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An interesting issue is being debate in Brussels, as part of the Social Business Initiative: What is Social Enterprise? As the European Parliament debates a voluntary label system for social enterprises, this answer to this question is becoming imperative. Proponents of the voluntary labelling system, such as Philippe Boulland, a French MEP for the European People’s Party, argue that the label “could enhance the competitiveness of European industry by motivating responsible consumers, attracting investment and fostering a European social welfare model.”

However, one journalist argues that there are three critical reasons this initiative will fail:

  1. Differentiation: According to the proposed system, there is little difference between social enterprise and corporate social responsibility, which are 2 different concepts. While, social enterprise ties in social purpose into its business model, corporate social responsibility is an add-on that companies use to house their charitable donations and such projects. Companies that aren’t actually social enterprises could attempt to get this label, thereby confusing consumers.
  2. Localisation: The proposal treats economic activity in all parts of Europe as the same. In reality, different regions in the vast European Union (EU) treat social enterprise differently. Therefore, the platform needs an element of localisation.
  3. Demand: The writer argues that this label ignores the success of labels such as Fairtrade and organic food, which developed out of consumer demand, whereas this label is developed through more top-down approach. The companies that want to be involved with this label need to prove their success and demonstrated their values are good for the public.

All of these concerns with the labelling system make sense. A labelling initiative needs to consider how it differentiates from things like CSR, which are not social enterprise activities, localisation and how this impacts the treatment of social enterprise in different regions and demand for such a label. To address some of these concerns, the commissioning group wants to conduct studies to evaluate the potential of the proposed label.

What do you think?