How are co-operatives investing in communities?

The community impact index is not a definitive statement on which organisations carry out more, or less, community activity than others. What it shows is the total reported community...

The community impact index is not a definitive statement on which organisations carry out more, or less, community activity than others. What it shows is the total reported community investment activity of these organisations, ranked according to percentage of pre-tax profits.

There are limitations to this reported data, both in terms of what is reported and how, meaning it is not possible to compare individual organisations with confidence. However, certain observations can be made about overall sector performance.

On this basis, the 10 largest UK consumer co-operatives perform very strongly in comparison to their mainstream competitors, investing 6.3% of pre-tax profits in helping communities compared to only 3.7% of the main UK supermarkets, a 2.6% difference.

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This is particularly impressive given the relative scale of the supermarkets: the total turnover of the largest consumer co-operatives is £16.9bn, a whopping £184.5bn less than that of their mainstream supermarket competitors, and combined is considerably less than the turnover of Tesco alone.

Asda, the third largest supermarket, has a (UK-only) turnover of £21bn, which is over £20bn more than the third largest consumer co-operative. So, while the total figure invested in UK communities by the mainstream supermarkets is considerably higher, in relation to profit and business size, it is clear that consumer co-operatives punch above their weight.

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The notable anomaly on the index is the Co-operative Group. Despite the weighty sum of £18.3m invested in UK communities, due to a financial loss in 2012 this cannot be represented as a percentage of pre-tax profits. However, by its own calculations, in 2011 investment in UK communities stood at 3.2% of pre-tax profit. The Co-operative Group performs strongly against competitors. In 2012 it gained Platinum Plus in Business in the Community’s Corporate Responsibility Index, with a score of 98%, and the Co-operative Membership and Community Fund won the Third Sector Business Charity Award for best corporate foundation 2012.

Other co-operatives and supermarkets have gained awards and recognised standards for their community work. Midcounties Co-operative, Sainsbury’s and M&S all hold the Business in the Community (BITC) ‘Community Mark’ award, which Andy Melia, BITC’s community investment manager describes as “the UK’s only national standard of leadership and excellence in community investment.”

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The ‘other’ large co-operatives suffer on the index because of low reporting activity, but larger organisations still have a higher reporting activity that smaller ones. This is largely because mainstream CSR reporting methods favour enterprises which have the additional resources to measure, collate and report on activity.

Jon Lloyd, from global corporate responsibility consultancy Corporate Citizenship, says: “There’s not a lot of reporting activity out there about what smaller companies are actually doing. Some may be being criticised because they aren’t reporting. It is a resource issue to have someone gather this information and report on it, but often it can just be ingrained in the business, and could outweigh what a bigger business might do if it was measured.”

There is also less pressure from competitors and consumers for transparency and arguably, the more local an organisation is, the more it can articulate its community value immediately and directly. Some, such as housing associations, claim they are, by their very nature, for the benefit of the community which they serve. Simple, non-burdensome reporting is possible however, and those co-operatives which would like to pursue a more structured programme can use the quick guide to measurement, on the final page, to get started.

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