This policy guidance note describes different approaches and policy levers to support access to public and private markets by social enterprises. It is structured around good practice statements included in the action area “Access to Markets” in the Social Entrepreneurship component of the Better Entrepreneurship Policy Tool developed by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities and the Directorate-General for Employment, Social Affairs and Inclusion of the European Commission: www.betterentrepreneurship.eu
Access to public and private markets is a key policy lever for enhancing social enterprise development and growth. Through public procurement, the public sector can buy goods and services from social enterprises that deliver social and environmental value. In this way, public procurement becomes a vehicle to meet social, environmental or economic objectives, such as reintegration of long-term unemployed into labour markets, and/or social- and work integration of people from vulnerable groups. Governments thus strategically choose to procure goods or services from social enterprises that have expertise in delivering the required social and/or environmental benefit.
Although the public sector offers a significant market potential for social enterprises, some of them seek opportunities to scale-up their impact by entering private markets and expanding their customerbase. At the same time, traditional firms are increasingly interested in contributing to social and environmental outcomes on top of their economic performance. Over the last decade, a shift has occurred from traditional corporate social responsibility (CSR) to embedding social and environmental considerations as part of core business activities. Therefore, companies seek to establish commercial partnerships with social enterprises, integrating them in their supply chains. What is more, apart from business-to-business (B2B) commercial relationships, social enterprises provide their products and services directly to individual consumers, whether from disadvantaged groups or not. This is important as a growing number of consumers, particularly so-called “millennials”, increasingly demand sustainably produced goods and services, and expect that large firms have a positive impact on society as well.
At European level, within the framework of the 2020 Strategy for Smart, Sustainable and Inclusive Growth, three 2014 Procurement Directives demonstrate a strong commitment for using public contracts for broader social and environmental outcomes1. These directives offer a wide array of opportunities for including social considerations, along with environmental and innovation aspects, in the award of public contracts, and can help to create momentum in public procurement from social enterprises.
Policy levers for supporting access to markets:
- Make the inclusion of social and/or environmental considerations in public procurement a priority for public sector entities, and help the implementation and monitoring of the 2014 EU Procurement Directives.
- Develop support activities and material, such as training programmes and technical guides, which help social enterprises to access procurement markets.
- Develop the skills among procurement officials (private and public) to evaluate the tender proposals from social enterprises, and tackle misconceptions regarding the goods and services provided by social enterprises (e.g. that they are more costly or of lower quality compared to other firms).
- Encourage the dissemination of good practices of commercial partnerships and/or opportunities between social enterprises and firms.
Pitfalls to Avoid
- Use exclusively the “lowest-price only” mind-set in public procurement.
- Insufficient control of bidding offers against green/social “washing” (i.e. offers without a real integration project or social and/or environmental considerations).