ESEM: Social Enterprises in Europe Are Becoming More Innovative
Social enterprises continue to play an increasingly important role in the European economy by creating solutions to societal challenges, strengthening local communities, and promoting sustainable development. The latest European Social Enterprise Monitor (ESEM) 2023–2024 report provides a unique insight into the operations of more than 1,800 social enterprises across 30 European countries. Its results were revealed on January 23 of this year in Davos during the World Economic Forum, but the data is now publicly available. The aim of the study is to provide decision-makers, social entrepreneurs and their employees, academia, and civil society with data on social entrepreneurship, social enterprises, and the ecosystem.
Key Trends in the Development of Social Enterprises in Europe
Sustainability, Innovation, and Inclusion – Core Elements of Social Enterprises
ESEM data reveals that the average lifespan of a social enterprise is 10 years, demonstrating their resilience and ability to adapt. Approximately 87.1% of enterprises have implemented at least one innovation in the past two years, highlighting the sector’s capacity to drive innovation even beyond traditional market mechanisms.
While most enterprises operate at the local or national level, only 29.8% of surveyed organizations provide services internationally, pointing to untapped potential for cross-border collaboration and growth.
Key Areas of Activity – Public Health and Education
Social enterprises operate in a wide range of fields, but the most common are the health and social care sector (29.4%) and education (25.2%). In these areas, enterprises often address major societal challenges, including providing services to vulnerable population groups.
Although these enterprises often operate with limited resources, more than half (51.8%) have managed to increase their income over the past year. However, only 30.2% are financially profitable, indicating a clear need for a stronger ecosystem and support mechanisms.
Inclusive Employment and Volunteering
Approximately 46.5% of enterprises employ people with migration experience, and 43.5% employ people with disabilities, demonstrating the important role of social enterprises in creating an inclusive labor market. More than half of the enterprises involve at least one volunteer in their daily operations, revealing strong community support and participation.
Main Challenges of Social Enterprises
Social impact is essential – but measuring it remains a challenge
62.2% of social enterprises currently measure their social impact, primarily to assess their alignment with their mission. However, only 18.8% believe they have sufficient knowledge and skills to evaluate this impact effectively, indicating a need for broader capacity building and training in this area.
71.6% of enterprises reported having defined target groups, most commonly children and youth (25.3%). As for the main area of impact, 54.5% of respondents identified UN Sustainable Development Goal No. 3 – “Good Health and Well-being”.
Insufficient Political Support and Ecosystem Development
The main sources of income for social enterprises are transactions with customers (B2C), other businesses (B2B), and the public sector (B2G), as well as public funding. However, entrepreneurs rated the ecosystem they operate in at only 39.2 out of 100 points, highlighting challenges related to insufficient political support, complex funding mechanisms, and weak lobbying efforts.
Meanwhile, 63.8% of enterprises believe that having a legal status for social enterprises is necessary to better define and protect the sector. However, only 31.1% received support from national or international networks in the past year, emphasizing the need to strengthen the role of support organizations.
About the ESEM Report
ESEM is a study aimed at collecting data on the social entrepreneurship sector across Europe to promote evidence-based policymaking and support mechanisms. At the European level, ESEM is led by the Euclid Network, while national surveys are organized by social economy support organizations in each country.
In Latvia, the study 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, a joint European ESEM report is produced, while country-specific data and analysis are available in national reports. The compiled ESEM data includes insights based on responses from 1,807 social entrepreneurs in 30 European countries. These responses were collected during 2023 and 2024.
Click on the image below to read the full report!
Meanwhile, the ESEM report on the situation in Latvia is available HERE (in latvian).