Social Enterprise Code of Practice

The Social Enterprise Academy has signed up to the Social Enterprise Code of Practice

The Code aims to develop as a benchmark for the way social enterprises operate in Scotland. It outlines a set of criteria, values and behaviours that help to define what social enterprises are.


Social Enterprise

  • Social enterprises are businesses whose primary objective is to achieve social and environmental benefit
  • Regardless of its legal form, the constitution of a social enterprise will include the requirement that profits are reinvested in the business or in the beneficiary community – and not distributed to owners/shareholders/investors
  • The constitution will always require that on dissolution, the assets of the social enterprise are redirected appropriately – this could include social enterprises with similar aims and objectives
  • Taken together these two provisions are referred to as the 'asset lock' – this is the defining characteristic of a social enterprise
  • Social enterprises are distinguished from the private sector by virtue of the asset lock
  • Social enterprises are differentiated from those charities and voluntary organisations in the third sector which do not aspire to financial independence through trading
  • Social enterprises are distinct from the public sector and cannot be the subsidiary of a public body


The term 'social enterprise' comes out of values developed throughout the history of our social economy. Its core principle is that economic activity should work for the common good – rather than the unlimited private gain of a few.

This locates social enterprise within the wider objective of changing the way society operates. Various social movements have contributed their DNA to its practice. These are some of the values and behaviours we have come to expect from each other.

Core Values

Social enterprises are businesses founded on fundamental core values – that social fairness and the protection of the planet should be pre-conditions of all economic activity – with all business practices expected to be honest and fair.

Good Employers

They are good employers – trying to offer a good workplace experience, aiming to pay a 'living wage', and having flatter pay structures than the private sector. 


From Co-ops and Mutual's, social enterprises have learned about common ownership and democratic governance.


From Development Trusts and the community business movement, social enteprises have learned about bottom up responses to social problems and how they empower local communities.


Within the common sense of running a business – social enterprises try to help and support one another – in the spirit of the Open Source IT community. They should also, where possible, encourage the practice of intra-trading i.e. procuring from within the sector itself.

Visit the Social Enterprise Code website