BLUEPRINT FOR A CO-OPERATIVE DECADE - INTERNATIONAL CO-OPERATIVE ALLIANCE JANUARY 2013 - INTERNATIONAL ...
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International Co-operative Alliance Blueprint for a Co-operative Decade January 2013
BLUEPRINT FOR
A CO-OPERATIVE
DECADE
This Paper has been written under the guidance of the Planning Work Group of the International Co-operative
Alliance by Cliff Mills and Will Davies, Centre for Mutual and Employee-owned Business, University of Oxford.
The members of the Planning Work Group are:
Dame Pauline Green Mark Craig Zhang Wangshu
Chair – President, International Co-operative Group (UK) All China Federation of Supply and
Co-operative Alliance Marketing Co-operatives (China)
Nelson Kuria
Stéphane Bertrand CIC Insurance Group (Kenya)
Desjardins (Canada)
Cliff Mills
Cliff Mills is a practitioner in the law and
governance of co-operative, mutual and
Contents
membership-based organisations. He has INTRODUCTION
written the constitutions of a number of the ........................................ 01
UK’s leading co-operative retail societies, and
worked extensively in the development of new
co-operative and mutual models for public purpose of this
services. He has played a significant part in the document
development of co-operative law in the UK. ........................................ 03
As well as being a Senior Research Associate with
the Oxford Centre for Mutual and Employee- summary of the
owned Business, Cliff is Principal Associate with blueprint strategy
Mutuo, and consultant with Capsticks Solicitors ........................................ 04
LLP and Cobbetts LLP.
Dr Will Davies CHAPTER 1
Will is Assistant Professor, Centre for Participation...................... 07
Interdisciplinary Methodologies, University of
Warwick. His research is in economic sociology
and political economy. He has authored a CHAPTER 2
number of policy reports on mutualism, including Sustainability..................... 13
Reinventing the Firm (Demos, 2009), Bringing
Mutualism Back into Business (Policy Network,
2010) and All of Our Business (Employee CHAPTER 3
Ownership Association, 2012). He contributes Identity............................. 19
regularly to media and policy debates about
ownership and mutualism, and has written
for The Financial Times, The New Statesman, CHAPTER 4
Prospect, the BBC and The New Left Review. Legal Framework.............. 25
Will was the Academic Director of the Centre
for Mutual and Employee-owned Business until CHAPTER 5
September 2012. Dr Ruth Yeoman now holds this Capital.............................. 31
post and has assisted in the completion of this
Blueprint.
CONCLUSION
........................................ 35
references
........................................ 39
Statement on the
Co-Operative Identity
........................................ 41
INTRODUCTION 1 |
In 2009, the General Assembly
of the United Nations 2012 International Year of Co-operatives
proclaimed 2012 to be the “Co-operatives are a reminder to the international community
United Nations International that it is possible to pursue both economic viability and social
Year of Co-operatives1. responsibility.” Ban Ki-moon, UN Secretary General
At the present time in the second The United Nations’ goals for the International Year of
half of 2012, following five Co-operatives are to:
years of financial turbulence the • Increase public awareness about co-operatives and their
more developed economies of contributions to socio-economic development and the
the world remain in a state of achievement of the Millennium Development Goals.
crisis from which there is still no
apparent exit, and the developing • Promote the formation and growth of co-operatives.
economies are being impeded in
their pursuit of the Millennium • Encourage governments to establish policies, laws and
Development Goals. In many regulations conducive to the formation, growth and stability of
nations, governments are in co-operatives.
retreat, cutting their social and
public spending, leaving citizens
even more vulnerable to economic control. The co-operative model institutions create long-term
turmoil. In others, inequality is a commercially efficient and security; they are long-lasting,
continues to increase as economic effective way of doing business sustainable and successful.
power is shifting dramatically
with consequential social impacts.
A general movement of global “rarely has the argument in favour
power from West to East may be
apparent, but there is still little of co-operatives looked stronger”
sense of how political institutions
are to be reformed to cope with that takes account of a wider This is an historic moment of
growing social unrest, economic range of human needs, of time opportunity for the co-operative
stagnation and future insecurity. horizons and of values in decision- sector. With political institutions
making. It is an approach which in many nations struggling to
In the midst of this uncertainty works on a very small, and on a keep up with a rapidly changing
and suffering, co-operatives very large scale. The co-operative world, it is essential that citizens
can provide some hope and sector is worldwide, providing become increasingly resourceful,
clarity of direction for citizens millions of jobs around the globe. enterprising and co-operative in
around the world. Uniquely Co-operatives develop individual order to face the inevitable social
amongst models of enterprise, participation, can build personal and environmental challenges we
co-operatives bring economic self-confidence and resilience, and face as a world community. Rarely
resources under democratic create social capital. Co-operative has the argument in favour of
co-operatives looked stronger than
it does in 2012. But unless there is
• Co-operatives have 1 billion members around the world concerted action over the next few
Worldwatch Institute, Vital Signs publication, 22/2/2012 years, the moment will be lost.
• In India the consumer needs of 67% of rural households are By 2020, poverty will have
covered by co-operatives increased, the plight of young
ILO (2011) Co-operatives for people centred rural agriculture people will have deteriorated, and
global warming will be having more
• 40% of African households belong to a co-operative frequent impacts on everyday life.
