European Parliament approves new rules for social investments

The social enterprise sector in Europe has taken a welcome turn towards professionalization this week, when the European Parliament voted in favor of new rules for a label for European Social Entrepreneurship Funds.

Under the new rules a label for ”European Social Entrepreneurship Funds“ would be created allowing investors to identify funds that focus on investing in European social businesses. 

Managers of social entrepreneurship funds need to prove that they are meeting certain requirements (namely that 70% of the capital received from investors are spent in supporting social businesses), upon which the label will be awarded. The rules also contain provisions on required disclosure so that investors can receive sufficient information on each investment.

Given the highly dynamic sector it will be interesting to see in how far the rules will be able to actually achieve  their goal of helping to better measure and communicate the social performance of such funds. Preliminary insights from social impact investors have shown both the complexity of meaningful social impact assessments and the cost of such activities.

Read more about the proposed rules here:http://ec.europa.eu/internal_market/investment/social_investment_funds/index_en.htm