Should co-ops shake on deals with big business?

Far from being a new phenomenon, partnerships between co-operative and multinationals are becoming a common occurrence, with the likes of Coca-Cola, Nespresso or Mars collaborating with co-ops on...

Far from being a new phenomenon, partnerships between co-operative and multinationals are becoming a common occurrence, with the likes of Coca-Cola, Nespresso or Mars collaborating with co-ops on common projects.

Amazon is now giving customers the chance to choose to donate 0.5% of their purchase to an organisation of their choice, including a number of co-ops and credit unions. At the moment, Amazon Smile‘s list includes 178 credit union organisations and 3,012 co-operative bodies that have registered with the company to feature in the list.

But how well do Amazon and other companies sit with the ethics of the movement?

The Co-op Group drew criticism from members over its deal with Amazon
The Co-op Group drew criticism from members over its deal with Amazon

According to Ethical Consumer, Amazon UK’s subsidiary paid £11.9m in corporate taxes in 2014 on sales of £5.3bn, the equivalent of less than 0.3%. Furthermore, Amazon came third in Ethical Consumer’s list of least ethical companies in the UK.

By contrast, co-operatives and credit unions rank high in the magazine’s rankings, with the Co-operative Group, Suma and John Lewis featured in their readers’ top 10 most ethical companies on the past 25 years. The magazine has also produced a detailed ethical ranking of UK banks where credit unions and building societies score highly.

And while the controversy surrounding the multinational’s tax affairs continues, some co-operatives have positioned themselves as pioneers of the Fair Tax Mark.

Another multinational included in Ethical Consumer’s least ethical companies of the past 25 years, Coca-Cola has partnered with Select Milk Producers, a dairy co-operative in the USA. The two now produce Fairlife, a premium milk. The drink, which costs double the price of regular milk, includes 50% more protein, 30% more calcium and half the sugar of typical milk.

“Fairlife is a transformational innovation that retains the purity of real milk yet significantly improves its health benefits and taste,” said Mike McCloskey, chief executive of the co-op in February 2015.

Mr McCloskey and his wife founded Select Milk Producers in 1994. The co-op has 92 members who own and operate their own farms, and collectively they own Fair Oaks Farms Dairy Adventure, part of their flagship farm.

A co-operative in South Sudan helps produce coffee for Nespresso (Photograph: PRNewsFoto/Nestle Nespresso)
A co-operative in South Sudan helps produce coffee for Nespresso (Photograph: PRNewsFoto/Nestle Nespresso)

Select Milk Producers is the sixth largest co-operative in the country while Fair Oaks Dairy Farms is the USA’s only dairy theme park, home to 37,000 cows and 11 different milking operations. In 2012 Select Milk producers partnered with Coca-Cola to form Fairlife, LLC. Coca-Cola company is the distribution partner for the products that Fairlife creates. Since February 2015 Fairlife milk has been rolling out nationwide distributed by the Coca-Cola Company’s Minute Maid Division.

Similarly, in South Sudan, Nescafé-owned Nespresso has been working with non-profit organisation TechnoServe and local producers to establish three new coffee co-ops. The co-operatives have received support to enable farmer mobilisation and infrastructure development, three wet mills and two coffee nurseries.

The initiative forms part of Nespresso’s AAA Sustainable Quality Program, which, according to company, is aimed at securing the supply of the highest quality green coffee, while protecting the livelihoods of the farmers who produce it. The initiative involves 500 farmers who deliver their coffee to the co-operative wet mills in order to earn 40% premium over the local market price.

As well as getting support to form co-operatives, farmers are taught how to grow high-quality coffee beans using techniques such as stumping and pruning, and how to process the beans. Nespresso has invested more than CHF 700,000 (£474,000) in reviving the coffee industry in the Yei region of South Sudan, and aims to invest CHF 2.5m (£1.7m) and expand the program to include several thousand farmers by 2020.

In spite of these initiatives, last year Nestle, which owns Nescafé, was voted the least ethical company of the past 25 years by readers of Ethical Consumer. According to Ethical Consumer’s Tim Hunt, who helped conduct the survey, Nestlé’s brands scored just one out of 14 in the magazine’s ethical rankings table.