By 2020, we need to be able to
• 300 largest co-operatives had a combined annual turn-over of look back on 2012 as representing
$2 trillion in 2010 a turning point for the co-operative
World Co-operative Monitor: Exploring the Co-operative idea, and the contribution it
Economy 2012 is making to people’s security,
well-being and happiness.
introduction | 2
Purpose of this
document
This document was considered in draft by the General Assembly of the International Co-operative
Alliance (ICA) in Manchester in October 2012. Following comment and discussion (now reflected in this
revised version) the Blueprint was approved by the General Assembly. It is now issued in its final form.
The intention of the General
Assembly is that the United “the International Year of
Nations International Year
of Co-operatives marks the Co-operatives has provided a
beginning of a world-wide
campaign to take the co-operative powerful focal point for the sector”
way of doing business to a new
level. The ambitious plan in this since the great financial collapse. • An unstable financial sector
Blueprint - the “2020 Vision” - By pursuing the strategy outlined • Increasing inequality
is for the co-operative form of in this Blueprint, we aim to make • A growing global governance
business by 2020 to become: 2011-2020 a Co-operative Decade gap
of confident growth. • A seemingly disenfranchised
• The acknowledged leader younger generation
in economic, social and The International Year of • A loss of trust in political and
environmental sustainability Co-operatives has provided a economic organisations
• The model preferred by people powerful focal point for the sector.
• The fastest growing form of It has heightened its sense of Co-operatives already make a
enterprise shared purpose, illustrated by the significant contribution towards
range of activities and celebrations alleviating these pressing
The 2020 Vision seeks to build of the International Year, by global problems. But, with
on the achievements of the the number of international appropriate support and greater
International Year of Co-operatives conferences and summits held understanding and recognition,
and the resilience demonstrated around the world with agreed they could contribute much
by the co-operative movement outcome declarations2, as well more. We therefore believe that
as the wide-spread take-up of the major priorities are to make
the 2012 International Year logo far more people aware of the
by co-operatives around the co-operative form of enterprise, to
world. It has raised the profile of provide people with the tools and
co-operatives beyond the limits back-up to establish, fund and
of the sector itself, in civil society develop sustainable co-operatives,
and amongst governmental and and to remove barriers that get in
inter-governmental bodies. their way
These are significant Hence the purpose of this
achievements, but they need document is to set out a proposed
to be seen in the context of the Blueprint for a Co-operative
dominant emerging trends that Decade, and provide a clear
are likely to shape our politics, direction for the coming years.
societies and economies for the The challenge now is for the
foreseeable future3. Some of the ICA, national bodies, sector
most crucial Global Trends are: groups, co-operative societies
and individual members to
• Environmental degradation take this Blueprint forward into
and resource depletion implementation.
3 | introduction
Summary of the
Blueprint strategy
The starting point for the strategy for a global co-operative future is the powerful claim which
co-operatives make to the outside world: that they have a way of doing business which is both better, and
brings a more effective balance to the global economy than the dominance of one single model as now.
• Co-operatives are better distinctive message to ensure framework. This framework
because they give individuals that co-operatives are seen and plays a critical role for the
participation4 through understood by everybody from viability and existence of
ownership, which makes them policy-makers to the general co-operatives. The Blueprint
inherently more engaging, public. So the aim is to build seeks to ensure supportive
more productive, and both the co-operative message and legal frameworks for
more useful and more secure the co-operative identity. co-operative growth.
relevant in the contemporary
world. The aim is to With the intrinsic and abiding • Co-operatives need access
elevate participation within value of the co-operative model to capital if they are to be
membership and governance clearly established, and a established, grow and flourish.
to a new level. distinctive co-operative identity The aim is to secure reliable
and proposition described, co-operative capital while
• Co-operatives are better attention turns in chapters 4 and guaranteeing member control.
because their business model 5 to what facilitates or inhibits
creates greater economic, co-operatives. These are the five interlinked
social and environmental and overlapping themes of the
sustainability. • Co-operatives in every Blueprint strategy, which can be
jurisdiction sit within a legal illustrated as follows:
• Co-operatives are better
because they are a business
model that puts people at the
heart of economic decision-
making and bring a greater
sense of fair play to the global PARTICIPATION SUSTAINABILITY
economy. The objective is to
develop our external identity.
Chapters 1 (Participation) and
2 (Sustainability) explain why
co-operatives offer a better way
of doing business. Chapter 3 then IDENTITY
effectively sets out the co-operative
proposition for today: what
it means to be a co-operative
and what are the defining
characteristics or “irreducible core”.
• This is looked at through the LEGAL
lens of identity – which is CAPITAL
defined by the core values and
FRAMEWORK
principles of co-operation, and
needs to be communicated
through a powerful and
introduction | 4
5 | introduction
To pursue the 2020 Vision, the Blueprint
strategy therefore involves concentrating
on these 5 critical interlinked themes,
and establishing implementation
strategies in relation to each of them.
The overarching agenda for the ICA, its
members and the co-operative sector
generally is laid out here:
1 Elevate participation within membership
and governance to a new level
2 Position co-operatives as builders of
sustainability
3 Build the co-operative message and
secure the co-operative identity
4 Ensure supportive legal frameworks for
co-operative growth
5 Secure reliable co-operative capital while
guaranteeing member control
Each of these themes represents a priority
area for the ICA, its members and the wider
co-operative sector. Each chapter of this
document concludes with some possible
and indicative actions that might be taken,
in pursuit of these goals. It is for the ICA,
its Board, members, regions, sectoral
organisations and networks to decide on
actions they need to take to implement the
Strategy, and to regularly assess progress
and impact across a wide range of factors
including social, environmental and
economic. Through working together on
these themes the co-operative community
can collectively drive forward its pursuit of
the 2020 Vision.
