Across Europe, more and more people are hearing about the green transition, sustainable finance, and the social economy. These terms can sound abstract, but behind them there is a very practical question: who will build a fairer, greener future in our cities, towns and rural areas?
The Social and Solidarity Economy (SSE) is already playing a key role in this story. Cooperatives running energy communities, social enterprises working with recycled materials, associations offering community services, and foundations supporting people in vulnerable situations – all of these are part of the SSE. At the same time, the European Union is creating new rules that define what counts as “sustainable” for investors. This is where the EU taxonomy comes in, and where the paths of finance, climate policy and the social economy start to meet.
What is the EU green taxonomy – in simple terms?
The EU green taxonomy is essentially a common language for sustainable economic activities. Instead of everyone using their own definition of what is “green”, the EU has created a shared framework that tells banks, investors and public institutions which activities can officially be considered environmentally sustainable.
To do this, the taxonomy looks at several big environmental goals, such as fighting climate change, adapting to more extreme weather, protecting water and ecosystems, reducing pollution and supporting a circular economy. If an activity – for example building a wind farm, renovating buildings to be more energy efficient, or running a recycling plant – makes a strong positive contribution to one of these goals, and does not seriously harm the others, then it can be classified as “taxonomy-aligned”.
The important point for the general public is this: the taxonomy does not ban activities, but it strongly influences where “green” money flows. When a bank says it offers a green mortgage or a green loan, when an investment fund claims to be sustainable, or when public authorities report on how green their spending is, they increasingly use the taxonomy as their reference.
What about the ‘social’ side – a social taxonomy?
So far, the EU has focused mainly on environmental issues. However, experts and civil society organisations have argued for a long time that we also need a social dimension: decent jobs, fair working conditions, access to essential services, and inclusive communities.
This debate has led to proposals for a social taxonomy – a similar classification system that would define which economic activities make a substantial positive contribution to people’s well-being and social rights. While this social taxonomy is not yet law, the discussion has already had an impact. It pushes policymakers and investors to ask: how can we ensure that the green transition is also a just transition, where no group or region is left behind?
In parallel, the EU has launched a Social Economy Action Plan and a Transition Pathway for Proximity and Social Economy, which explicitly recognise the SSE as a key partner in both the green and the social dimensions of change. This means that, even before a formal social taxonomy exists, the idea that the economy should be both green and fair is gaining ground.
Why does all this matter for the Social and Solidarity Economy?
Many SSE organisations may feel that the world of sustainable finance is far away from their everyday work. They run local projects, often with limited staff and resources, and may not imagine themselves talking about taxonomy alignment or technical criteria.
Yet the EU sustainable finance agenda can have real consequences for them.
First, it can influence access to funding. Banks, ethical investors and even some public programmes are increasingly interested in projects that can show clear environmental and social benefits. The taxonomy provides a framework for recognising such projects. If SSE organisations can demonstrate how their activities support climate goals, protect nature or strengthen communities, they may find new doors opening to them.
Second, the taxonomy gives a shared language to talk about impact. SSE organisations have long delivered social and environmental value, but this has not always been visible in financial and policy debates. By connecting their work to taxonomy categories and to EU climate and social objectives, they can make that value easier to understand for people outside their usual networks.
Third, the taxonomy debate is also about rules and reporting. If criteria become too complex or too heavy, smaller organisations – including many SSE actors – may struggle to participate. This is why it is important for the social economy to be present in these discussions and to argue for approaches that are realistic for small and community-based initiatives.
Where do SSE and the taxonomy naturally meet?
In practice, many SSE organisations already operate in areas the taxonomy considers crucial. Community energy cooperatives help reduce greenhouse gas emissions and involve citizens directly in the energy transition. Repair cafés, reuse centres and social enterprises working with recycled materials contribute to a circular economy while creating local jobs. Associations that restore rivers, forests or urban green spaces protect biodiversity and improve quality of life.
On the social side, SSE actors are often pioneers. They offer training and work opportunities to people far from the labour market. They run community services in rural areas where public and private actors are often absent. They involve users and workers in decision-making and reinvest profits in social missions rather than distributing them to shareholders. In other words, they naturally embody the values that a future social taxonomy is trying to put into a formal framework.
A particularly important link is the idea of minimum social safeguards. Even in the current environmental taxonomy, projects must show that they respect basic labour and human rights standards. Here, the typical SSE governance model – democratic, participatory, community-oriented – is a strong asset. It offers reassurance that environmental projects are not only green on paper, but also fair in their real-world effects on people and communities.
A fair green transition – and the role of SSE
The EU’s green transition will only be successful if citizens feel that it brings them real benefits and that costs and opportunities are shared fairly. This is where the Social and Solidarity Economy has something unique to offer.
SSE organisations can translate big strategies into concrete local change: they can create quality jobs in regions hit by industrial decline, help workers reskill for new green sectors, provide affordable energy and mobility solutions, and build social ties in neighbourhoods that might otherwise feel left behind.
For the general public, this means that the green transition is not just about technology or finance. It is also about trust, participation and solidarity. The EU taxonomy may seem technical, but at its heart it is about redefining what we consider valuable in our economy. If the Social and Solidarity Economy is actively involved in shaping that definition – both on the green and on the social side – Europe has a better chance of building a future that is not only climate-neutral, but also more just and inclusive for everyone.
