Unlocking Social Impact: Understanding the ‘Solidarity Enterprise of Social Utility’ Label
The Significance of the ESUS Accreditation for Social Enterprises
Social enterprises that align with the Social and Solidarity Economy (SSE) as per the definition set out in Section 1 of the July 31, 2014, legislation on SSE are candidates for the “Solidarity Enterprise of Social Utility” (ESUS) accreditation. Following reforms rendered by Section 11 of the act, the ESUS label is granted to those organizations that, among other criteria, aim for substantial social impact; this may involve support for vulnerable populations or initiatives to strengthen or reestablish local solidarities.
Why Apply for the ESUS Label?
The ESUS label acts as a gateway for social enterprises and social entrepreneurs seeking financial resources. It opens up access to various solidarity savings schemes, some of which have witnessed significant expansion. For example, the funds accumulated in solidarity-based employee savings schemes escalated from 600 million euros in 2007 to over 5 billion euros in 2015. Legislation mandated since 2008 requires businesses to offer employees the option to contribute to a special “90-10” solidarity savings fund, which invests at least 5% and up to 10% in ESUS-accredited companies. This growth is partially driven by employees’ desire to invest their savings meaningfully while ensuring reasonable returns.
Furthermore, the ESUS accreditation allows entrance into solidarity components of tax incentive schemes aimed at financing specific types of Small and Medium-sized Enterprises (SMEs), through income tax reductions (“Madelin” scheme) or wealth tax reductions (“ISF-PME” scheme).
Such funding sources increasingly benefit solidarity enterprises by providing equity and quasi-equity capital vital for scaling up.
How to Apply for the ESUS Accreditation?
ESUS accreditation applications must be submitted by the legal representative of the applicant company to the Directorate for the Economy, Employment, Labor, and Solidarity (Dreets) in the French department where the company’s head office is located. If the head office is in another EU member state, the application should be made to the Dreets of the department where the company has its main establishment in France. Official guidelines issued on September 20, 2016, detail the application processing methods by these decentralized services.
The criteria for receiving the ESUS label yield four distinct scenarios based on two key questions:
- Does the company fall under the automatic “by default and SSE” category, as detailed in Section II of Article 11 of the ESS law? If not, the substantial nature of the social utility will be assessed through the company’s statutes and financial statements.
- What is the company’s legal status? For commercial companies, inclusion in the SSE will be ascertained through a review of the statutes. For other legal forms, the legal structure itself affirms this requirement.
Identifying “By Default and SSE” Enterprises
Section II of Article 11 of the July 31, 2014, law defines a list of companies automatically classed as SSE, including integration enterprises, temporary work integration enterprises, intermediary associations, integration workshops, social integration organizations under Article L. 121-2 of the Social Action and Families Code, and various other organizations dedicated to social, employment, or housing integration and aid.
This classification encompasses a wide array of entities, such as organizations assisting children and disabled adults described in specific sections of the Social Action and Families Code, recognized associations and foundations of public utility that pursue objectives of social utility as per the law, and other government-approved bodies under specific codes related to construction, housing, and social action.