Following the International Year of
Co-operatives, it is intended that this
Blueprint will provide the ICA and its
members with a clear focal point for future
activity, underpinned by ambitious goals.
introduction | 6
1. PARTICIPATION
“Elevate participation within
membership and governance to a
new level”
Democratic member participation is the best-known feature of the co-operative way of doing business,
and a major part of what characterises a co-operative in contrast to investor-owned businesses.
The individual member has a role to play in a gender equality7. Higher levels of worker engagement
co-operative which goes beyond the basic economic and more effective decision-making are achieved
relationship of customer, worker or producer. through worker membership because the distinctively
Collectively members own their co-operative, and democratic structures fostered by co-operatives
through democratic arrangements they participate enable individual participation to result in real
in its governance. Individually they have a right influence within the enterprise through democratically
to information, a voice, and representation. In legitimised authority. The co-operative tradition of
this Blueprint we use the word “participation” as democratic participation in the workplace enables
shorthand to refer to this bundle of rights. individuals to develop the skills and confidence for
participation in their communities and societies8.
There is good evidence to suggest that providing Co-operatives are sites for learning how to participate
consumers and workers with a voice inside in democratic decision-making, and, as such, they
organisations produces better, more intelligent and generate a public good which exceeds their economic
responsive forms of business6. Consumer and credit imperative. Thus, democratic participation in
co-operatives reduce poverty and make a positive co-operatives supports both better business decisions
contribution in skill development, education and and stronger communities.
The seven co-operative principles9 - Applied
The co-operative enterprise The co-operative individual
People can join – and leave I can find a common interest with others if I am open to their needs
and if I behave in a way that enables them to co-operate with me.
Your voice will be heard Because I have an equal say in what happens, I listen and I
communicate openly and honestly.
You control the capital I keep a close eye on what we are trying to do together and the
decisions I make are guided by this.
Together, you are I help others so that they can help themselves and they help me in the
autonomous same way, so that together we are more in control of our future.
You can develop yourself I am interested to learn from those and others around me so that I
can behave in a more co-operative way.
You can be more successful I look for opportunities to co-operate with others in new settings.
by co-operating with
others who know how to
co-operate
You can do something for I am aware that I am part of a larger system and I am committed to
your community even as doing what I can to make it better.
you keep succeeding
participation | 8My benefit – our benefit
Those social pioneers who The global financial crisis and else to solve the problems no
established co-operatives over the failure of the developed longer seems to be sensible. The
previous centuries had a clear economies and their institutions Global Trends analysis already
vision: they could see that by to meet the needs of their citizens referred to identifies as the first
getting people to collaborate have dramatically changed of its three global trends “the
and work together, they could today’s landscape. With growing empowerment of individuals,
meet both their individual and inequality, and collapsing trust in which contributes to a sense of
collective needs for access to commercial, governmental and belonging to a single human
goods and services, or to work. even religious institutions, sitting community”.10
For them, participation was the back and waiting for somebody
means to an end, not an end
in itself. They became involved
or engaged in order to meet
their needs: it was part of the
process of establishing their
co-operative and making it
perform better.
The contemporary consumer-world
of developed economies is very
different. Through modern
transport systems, multiplicity of
competing suppliers, and more
recently the power of the internet,
lack of access has been replaced
in many cases by a wide range
of choices. A consumer culture
prevails. Not only does this remove
the need for self-help initiatives at
community-level, but at individual
level it has a tendency to make
us apathetic, complacent, or just
plain lazy. It discourages civic
participation, and encourages the
pursuit of personal pleasure and
satisfaction.
Drivers of change
• The global emergence of the middle class, interconnected by myriad networks. As a result, citizens will
want a greater say in their future than previous generations.
• Growing awareness that the demands and concerns of people in many different countries converge, with
shared aspirations and shared grievances. This will contrast sharply with governments’ capacity to deliver
public goods, particularly those relating to improving quality of life, resulting in an expectations gap.
• Increased civil society pressure for direct participation in the political arena. Greater participation and
knowledge coupled with a growing expectations gap may lead to tensions, revolt and conflict. The youth
movements of 2011 – from the ranks of which many members of the power elite of 2030 are likely to
emerge – are aware of the problems facing representative democracy.
9 | participationThis is a very different context. social media and the rise of others work collaboratively to
The disenchantment and ‘post-bureaucratic’ governance achieve greater business efficiency.
disengagement of younger introduce greater horizontal Collaborative participation
people is already apparent, organisation and transparency. involving these and other
as they become aware of the important groups in particular
institutions and systems they Co-operatives needn’t – and sectors (such as carers, parents,
are inheriting, together with the mustn’t – abandon the definition local residents, specialist local
immediate economic challenges of their voting membership; but groups) provides a platform
they face (the “graduate with no unless they remain open to the for exploring more flexible
future”11). From Los Indignados new possibilities for participation and effective mechanisms for
of the Spanish cities, to the and engagement and willing to businesses, embedding the idea of
worldwide Occupy movement, innovate, they might miss out co-production in the design of the
there is what has been described on opportunities to inspire and organisation itself, and giving them
by one American philosopher as a involve a new generation of a competitive edge over traditional
“democratic awakening”.12 members. Moreover, they risk single-interest businesses.14
looking slower and less responsive,
In this context, participation in comparison both to new Grass-roots participation also
– including wider democratic network-based movements such has an important role to play in
participation – becomes an end as Occupy, and to profit-seeking relation to the ICA itself. One
in itself, a way of countering the ventures which engage with facet of the shifting tectonic plates
accumulation of power in the audiences and consumers in new of power at governmental level
hands of a small elite, and a way interactive ways. is the growing importance of
new governance hubs like G20.
