The Social Economy: Principles, Importance, and Impact
1) What is the Social Economy?
The social economy encompasses entities that prioritize people and social/environmental purpose over profit. These organizations share common principles:
- Primacy of people and social objectives over capital
- Reinvestment of profits for societal benefit
- Democratic and participatory governance
Values:
- Primacy of people and the social
- Objectives over capital
- Democratic governance
- Solidarity
- Reinvestment of most profits to achieve sustainable development goals
Relevant Figures:
- 2.8 million social economy enterprises in the EU
- Employs 13.6 million people in the EU
- Accounts for 8% of the EU’s GDP
Types of Organizations:
Mutuals, foundations, social enterprises, associations, cooperatives, and other country-specific forms.
2) What Defines a Social Economy Organization?
Organizations become part of the social economy based on these purposes and principles:
- Primacy of the individual and social objectives over capital
- Voluntary and open membership
- Democratic governance
- Combination of member/user and general interests
- Defense and application of solidarity and responsibility
- Autonomous management and independence from public authorities
- Reinvestment of benefits/surpluses for sustainable development, member services, or general interest
3) Why is the Social Economy Important?
The social economy is crucial for:
- Quality jobs for all
- Deepening democracies
- Social innovation
- Championing equality
- Fighting climate change
- Quality services
4) How Does the Social Economy Promote Equality?
The social economy fosters equality by:
- Offering fair trade initiatives
- Empowering marginalized communities through community-owned enterprises
- Providing education and training programs for underserved groups
- Facilitating access to finance through microfinance institutions
- Encouraging socially responsible business practices
6) Sustainability vs. Sustainable Development
Sustainability:
A socio-ecological process where human needs are met while maintaining the natural environment’s quality indefinitely.
Sustainable Development:
Meeting present needs without compromising the ability of future generations to meet their own needs.
Sustainability focuses on resource consumption and replenishment, while sustainable development emphasizes leaving a better world for future generations by preserving resources.
5) Corporate Culture in the Social Economy
Vision:
How the company envisions its future state.
Mission:
The company’s reason for existence and its contribution to society.
Values:
Actions reflecting the fundamental beliefs of most individuals within the organization.
Individual values, experiences, and backgrounds combine to form the corporate culture.
Example: Danone
Mission: Bringing health through food to as many people as possible.
Vision: Danone, One Planet. One Health
Values: Humanism, Openness, Proximity, Enthusiasm (HOPE)
Corporate Culture: Guided by CODES (Creates, Opens, Drives, Empowers, Self-Aware), shaping daily work, behavior, progress, interactions, and recruitment.
7) Types of Sustainability
Sustainability:
A socio-ecological process characterized by fulfilling human needs while maintaining the natural environment’s quality indefinitely.
Weak Sustainability:
Prioritizes human needs and seeks a balance between economy, society, and environment.
Strong Sustainability:
Prioritizes the environment, followed by society and then the economy.
8) Sustainable Development Goals (SDGs) and Social Business Ideas
The 2030 Agenda for Sustainable Development includes 17 SDGs aiming for peace and prosperity for people and the planet, addressing climate change, and preserving oceans and forests.
SDG 4: Quality Education
Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
Social Business Idea 1: Online Education Platform – Affordable and accessible educational resources for underserved communities.
Social Business Idea 2: Vocational Training Centers – Skill development programs aligned with local job opportunities.
SDG 7: Affordable and Clean Energy
Ensure access to affordable, reliable, sustainable, and modern energy for all.
Social Business Idea 1: Solar Energy Microgrids – Affordable and clean energy access for rural and remote communities.
Social Business Idea 2: Energy-Efficient Solutions – Energy-efficient products and services to reduce consumption and costs.
9) The Bottom of the Pyramid (BOP) and Social Business
The BOP represents the world’s poorest citizens, an underserved market facing barriers to realizing their potential. Social businesses can address their needs.
Examples:
Water Bottle Company in Bangladesh: Provides clean water to poor villages at an affordable price, addressing the lack of access to safe drinking water.
Danone: Creates nutritious yogurts for people in poorer countries lacking access to nutritious food, restoring essential nutrients.
10) Social Business vs. Traditional Business
Social Business:
Integrates a social or environmental purpose into its business model.
- Measures financial and social impact.
- Reinvests profits back into the business.
- Seeks investors focused on making a difference.
Traditional Business:
- Focuses primarily on financial performance (revenue and profit).
- Distributes profits to shareholders.
- Seeks investors seeking financial returns (ROI).
11) Social Impact Measurement
A crucial practice for social and solidarity economy entities to implement their social mission effectively. It involves assessing the effects of their activities on society and the environment.
12) Importance of Social Impact Measurement
Social impact measurement is essential for:
- Effective Resource Allocation: Identifying impactful interventions and improving societal progress.
- Innovation and Adaptation: Enabling creative solutions and engaging diverse stakeholders.
- Stakeholder Engagement: Fostering collaboration and securing funding.
- Advocacy and Influence: Supporting political and public advocacy efforts.
13) Types of Evaluation
Ex-ante Evaluation:
Estimating impact before implementation.
Ex-post, or retrospectively evaluating impact.
In itinere, or concurrent to implementation as part of the continuous monitoring function.