Why we need a coherent social enterprise framework

As Malta prepares to consider developing a national framework for Social Enterprise by passing legislation in the coming weeks, I am reproducing in this article the key principles of the speech I delivered in Parliament last week. Certainly, we must be clear about three concepts that are related to each other but not the same. These are the Social Economy, the Social Entrepreneurship, and the Social Enterprise.

The Social Economy, the Social Entrepreneurship, and the Social Enterprise

The Social Economy is the wider ecosystem. It includes voluntary organisations, non‑profit service operators, associations, foundations, cooperatives, civil society, and social enterprises. These structures operate in different ways. However, they share one important principle, that economic activity should serve people, communities, and a social purpose, not simply the maximisation of profit.

On the other hand, social entrepreneurship is not a legal or organisational form. It is an approach that uses initiative, innovation, and entrepreneurial thinking to address a social need. This approach can emerge within a voluntary organisation, a cooperative, a social enterprise, a public institution, or even a conventional business.

However, the Social Enterprise is a particular organisational structure. It carries out economic activity in the market, but its primary aim is to create social or environmental impact. The income it generates sustains its mission, while most of its profits or favourable balances are reinvested in that same purpose.

These concepts are related, but they cannot be used interchangeably. This distinction matters because the sustainability of the social sector in Malta cannot be reduced to simple commercialisation. Certain social needs can be supported by a model that generates its own income. Others cannot and must not rely on vulnerable people’s ability to pay. A service does not become less valuable simply because it cannot generate commercial revenue. In fact, voluntary organisations and non‑profit operators often exist precisely because they meet needs that neither the market nor the State can fully address in time, or with the same level of confidence within the community. These organisations are not peripheral actors. Nor are they simply social enterprises that have not yet become commercial. They are part of the essential social infrastructure of our country.

The principles of ESG within the framework of the Social Enterprise

This is directly linked to the growing importance of Environmental, Social and Governance principles – the concept known as ESG – which I have the opportunity to work on from a banking perspective. We often speak about ESG as a reporting or investment framework for business, and this deserves emphasis. Behind every environmental, social, and governance indicator, there must be concrete action, clear responsibility, and real impact. The environmental dimension concerns how we manage resources, waste, and energy, as well as the transition to an increasingly sustainable economy. Social Economy organisations contribute through reuse and circularity, repair, environmental education, community actions, and sustainable jobs.

The social dimension concerns people, inter alia, decent work, inclusion, equality, health, wellbeing, care, skills, human rights, and resilient communities. These are not simply numbers or indices on paper. They are the daily work of many of Malta’s voluntary organisations, non‑profit operators, and social enterprises. The governance dimension concerns how decisions are taken, how resources are protected, how stakeholders continue to be heard, and how organisations remain accountable to their purpose. Shared governance, transparency, reinvestment of profits, and protection of social purpose are already at the heart of much of the Social Economy.

Therefore, the Social Economy is not separate from ESG. In fact, it helps give the Environmental, Social and Governance pillars concrete meaning. However, voluntary organisations and non‑profit operators should not become mere instruments through which larger organisations showcase their ESG credentials. A donation, sponsorship, or short‑term project can produce positive results, but it does not automatically create a sustainable social partnership with those who work continuously.

Long‑term commitment to ESG beyond reporting standards

A serious commitment to ESG must build long‑term capacity, sustain measurable social outcomes, and respect the knowledge and independence of the organisations closest to our communities. In tandem, we must not allow new concepts to create disproportionate reporting burdens. Accountability is necessary, but proportionality reflects the organisation’s size and capacity. Otherwise, we divert limited resources from the social purpose we are supposed to support to administrative requirements. Therefore, Malta needs a holistic and unified approach to the sustainability of the entire social sector. This means proportionate regulation and clear recognition of the different models within the social economy. It means funding that covers the full cost of the service, so key services are delivered through sustainable commitments rather than short funding cycles. It also means public procurement and commissioning that recognise social value, even when the direct financial cost is lower. We need proper access to grants, donations, income from activity, and responsible investment, investment in professional and voluntary capacity, and a common but proportionate approach to measuring social impact.

Political coherence

For those of us who form part of the European family of Socialists and Democrats, and for a Labour Party rooted in socialist values, this is not simply a matter of administrative design. It is a matter of political coherence. Social resilience cannot be designed separately from economic sustainability or environmental accountability. Nor can it be built in institutional isolation. A just transition must be environmentally responsible, economically sustainable, and socially inclusive, because a transition that leaves people or communities behind cannot be considered sustainable. It is crucial to create wealth, but progress today is evaluated not only by the wealth we generate, but also by how that wealth is distributed inter alia by the dignity, security, and opportunities people experience, as well as by the strength of the communities and institutions that sustain them. This connects directly with the Int Malta manifesto, which the electorate voted for, and where the PL introduced the concept of the Wellbeing Index.

The Social Economy gives concrete expression to these values. Voluntary organisations, non‑profit operators, cooperatives, and social enterprises transform solidarity into action, participation into governance, and social purpose into public value. For a Labour movement built on solidarity and social justice, social resilience is not an addition to sustainable development but the natural home of policy itself. It is one of its foundations. And this is consistent with the Malta Vision 2050, which identifies strengthening social enterprises as a priority to contribute to concrete improvements in the quality of life in Malta and Gozo.