As the world’s biggest problems
“participation is once again cry out for shared solutions, so
the importance of multilateral
becoming one of the co-operative institutions increases. The ICA
is one of these institutions. It
sector’s most valuable assets” owes its existence – as well as its
legitimacy and authority – to the
of challenging the dated ways of The function of participation in grass-roots membership of one
previous generations which seem a co-operative is also evolving billion people in their co-operatives
to be failing. It enables individuals in some economies with the around the world, and to their
to have some level of influence emergence of new types of co-operatives’ participation in
over things affecting their lives. co-operative organisation, their national bodies. Nurturing
This meets a need for democratic particularly in areas of public participation at grass-roots
participation in a whole range of service such as health and social level therefore strengthens
institutions from which individuals
currently feel excluded and
which also seem to lack any real “one facet of the shifting tectonic
accountability. So participation
is once again becoming one of plates of power at governmental
the co-operative sector’s most
valuable assets. level is the growing importance of
But the possibilities for new governance hubs like G20”
participation and the expectations
that (especially) younger people care; in new technologies, the legitimacy and authority
have for participation have particularly renewable energy both of front-line co-operative
changed dramatically in recent and other green technologies; organisations, but also and
years.13 Looser, networked and in the creative use of particularly of their representative
forms of association have been mobile technology and portable bodies such as the ICA.
rising in recent years, in which wi-fi, to bring financial services
the division between ‘member’ to remote agricultural and
and ‘non-member’ is less clearly other co-operatives. In these
defined. The digital revolution, organisations, users, workers and
participation | 10The goal
The aim is to elevate participation within membership and governance to a new level, and to do this
by focussing on the practical aspects of participation:
• Specifically and directly • Securing support for all • Securing their leadership in
focussing on young adults co-operatives to adopt innovation in the context
and young people, exploring membership strategies and to of work organisation
their mechanisms for forming report on them annually. With including co-production
and maintaining relationships, co-operatives serving diverse and human resource
and considering whether and extensive communities, management practices.
established traditional the co-operative sector has Through the advantages
mechanisms for participation an interest in maintaining of employee-member
and engagement can and some standards in securing participation in decision-
need to be adapted. The representative membership, making and information
co-operative sector needs both defensively so as not sharing, co-operatives can and
to offer a genuine welcome to be seen as exclusive, must address the competitive
to young people, inviting and pro-actively with a pressure from investor-owned
them to take a real part and view to meeting human and private companies.
to help to shape the future. need as well as building the
They should be involved in business. Good practice in • As a separate initiative and
planning the implementation membership development linking into the theme of
of this Blueprint. This is not just consistent with capital below, investigating a
involves considering a range following the 5th Co-operative different more limited form
of questions. Are younger Principle (Education, training of participation for providers
generations evolving their own and information) and the of capital, which does not
mechanisms for collaboration 7th Co-operative Principle undermine or damage
which the established (Concern for the community), co-operative nature.
co-operative sector can but it is also something on
learn from and adopt? Are which co-operatives should This is considered both an
co-operatives providing the seek to demonstrate their important and a legitimate
most appropriate access points excellence, distinguishing goal for the ICA to pursue, and
for young people? Are they themselves from other forms an important part of its role.
committed to creating a space of organisation. Individual co-operatives are
or platform for them, and
enabling them to shape the
future? Are they even using “this is considered both an
the right language?
important and a legitimate goal
• Leading innovation in
democratic participation, for the ICA to pursue”
engagement and
involvement, and identifying, • Exploring the parameters focussed on meeting the needs
disseminating and upholding of traditional membership, of the people they serve and
best practice. This includes considering how other running their business. It is the
developing best practice in innovative and traditional role of the national bodies and
relation to communication, forms of participation (such as the ICA to undertake activities
decision-making, meeting comment, conversation and which will support co-operatives
(both physically and virtually), debate, engagement via social in the long-term. They should
and openness. It also media) do and could interface be doing things which help to
includes exploring ways of with membership, and whether build successful, sustainable
encouraging, retaining and different levels of participation co-operatives, and which
building participation by (e.g. member, supporter, nourish and nurture individual
providing member-benefits follower) are appropriate or not co-operators as they go about
and incentives. in this context. their day to day business.
11 | participationHow might the goal be achieved?
As explained further in the conclusions below, responsibility for planning implementation is shared
across the co-operative sector. However to give an indication of some of the ideas which have already
emerged in discussion within the ICA, and to prompt discussion, but without either being prescriptive
or imposing restrictions at this stage, the following ideas are offered.
Possible or indicative actions
• Finding new ways of ‘joining • Working with young adults • In relation to participation of
up’ co-operators within the and young people and the non-user funding members,
co-operatives sector to create social media industry to gathering evidence of existing
a more connected network of explore the motivation of models and practice (see
co-operators. younger generations in relation further below).
to collaborative activity and
• Gathering and collating affinity; how communication • Engage the Global 300
information about best and the forming of co-operatives to strengthen
practice; finding and sharing relationships have changed visibility of co-operative
the best ideas, including in and are changing both on-line success and impact and to
such areas as age and gender and off-line; examining the amplify the co-operative voice,
balance; identifying negative practices which have evolved such as through a Leadership
or damaging trends, helping in recent movements. Roundtable.
