Why co-operatives are leaders in responsible business

What is a responsible business? To say that there are as many definitions of responsible business as there are businesses would be a bit of an exaggeration. But only a...

What is a responsible business? To say that there are as many definitions of responsible business as there are businesses would be a bit of an exaggeration. But only a bit. Social responsibility, community investment, ethical trading, fair trade … the list goes on.

As businesses with a strong ethical heritage, co-operatives have tended to shy away from engagement with initiatives like Responsible Business Week. But it helps to have a prompt, sometimes, to remind ourselves why co-ops are leaders in responsible business.

To me, there are two sides to this. On the one hand, the fundamental and most distinctive feature of a co-operative is that it is owned and controlled by the people who are closest to the business. Sometimes it is the customers who use it.

Co-operatives: the ultimate responsible business?

Sometimes it is the employees who work there. Sometimes it is the suppliers to the business, like farmers. Sometimes it is the local people who live near to it. Increasingly, it is a mix of all four.

What member ownership creates is a mechanism through which a co-operative works for the people most affected by the business, not despite them.

Recent research for Co-operatives UK on worker co-ops by Professor Virginie Pérotin of Leeds University Business School, for example, finds that when workers own a business they are less likely to resort to redundancies when times are hard, and more likely to increase reward for workers when times are good. Not surprisingly, they get a more productive and engaged workforce in return.

paper rhino logo
Paper Rhino design co-op in Peterborough

As Jay Gearing of the worker- owned design agency Paper Rhino says, “Becoming a worker co-operative made a lot of sense to us. We didn’t want to be bosses, we wanted to be as fair as possible and we wanted to share the responsibilities equally amongst everyone. Democratic decision making gives all the employees a real invested interest in the business. It brings creativity with different personalities.

“Everybody contributes new ideas for the business and we share our profit-making. If the business makes more money, we all make more money – and that is the best incentive you can think of.”

Co-ops like Paper Rhino act responsibly towards their members because, ultimately, the business is owned by and run for them.

On the other hand, co-operatives not only act responsibility towards those closest to the business, but also towards society more widely.

We tend to hide our light under a bushel […] let’s not forget that co-operatives have and continue to lead the way

As Co-op News readers will know, over the last three decades the UK’s consumer-owned co-operatives have been the pioneers of Fairtrade, making sure that the producers of our food get a fair reward. What seemed like a cranky idea in the early 1990s when the Co-operative was the first to introduce Fairtrade products, is now firmly established as one of the most effective ways for retailers to trade responsibly.

And today we see co-operatives taking the same pioneering approach on perhaps the biggest business of our times – tax. While Google, Facebook, Starbucks and other multinationals are raked over the coals for their approach to tax, co-ops like the Midcounties Co-operative, Phone Co-op, Unity Trust Bank, the Co-operative Group and the Ecology Building Society are pioneering the Fair Tax Mark, which allows businesses to demonstrate a fair and transparent approach to tax. Fair tax is the new Fairtrade, and it’s no surprise that it is co-operatives, again, which are championing the cause.

As a sector, we tend to hide our light under a bushel. This Responsible Business Week let’s not forget that co-operatives have and continue to lead the way.

  • You can find all of our coverage from Responsible Business Week here.
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