic policy. The Act shifts this terrain. By naming social enterprises within the wider set of IDBMs that must be nurtured and expanded, the legislation signals that they are fundamental to how Scotland intends to generate and retain economic value. Social enterprises alongside other IDBMs, now stand not on the periphery of economic development strategy but at its centre. 

Social enterprises are already essential contributors to Scotland’s economy, but they have often been positioned as secondary actors within broader economic policy. The Act shifts this terrain

One of the clearest routes through which the legislation will affect social enterprises is procurement. Public procurement is named explicitly as an instrument for circulating and retaining wealth within local and regional economies. Under community wealth building we should expect councils, health boards and other anchor institutions to use procurement even more strategically to support IDBMs. This opens new contracting opportunities for social enterprises, whose social, environmental and community impacts are now aligned with the legislative aims of economic transformation.

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The Act also reinforces the importance of social enterprises as local economic builders. It encourages inclusive and democratic ownership of land, property and economic sectors.  For social enterprises, this shift could be transformative. It repositions them not simply as recipients of grants or loans, but as economic players and investment recipients within their local economies. Social enterprises and IDBMs embody what Scotland wants of its economy. Something that is more relational, dynamic and with long-term commitments to community and place. 

However, the legislation is not the sole pathway, rather it provides vital scaffolding for it. And that scaffolding will remain insufficient without the wider movement, practice, and institutional and cultural evolution that Scotland has already been nurturing. Here IDBMs and social enterprises have a responsibility to step forward as co‑designers and producers of the new economic system. The legislation creates a statutory architecture in which social enterprises are both recognised and required as essential partners. It expands the scope for collaborative working with public bodies. It embeds the values of inclusive ownership, fair work, and local wealth retention into the formal machinery of government. And it positions Scotland within a global movement for economic system change.

What Scotland has legislated for is a vision of an economy rooted in resilience, environmental stewardship and more democratic control

Ultimately, what Scotland has legislated for is a vision of an economy rooted in resilience, environmental stewardship and more democratic control. Social enterprises have been living this vision for decades. Now Scotland is creating the statutory conditions for that vision to shape the mainstream economy. This legislation gives social enterprises the mandate and the opportunity to deepen their strategic and specific impact in Scotland. This legislation places Scotland alongside many other places trying to reshape their economies in fairer, more democratic ways. We are one part of a much bigger conversation. Our task now is to quietly get on with the work — sharing what we learn, learning from others, and supporting a more inclusive and democratic global economic transition.

Neil McInroy is global lead for Community Wealth Building at the USA-based research organisation, the Democracy Collaborative. He is also chair of the Economic Development Association Scotland (EDAS). He helped to pioneer community wealth building in the UK and was community wealth building adviser to the Scottish Government until 2023.

Header photo: Forth Bridge, Scotland, by Ian Dick on Flickr, reproduced under a Creative Commons licence.