to expose bad practice
and developing tools and
techniques to improve it. “amplify the co-operative voice,
• Gathering and collating such as through a leadership
information which
demonstrates how such roundtable”
examples of best practice are
positively linked to strong • Examining and challenging
performance across a broad existing practices of
range of indicators, including, co-operative democracy,
for example, financial success, gathering evidence of
employee engagement, innovative practice,
social engagement and encouraging trials of alternative
environmental sustainability. approaches and collating data.
participation | 122. SUSTAINABILITY 13 |
“Position co-operatives as builders
of sustainability”
Investor-owned business models currently suffer from a crisis of unsustainability, in economic, social and
environmental terms. The financial crisis has been an epic example of the perils of valuing very short-
term gain over longer-term viability. The dominant model of capitalism of the past three decades has
also been accompanied by increased levels of inequality, translating into lower levels of ‘social capital’
and wellbeing.15 Meanwhile, the quest for ‘shareholder value’ by PLCs very often involves sacrificing
environmental sustainability, as the case of the BP Gulf of Mexico spill revealed (see box below).
These crises all derive from a to goods and services without
business model that puts financial exploitation. This has meant
return ahead of human need, a trading in accordance with a
model that seeks to privatise gains set of values based on what we
and then socialise losses. As the would today call sustainability.
Harvard Business School guru, By placing human need at their
Michael Porter, has argued, the centre, co-operatives respond
future belongs to those businesses to today’s crises of sustainability
which invest in “shared value”, and deliver a distinctive form of
that is, which account properly “shared value”. Quite simply, a
for their impact on customers, co-operative is a collective pursuit
environment, employees, and the of sustainability. Co-operatives
future.16 seek to ‘optimise’ outcomes for
a range of stakeholders, without
“Sustainability in a general seeking to ‘maximise’ the benefit
sense is the capacity to support, for any single stakeholder.
maintain or endure. Since the Building economic, social and
1980s human sustainability has environmental sustainability
been related to the integration should therefore be one of the
of environmental, economic, and over-arching motivations and
social dimensions towards global justifications for a growing
stewardship and responsible co-operative sector. It offers an
management of resources.”17 answer to the question of why juncture. Put simply, co-operatives
Co-operatives have always set out co-operatives are necessary are more efficient than
to enable people to have access and beneficial, at this historical investor-owned businesses, once
a more complete range of costs
and benefits (present and future)
The eleven workers who were killed at the ruptured well, and the is taken into account.
4.9 million barrels of oil that spilled, are slipping out of memory.
The short-term environmental damage was not as catastrophic The ICA must take a lead
as feared, and the long-term impact — the toll the oil will take as in outlining a vision of the
it moves through the food chain of Gulf marine life — is not yet co-operative economy, which
known. Yet the reports of the past year and anniversary-themed values long-term outcomes and
books on the disaster provide a trove of data that reveals how spill-over costs/benefits. At the
the oil and gas industry is as reckless and unaccountable as the same time, it needs to draw on
too-big-to-fail banks that brought on the financial crisis of 2008. expertise and best practice from
The BP disaster revealed the same problems — lax government outside of the co-operative sector,
regulation, corporate profits despite the risks, a fawning press — to articulate and measure the
that characterized the financial meltdown. Big banks and big oil forms of value that co-operatives
have more in common than their size. produce for society, and which
the dominant model of capitalism
‘What happened at Macondo Well’, New York Review of Books, dramatically under-produces. This
29th September 2011 chapter lays out a strategy for
how this can be done.
sustainability | 14The goal
Although there are some local exceptions, at present sustainability is not a term that is universally
associated with co-operatives. This is what needs to change by 2020 – to position co-operatives as
builders of sustainability. The co-operative sector needs to demonstrate convincingly that sustainability
is in the intrinsic nature of co-operatives, and that co-operative enterprise makes a positive
contribution to sustainability in three senses:
• Economic: There is Co-operatives have a number of problem of short-termism that
considerable evidence that positive messages to share here. afflicts all manner of financial
a diversity of ownership Firstly, financial co-operatives and non-financial firms. To put
forms contributes to a more act in the interests of their this in another way, they do
stable financial sector as a members, not shareholders. not suffer from the problem
whole.18 The investor-owned They pursue ‘stakeholder value’ of ‘financialisation’ that has
company was central to how not ‘shareholder value’, making afflicted capitalism over the past
the financial crisis occurred, them intrinsically less risky. There twenty years, in which financial
with managers acting in is good evidence to suggest that performance is the central
the interests of themselves credit co-operatives contribute indicator of good business. By their
and a very small number to greater financial stability and nature and form of ownership,
of stakeholders. Outside of sustainability.20 they are less likely to reduce the
the financial services sector quality of products or services
itself, there has been growing Secondly, by putting human in the pursuit of profit. They
concern that the promotion of need and utility at the centre thereby improve the diversity and
‘shareholder value’ undermines of their organisational purpose, overall ecology of business forms,
the long-term productive rather than profit, co-operatives introducing real choice as to how
potential of companies.19 do not suffer from the same business is done.21 In developing
economies, they play a mainstream
role in economic development,
“We have arrived at a situation in which the ownership and control both directly and indirectly as well
of banks is typically vested in agents representing small slivers of the as supporting the introduction of
balance sheet, but operating with socially sub-optimal risk-taking new technologies (see text box).
incentives. It is clear who the losers have been in the present crisis.”
