Co-operatives can do one simple thing to change the economic system, according to a speaker at the Imagine conference.
The economic event taking place in Quebec City heard from Dr Ronald Colman, who told delegates on Sunday that co-operative leaders can take this one piece of advice away from the conference and act immediately.
Dr Colman said co-operatives are in a new paradigm; and the movement can help enact change globally: "Co-ops are one of those rare institutions that is planting the seeds of the new economy. Co-ops are potentially one of our best hopes, if change does not happen in the co-op movement then where else are we likely to find it?"
During his presentation on 'What is progress and how can we manage it', Dr Colman believes co-operatives can start a new form of financial reporting. "An accounting system that begins with social, economic and environmental impacts," according to the founder and executive director of GPI Atlantic, a non-profit research group dedicated to developing comprehensive accounts and measures of wellbeing and sustainable development.
GPI Atlantic has constructed a full Genuine Progress Index for Nova Scotia, Canada (www.gpiatlantic.org); and Dr Colman appealed for co-operators to use this system for their needs.
He said: "Everyone has a set of annual financial reports, and they all follow an accounting system that is no different to the very accounting system that got us into the mess we're in today. So, if we can take this one little thing we can begin to make a change.
"If co-ops worldwide can begin to structure their financial reports to take into account environmental, social and economical costs, then that can bring change."
Dr Colman, who is currently working on bringing these measures of natural, human and social capital into Bhutan’s National Accounts, argued that Gross Domestic Product (GDP) just reported the money spent; and did not take into account the "invisible" human, social and ecological costs made through consumer decision.
He cited examples such as the transportation of butter from New Zealand to Chile reported no real costs since "greenhouse gas emissions are invisible". Such actions also send inaccurate signals to policy makers, as well as the public, said Dr Colman.
He added: "We currently measure how well-off we are as a society by how fast the economy is growing. The growing economy is being called robust and healthy, but this sends misleading signals to policy makers.
"The more trees we cut down and the more we deplete our fish stocks, the more our economy will grow. The more fossils we burn, the better our economy. It makes no distinction between activities that create benefit and those that cause harm, such as crime, sickness, pollution, war, cigarette sales, junk food, natural disasters."
Dr Colman believes co-operatives can do better: "This is not an appropriate accounting system for co-operatives. There is a reason co-ops are grown as such and we do our own members a disservice through the adoption of a standard accounting system.
"We need a set of accounts that include human capital, health, education. If we make an investment in cleaning up a polluted river, we should report that.
"In our accounts, there are measures of value, as well as measures of progress. We measure reductions in poverty, reductions in equity, reductions in crime as gains."
Dr Colman said co-operatives need to adopt three basic principles when constructing financial reports:
• Internalise externalities, explained Dr Colman: "So if you give your workers time off to do volunteer look at the work, if you see recycled paper you use that as a benefit. All of these things are measurable. If you stop serving water in plastic bottles and use jugs, you should include that. Look at the social, human and environmental externalities."
• "Recognise the economic values of non-market service," said Dr Colman. "So volunteer work and unpaid work inside the household should be reported, even though it's not part of the flow of money." He cited a study in Denmark that showed the Dutch unemployment rate was reduced by making part-time work more attractive and creating equal benefits compared to full-time workers. Added Dr Colman: "More jobs were created, and the Dutch have one of the highest rates of productivity."
• The third basic principle is to shift from fixed to variable costs. Dr Colman explained that while annual insurance may be paid for a car, the emission of the vehicle and number of miles driven needs to be reported. If an organisation offers free parking, it should instead charge for parking and offer incentives for car pooling.
Dr Colman encouraged delegates to look at case studies and other examples through his website (www.gpiatlantic.org); and told co-operators around the world to connect with the team behind GPI. He said that if there is any one institution to make this change and create hope, then co-operatives are best placed to carry this out. He closed by saying: "You could be a powerful force in this new paradigm."
In this article
- Contact Details
- Environmental Issue
- Executive Director
- Genuine progress indicator
- Gross domestic product
- New Zealand; Chile
- Nova Scotia
- Ronald Colman
- Social Issues
- speaker at the Imagine conference
- New Zealand
- North America
- South America