Mars Chocolate UK is also working directly with Fairtrade cocoa co-operatives in Ivory Coast after committing to Fairtrade’s Cocoa Sourcing Program. With this move, Fairtrade premiums paid by Mars globally to cocoa co-operatives will reach over USD $2m (£1.3m) per year by 2016.

Blas Maquivar, president of Mars Chocolate UK said the certification was “an important milestone” in the Mars Bar’s 83-year history. “At Mars, mutuality is one of our guiding principles and this is a true example of sharing mutual benefits with partners throughout our supply chain,” he said.

Michael Gidney, chief executive of the Fairtrade Foundation, added: “The winning ingredient in this partnership between Fairtrade and Mars is that it puts farmers’ own organisations in control of improving their own livelihoods and cocoa production, and ensures much-needed investment to achieve mutual goals.”

In another co-operative – private partnership Desjardins Group, the leading co-operative financial group in Canada and the fifth largest co-operative financial group in the world, announced it would start issuing MasterCard credit cards. The new collaboration with MasterCard, a technology company in the global payments industry, will give Desjardins customers in Quebec and Ontario access to a MasterCard card.

This agreement will benefit the local communities we serve.

“We’re giving Desjardins members and clients what they told us they wanted: access to the world’s two leading payment networks, which lets them do business with the vast majority of merchants in Canada and abroad,” said Caroline Lavallée, director of Desjardins Card and Payment Services.

“By offering our members and clients credit cards from two payment networks, one of which is MasterCard, we’re helping them take advantage of the unique benefits of each network and giving them the option to manage all their accounts through a single financial institution.”

Brian Lang, president of MasterCard Canada, said: “We’re proud to partner with Desjardins, Canada’s leading financial co-operative group, and thrilled to note that with this partnership MasterCard demonstrates that we are a partner of choice for all major banks and financial institutions in Canada.”

mastercardCo-operative – private partnerships are also emerging in the UK. The Midcounties Co-operative recently launched a partnership with Coffee Republic, hosting franchises in locations including the society’s new 7,000 sq. ft. store in Walsall.

Coffee Republic has created its first Fairtrade coffee specifically for the partnership. The chain had come fourth in Ethical Consumer’s guide to coffee shops, with an overall rating of 7.5 out of 20. It scored poorly on Fairtrade – which, before the partnership with Midcounties, it did not offer.

The Fairtraide coffee available in the new locations was developed to meet international standards, in line with Midcounties’ commitment to providing a better deal for producers in the developing world.

Midcounties, which has signed similar agreements with high street retailers including Bon Marché, Brantano and the Works, is a winner of the Queen’s Award for Enterprise in Sustainable Development and has achieved a 4.5 star rating in Business in the Community’s annual benchmark of responsible business, the Corporate Responsibility Index.

Midcounties store manager Oliver Holden with staff at the new instore Coffee Republic
Midcounties store manager Oliver Holden with staff at the new in-store Coffee Republic

Coffee Republic intends to open 10 cafés in Midcounties Co-operative Food stores before the end of 2016. Phil Ponsonby, group general manager at the Midcounties Co-operative Food, said Coffee Republic shared the co-op’s values of providing a quality service to customers.

“This agreement will benefit the local communities we serve by providing a welcoming environment in which to meet, as we look to further enhance the shopping experience offered in our stores,” he said.

Richard Shakespeare, head of franchising at Coffee Republic, said: “We pride ourselves on offering a friendly, relaxing and welcoming environment, and we believe our partnership with Midcounties aligns well with this philosophy.

“The opening of these supermarket cafés forms a fundamental part of our strategy to increase our reach across the UK by focusing on new franchises, and we look forward to inviting shoppers to join the Coffee Republic Revolution.”

Coffee Republic is looking to offer fair-trade coffee across their chains as an alternative and they are already Rain Forest Alliance certified.

All these initiatives point towards an increasing interest among multinational corporations to form new partnerships with co-operatives.

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