Andy Haldane, Executive Director for Financial Stability, • Social: Amongst the negative
Bank of England. http://www.lrb.co.uk/v34/n04/andrew-haldane/the- externalities generated by
doom-loop contemporary capitalism, and
which the state is often tasked
Co-operatives show a tendency to resist crises over history. This is with addressing, are social
true of the present crisis – co-operative banks and credit unions problems associated with
have done well over the course of this banking crisis. E.g. Rabobank individualism and inequality.
grew to 42% of its market in 2008 and its member institutions Some of these simply involve
received 20% increase of deposits. Membership levels of credit unnecessary human suffering,
unions has been rising over 2008-09 as increasingly measured by
J. Birchall & L. Ketilson (2009) Resilience of the Co-operative Business happiness economists and
Model in Times of Crisis. ILO wellbeing surveys. Others
bring monetary costs for
Canada: 1 in 3 Canadians are members of the credit union system governments, where they are
[The Globe and Mail, 15/5/2012] and the credit unions have a manifest as health problems
growing share of the retail deposit markets and the residential and crime. The study of
mortgages markets, which were at 16% and 19% respectively in ‘social capital’ suggests that
2010. [Moody’s investors service global banking report 123026, societies with higher levels
April 2010] As of the first quarter of 2012, Desjardins ranks 16th of membership associations
of 7,500 deposit taking financial institutions in North America and also do better economically,
is 2nd for its Tier 1 Capital Ratio, which is at 16.0%. [Desjardins in addition to enjoying higher
Group Q1 2012 Financial Report]. levels of trust and democratic
participation.22
15 | sustainabilityCo-operatives make a very
positive contribution here, in two An estimated 250 million farmers in developing nations belong to a
ways. First, they deliver social co-operative.
services to the needy. The extent World Bank (2007) World Development Report 2008: Agriculture for
of ‘social co-operatives’ varies Development
from country to country, but is
a widespread phenomenon in In Kenya, co-operatives employ 300,000 people and create work
some nations such as Italy and indirectly for 2 million via the finance and opportunities they create.
Japan.23 Co-operatives aren’t ILO (2012) How women fare in East African co-operatives: the case
simply market operators, but of Kenya, Tanzania and Uganda
also deliver services that would
otherwise come from private A Stanford University study found that new technologies can
insurance or the state. Where this improve agricultural sustainability in developing countries, but only
happens, there is a very strong with the engagement of local farmers and the social and economic
fiscal case for states to support networks they depend on. A study of farmers in the Yaqui Valley,
them in doing this, especially in Mexico, found that farmers were far more likely to gain information
the context of apparent fiscal on implementing new technologies from their local credit union,
crises. Second, membership than from scientists. The researchers argue that efforts to introduce
and association are goods in new, more sustainable technologies into agriculture must work via
and of themselves, while also participatory institutions, such as co-operatives.
acting as important resources on Stanford University (2011) http://news.stanford.edu/news/2011/june/
which successful societies – and understanding-farmer-networks-060211.html
economies – thrive.
Co-operatives contribute to the creation and development of superior environmental record.
stock of a nation’s ‘social capital’, co-operatives”.24 This is crucial There are various reasons for
in ways that investor-owned to developing nations. It is a this. First, as participatory
businesses do not. The United factor which endears them to organisations, concerns
Nations recognises this, urging governments and policy-makers, about future environmental
Governments to encourage and and enables them to out-perform outcomes can simply be
facilitate “the establishment and their profit-maximising rivals in voiced democratically by
development of co-operatives, ways which are understood and members, without needing
including taking measures appreciated. to be calculated in terms of
return on investment. Second,
where co-operatives are
“co-operatives contribute to the multi-stakeholder, the capacity
for businesses to push negative
stock of a nation’s ‘social capital’, environmental externalities
(i.e waste and pollution) upon
in ways that investor-owned particular stakeholders is
diminished.25
businesses do not”
aimed at enabling people living • Environmental: There
in poverty or belonging to is a growing body of
vulnerable groups to engage evidence demonstrating
on a voluntary basis in the that co-operatives have a
sustainability | 16Développement International Desjardins (DID) works with the Canadian International Development Agency and
is a leader in microfinance, with 8.8m members and clients globally and an overall loan portfolio of CAN$2.5bn.
Recent projects include funding rebuilding in Haiti, a CAN$ 11m loan portfolio in Panama at end of Dec 2011,
supporting 1700 entrepreneurs and a loan portfolio of CAN$7m in Zambia, where they account for 35% of the
microfinance market.
http://www.did.qc.ca/en/our-partners/performance-report/
A study of co-operatives in Sri Lanka and Tanzania found that the vast majority of co-operatives reduced poverty.
They also make a positive contribution in non-income areas such as skill development, education and gender equality.
Birchall & Simmons (2009) Co-operatives & poverty reduction: evidence from Sri Lanka and Tanzania.
Co-operative College
In China, co-operatives provide 91% of microcredit.
[Global to Local]
Credit unions allow a remittance system to provide low cost money transfer from people working in developed
countries to their families in developing countries, which is especially important in Latin America.
[ILO Sustainable Enterprise Programme: Resilience of the co-operative business model in times of crisis, p.26.]
Wind-power co-operatives
are growing in number:
The model – whereby
local communities provide
funding for a wind farm,
allowing them reduced
energy costs in the long-
term - is popular in
Scandinavia but has also
spread elsewhere in the last
decade: e.g.1 in North Frisia,
Germany, 90% of the 60
wind farms are community-
owned; e.g.2 National
Wind, a Minneapolis
company founded in 2003
is a developer of large-scale
community based wind
power projects, which have
an aggregate capacity of
over 4,000 MW and seek
to revitalise rural economies
by promoting investment in
domestic renewables.
