ESEM: Lack of social entrepreneurship’s understanding hinders its growth
European Social Enterprise Monitor (ESEM) is a biennial survey-based study of social entrepreneurship across Europe. It aims to provide decision-makers, social entrepreneurs and their staff, academia and civil society with data on social entrepreneurship, social entrepreneurs and the ecosystem. The latest report reveals important facts not only European, but also the development and trends of the Latvian social entrepreneurship sector in 2023 and 2024. The report offers insights into the sector’s impact, innovations, barriers and future opportunities. The results of the ESEM 2023/2024 were launched on 23 January at the World Economic Forum in Davos.
Essential aspects of social entrepreneurship in Latvia
Currently there are 242 active social enterprises in Latvia – based on the 3rd of February 2025 data of the register of Social Enterprises of the Ministry of Welfare. A social enterprise is a limited liability company (SIA) that carries out economic activities and generates positive and significant social impact in one of three ways: by employing target groups, by improving the quality of life of groups whose lives are affected by problems of major importance (e.g. by producing specialised goods or services for them), or by carrying out other activities of importance to society that generate lasting positive social impact (e.g. supporting science, protecting and preserving the environment).
On 1 April 2018, the Social Enterprise Law entered into force, providing a legal framework, both in terms of the criteria for becoming a social enterprise and elaborating the support for this type of business.
The ESEM report provides a comprehensive analysis of trends in the activities of social entrepreneurship organisations, including social enterprises, NGOs and foundations.
Key trends in social entrepreneurship
Focus on promoting public well-being. Latvian social entrepreneurs are active in healthcare (30.5%), education (28%) and reducing social inequalities. The strategic priorities of the companies are mainly based on social impact, and 66.7% of the respondents consider social impact to be important in decision-making.
There is a growing interest in environmental sustainability. Social entrepreneurs have a consistent focus on social objectives, but in recent years there has been a growing interest in environmental sustainability, in particular the integration of circular economy principles into business operations. Many companies are seeking to integrate more responsible processes into their internal operations, such as material recycling and waste reduction.
Innovation and adaptation. Following the COVID-19 pandemic, many companies implemented digital transformation processes, developed new products and expanded target groups, thereby increasing the sector’s resilience and level of innovation.
“ESEM report shows that while the sector faces a number of challenges, it continues to evolve and contribute to significant societal change. This study is an essential tool for policy makers and entrepreneurs to develop targeted support and promote sustainable growth,”
says Regita Zeiļa, Director of the Social Entrepreneurship Association of Latvia.
Key challenges for social entrepreneurs
Economic and political conditions. Inflation, the energy crisis and the war in Ukraine are the main challenges that have an impact on the stability of the sector. 33.3% of respondents indicated that these factors were a major obstacle to their companies’ operations.
Lack of financial stability. 51% of companies noted that the stability of their financial planning is temporary – up to six months. This reflects the need for sustainable support mechanisms and new sources of income.
Lack of awareness among the public and support organisations. 22.2% of enterprises indicated that the lack of understanding of social entrepreneurship by the private sector – banks, investors and public institutions makes it difficult for them to operate and develop.
The report also provides recommendations on how to mitigate these challenges. The main proposal highlighted is the creation of a special tax incentive system for social enterprises, supported by 74.1% of respondents. It also recommends the creation of specific state and local government funding mechanisms and the promotion of cooperation with the private sector.
About ESEM
ESEM is a study that aims to collect data on the social entrepreneurship sector across Europe in order to promote evidence-based policy and support mechanisms. ESEM is managed at European level by the Euclid Network and national surveys are organised by European social economy support organisations. In Latvia, the survey was implemented by the Social Entrepreneurship Association of Latvia in cooperation with the Ministry of Welfare, Reach for Change and the EKA University of Applied Sciences. Every two years there is a joint ESEM Europe report, while individual country data and analysis are available in national reports. The data collected by ESEM includes observations analysing 1807 social entrepreneurs’ responses from 30 European countries. These responses were collected in 2023 and 2024.
The ESEM report about whole Europe will be published soon HERE. At the moment there is available an informative material about the most important facts from the report.
Read the summary of the report on the situation in Latvia
Read the full report (in English) on the social entrepreneurship environment in Latvia
