A “Co-operative” Way of Doing Business: Who are the Leaders?

“Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility,” said UN Secretary General Ban Ki-moon in opening remarks for the United Nations 2012 International Year of Co-operatives.

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Owned by their workforces and their customers, co-ops have the perfect opportunity to dictate business decisions that drive social and environmental change. Unburdened by quarterly results, they have the luxury of growing slowly, focused more on long-term thinking.

According to the most recent International Co-operative Alliance (ICA) report “Blueprint for a Co-operative Decade,” “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 well-being.” This has provided an opening for co-operatives to differentiate themselves, with shareholders directly impacted by these decisions in each community pushing to change the business model.

“Our strategy is for the co-operative model to become the acknowledged leader in economic, social and environmental sustainability, and therefore the model preferred by people,” says Dame Pauline Green, president of the ICA.

Early adopters of sustainability, cooperatives around the world agreed to principles and values adopted by the ICA in 1995 that include Principle 7: Concern for community. This ensures that sustainable development be integrated into every decision considered by the co-operative’s membership.

The general public, at least within the G7, is aware of this social consciousness within co-operatives. According to a 2012 Abacus Data survey measuring Canadians’ perceptions and awareness of cooperatives, 84 per cent of respondents said co-ops are more likely to support the community’s values, and 72 per cent said co-ops are more likely to engage in environmentally sustainable practices.

The Corporate Knights Most Sustainable Co-operatives in the World ranking, in examining the largest cooperatives, was able to highlight the leading firms that are supporting a cleaner form of capitalism. The Co-operators Group, a Canadian insurance company, ranked first, as outlined by Tara Perkins here. Beyond offering an array of financial products that reward sustainable behaviour by the consumer, the organization maintains significant percentages of women in executive management and in the boardroom. Employee turnover remains quite low, while a portion of executive compensation is tied to improvements in sustainability performance.

Coming in second place is British consumer co-op The Co-operative, which has over six million members across the U.K. One of the world’s biggest supporters of renewable energy programs, The Co-operative powers over 5,000 branches with renewable energy, and is heavily involved in financing solar energy for businesses and residences. It has continued to expand its Green Schools Campaign, which is working with over 3,000 British schools to bring sustainability education programs to children ages five to 16. Renewable energy has also been expanded out to over 160 schools.

The Desjardins Group, the largest association of credit unions in North America, also performed well. Many of its financial services are designed to ease the burden for lower-income households, including small 24-month interest-free loans for individuals in trouble. Home insurance packages are offered for any level of income. Desjardins has also moved to expand its roster of socially responsible investment products, with over $831 million in assets now under management.

French banking co-op Groupe BPCE finished fourth, having financed more than 15,000 environmental projects in the past 10 years. It provides loans at a reduced rate to hospitals and schools for energy efficiency upgrades, along with investing in social cohesion charities. The Caisses d’Epargne Foundation for Social Solidarity was set up by the bank to combat dependence issues related to old age, disability and infirmity. It now runs the largest group of homes for the dependent elderly in France.

As Corporate Knights moved further down the list, however, it became increasingly difficult to evaluate cooperatives. Across the G7, from America’s State Farm Group to Japan’s Nippon Life Insurance Company, disclosure of basic environmental and social indicators among large co-operatives is lacking. Only 10 of the 35 cooperatives disclosed any data on resource productivity, and information on such social indicators as employee turnover and workplace injuries is even more scarce.

While corporate sustainability efforts have increasingly focused on disclosure through the Global Reporting Initiative and other bodies, co-operatives have not felt the same pressure. Mandatory disclosure requirements are more sporadic for cooperatives throughout the G7, especially absent the standardizing role of stock exchanges. Elizabeth Hicks, a professor at Mount Saint Vincent University in Halifax, Nova Scotia, believes that traditional standard-setting bodies are biased towards investor-owned business organizations. She points to the lack of co-operative representation on the International Accounting Standards Board (IASB) as an example of this disconnect.

With national governments showing little interest in increased disclosure requirements for co-operatives, and organizations like the IASB more interested in public corporations, it will likely fall on national and international co-operative organizations to fill the void. “At some point cooperatives are going to have to disclose this information,” says Daphne Rixon, executive director at the Centre of Excellence in Accounting and Reporting for Co-operatives. “I think the industry associations will have to play the role of designing the framework, and then gathering and monitoring the information.”

Some associations have already begun to do so, such as the Canadian Co-operative Association with its framework to improve environmental performance. It points interested co-operatives towards the standardized Co-operative Sustainability Scorecard, and recommends pursuing third-party verification of any environmental data disclosed. The World Co-operative Monitor, which has been compiling financial information on the 300 largest co-operatives in the world for years, is looking to expand its data collection into others areas, including social and environmental reporting.

The Corporate Knights ranking has identified the extent to which leading co-operatives throughout the world are embracing social and environmental leadership. For this to continue, however, it must correspond with an increase in disclosure.

This article was originally published on Corporate Knights
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Farida Helmy is an editorial intern at Corporate Knights Magazine. She previously worked as a contributing editor at Egypt Today Magazine and Business Today Magazine