The goal to position between economic, social Lastly, the goal should include
co-operatives as builders of and environmental interests, the ambition for co-operatives
sustainability should include but through seeking to satisfy globally through the ICA to
establishing a wide public the needs of ordinary citizens, influence the geo-political order
understanding of the business co-operatives tend to pursue in this vital area where individual
sustainability of co-operatives as a convergence between these governments struggle to make or
businesses. There are continuing interests. This results in greater stick to commitments.
tensions within any business organisational sustainability.
17 | sustainabilityHow might these goals be achieved?
At the centre of this strategy must be a concerted effort to collect and publicise the right sorts of data
about co-operatives. This includes the following:
Possible or indicative actions
• Innovations in accounting: have led (and dominate) the to the language of democratic
the co-operative sector needs development of principles and member control. It needs
to take the lead. There is standards for financial accounting to be broadened and now
already a large number of and audit. needs consistently to include
initiatives through which a reference to sustainability,
businesses, social enterprises • Case studies: The diversity of so as to attract interest from
and charities are being co-operative forms and goals public policy-makers, the
encouraged to capture their is under-recognised. Case broader public and young
non-financial performance, studies and first-hand stories people.
such as ‘triple bottom line showing the contributions of
accounting’ (TBL), ‘balance co-operatives to education, • Technology: The co-operative
scorecard approach’, ‘social communities, health and other sector should aim to become
return on investment’ (SROI), public goals are important leaders in the development
‘social impact reporting’, here and needed. Consumer and use of technologies
‘wellbeing’ measurement.26 energy co-operatives are and social systems which
Some of these attempt to making a crucial contribution specifically deliver human
convert their various outputs towards the shift to a low benefits, without despoiling
back into monetary terms, carbon economy, which the ecosystem.
as is the case with SROI; needs recording, studying and
governments also do this when highlighting. • Management Practices:
seeking to calculate the cost The co-operative sector
of environmental degradation. • Evidence gathering: In needs to do more to develop
Others (such as TBL) simply order to demonstrate their and promote distinctive
present rival forms of valuation contribution to sustainability management practices which
side by side. to public policy-makers, reflect the democratic values
economic analysis of the and long term horizon of the
Many of these forms of ‘positive externalities’ of co-operative business model,
accounting are being developed co-operatives is valuable. and which will fully exploit
by those working with profit- A number of techniques the potential co-operative
oriented businesses, to get exist (known as ‘contingent advantage.
them to expand their reporting valuation’) for capturing the
practices beyond financial data. value of non-market goods, • Strengthen and Integrate
But co-operatives have much to such as health and a clean the Co-operative Business
gain from seizing this agenda, environment. Consideration Network: The co-operative
as a means of demonstrating should be given to the ICA sector should identify
their positive impact. There facilitating the establishment and remove barriers to
are some attempts to develop of a virtual data bank.28 inter-co-operation, including,
specific co-operative performance where possible, integrating
measurement tools, but these • Public advocacy: The systems, such as procurement,
need expanding.27 message about co-operatives using the principle of
can no longer be limited only subsidiarity.
The use of social auditing is
important to verify claims about
performance. Co-operatives “co-operatives are making a crucial
should be leading the field in
the development of principles contribution towards the shift to a
and standards for such audits,
as investor-owned businesses low carbon economy”
sustainability | 183. IDENTITY
“Build the co-operative message and
secure the co-operative identity”
In a world suffering from a deficit of democratic representation and from short-termism, co-operatives
demonstrate how business can be done not only differently, but better – not only for their own
benefit, but for the world’s. However, to spread this valuable message, there must be clarity as to how
co-operatives are to be defined and distinguished. This is important for the co-operative sector itself, in
creating a powerful sense of shared identity; but it is also important that an identifiable co-operative
message or “brand” is projected, which differentiates this form of business.
The market-place for ‘social’
or ‘ethical’ business is a
crowded one. ‘Corporate
social responsibility’ and ‘social
enterprise’ are two examples of
how privately owned business
models have been re-imagined
or re-branded, for purposes
beyond the pursuit of profit
maximisation. The so-called
“ethical corporation” and other
more sincere enterprises are
already using the language and
messages of co-operatives. How
do co-operatives distinguish
themselves in this context?
How do they second guess
and outpace investor-owned
corporations?
A great advantage that
co-operatives possess is having
the Co-operative Principles.
Co-operatives don’t simply appear
different, thanks to some image the Co-operative Identity as an It also includes the broader
makeover – they fundamentally answer. However, the extent to public of potential members and
are different. Their abiding which the Co-operative Principles younger people, who might be
values of participation and are applied or not varies greatly attracted to a sector that is ethical
sustainability are not just bolted from one jurisdiction and legal and participatory, but whose
on to a conventional business system to another. So there are message sometimes appears
model, but structure how they many for whom the Co-operative indistinct in a crowded field, and
are owned, governed, managed Principles do not offer adequate uses language which does not
and evaluated. With consumers explanation or clarity of definition. always resonate. A sector which
increasingly cynical about ethical This includes regulators and is fundamentally open source, is
‘green-washing’ of corporate policy-makers, a number of disruptive in the market-place,
brands, co-operatives have an whom are seeking guidance on and is independent of the
authenticity that no other ethical how to distinguish an ‘authentic’ establishment needs to learn
business model can match. co-operative from an ‘inauthentic’ to communicate those features
one, and are concerned that strongly to people who might feel
Those involved in the co-operative co-operative regulations are instinctively drawn to them.
sector may argue that there being ‘gamed’ as a means of
is no question about what seeking market-place advantages
constitutes a co-operative, by and avoiding transparency or
pointing to the ICA Statement on competition.
identity | 20The goal The goal is to build the co-operative message and secure the co-operative identity, to secure moral economic authority and “better business” status for co-operatives. It is important to distinguish between ‘identity’ and ‘message’. Broadly speaking, ‘identity’ is the meaning of co-operatives for the sector itself and its members, how it recognises itself when looking in the mirror; ‘message” is the way in which the identity of co-operatives is communicated and projected to the outside world, through education, the provision of information, marketing, logos and other forms of engagement with non-members. The word more commonly used values, and which wishes to through the co-operative to denote message is “brand”, encourage the wide-spread use message. and within the co-operatives of the co-operative idea which is sector people use it as a short- available without charge to those The UN International Year hand and talk about building the who wish to follow its principles. of Co-operatives and its co-operative “brand”. However accompanying logo demonstrate the term “brand” is not used with Having said that, the co-operative the positive potential of providing any enthusiasm in this context, sector has a legitimate interest in a single differentiating message because of its association with seeking to protect the integrity for the co-operative sector that private intellectual property of the “co-operative” word so it can be carried across multiple rights which provide a means is not misused. The ability to do spheres. The .coop domain name to prevent use except where this varies between jurisdictions, also provides an opportunity for appropriate payment is made and for present purposes the clear differentiation here. to the owner of the rights. In a primary focus is on projecting an more popular sense “brand” is appropriate message of what is Co-operatives need a more rather more to do with superficial denoted by “co-operative” to a sharply articulated message so image denoting attributes world which is largely ignorant that people are more aware of attractive to consumers. Neither of what it stands for. As follows what they are choosing when of these is consistent with a from the two previous chapters, faced with the option between co-operative sector that has a the Blueprint seeks to project both a co-operative or an investor or strong belief in longer-lasting participation and sustainability privately-owned business. 21 | identity
How can this goal best be pursued?
Possible or indicative actions
• There is no desire to
undermine the Statement
on the Co-operative Identity,
so the Statement should
be celebrated. However,
the Co-operative Principles
(contained within the
Statement on the Co-operative
Identity) themselves could
usefully be supplemented
with Guidance, for the
purposes of translation into
regulatory frameworks (this
links to Theme Four below).
Developing Guidance involves
establishing the irreducible
core – e.g. what is the
minimum requirement behind
“controlled by their members”
in the 2nd Co-operative
Principle? Without such
guidance, it is difficult or even
impossible for regulators to
have a basis for accepting
or rejecting a proposed
constitution. It would also help • Co-operatives also need to • Consider using the allocation
to provide a clear basis for think about how they are of .coop domain names
the ICA to work with national perceived more widely by only to those which meet the
bodies and their governments non-members and expert requirements of the irreducible
where there are problems communities. The rise of terms core. Whilst this may take
maintaining the irreducible such as ‘social enterprise’, some time to establish,
core. ‘corporate social responsibility’, eventually it will provide the
‘employee ownership’, most visible evidence of what
• Co-operatives need to ‘social innovation’ adds to is denoted by “co-operative”.
think about how they are the confusion surrounding It has the advantage of
perceived by, and how they the actual difference that crossing jurisdictional
project themselves to and a co-operative makes. boundaries. It would also
communicate with young Co-operatives are often not provide the basis for the ICA
people. Securing their interest seen as sufficiently distinctive, to approach governments
and positive engagement can as to be dealt with separately of states whose legislation
only be achieved through on issues such as regulation. prevented compliance with the
an understanding of the The message therefore irreducible core, and resulting
changing ways in which needs management, if it is to in their exclusion from use
they communicate and form function in the longer-term of .coop which might be a
relationships with each other interests of co-operatives. competitive disadvantage to
using technology and social Following development their economy.
media. Human relationships of Guidance, appropriate
are at the heart of a phraseology should be
co-operative. Young people developed which is designed
need to help to shape the from the point of view of
identity and the messages. message projection.
23 | identity• Identity is also important in securing a
co-operative voice in global policy debate. Part “the extent to which
of this is concerned with the wide adoption by
co-operatives around the world of commonly held the 2012 IYC logo was
principles underpinned by a visible sign of their
adherence. The extent to which the 2012 IYC adopted by societies
logo was adopted by societies has demonstrated
the power of identifying with shared values across has demonstrated the
national boundaries. Consideration should be
given, separate from the potential use of .coop, power of identifying
to the development of a common symbol which
would attract similar take-up to 2012 IYC. with shared values across
• Learning about co-operative ideas and traditions national boundaries”
needs to be included within the curriculum at all
stages of education. Co-operative education • Solidarity amongst co-operatives needs to be
is the best way to build an understanding of strengthened by encouraging larger co-operatives
co-operative identity and messages by the widest to put aside some of their profits to support the
possible range of individuals. development of new and small co-operatives
• Training programmes are needed to explain • As put forward in the previous two chapters, this
the co-operative identity to future leaders. This Blueprint proposes that in the coming years the
needs to be part of a much broader promotion of co-operative sector should aim for co-operatives
co-operative identity amongst business schools to become identified with both participation
and professional bodies. Research and the and sustainability. This includes recognition
development of theories, knowledge and ideas of the financial security of co-operative financial
should be promoted and extended, building institutions, and the contribution co-operatives
collaboration between managers, practitioners and make to global security,
academics.
• Consider the creation of a World Co-operative
• It is important to monitor the public reception Heritage list, to raise visibility of co-operative
of co-operative messaging through market surveys impact throughout modern history.
and focus groups in different countries
identity | 24You can also read
