Sustainability: are co-operatives different?

In a report on ‘the business of sustainability’, global management consultant McKinsey says: “The choice for companies today is not if, but how, they should manage their sustainability activities. Companies can choose to see this agenda as a necessary evil – a matter of compliance or a risk to be managed while they get on with the business of business – or they can think of it as a novel way to open up new business opportunities while creating value for society.”

This might be the case for conventional businesses, but are co-ops different? One of the co-operative principles is ‘concern for the community,’ indicating that built into the very foundations of a co-operative is a greater focus on environmental and social concerns than other businesses. Is this true?

Yuill Herbert of Sustainability Solutions, a Canadian co-operative that surveyed how co-ops around the world focus on sustainability, thinks so, saying sustainability is “a sweet spot for co-operatives”.

The ‘Sustainability Scan,’ which Sustainability Solutions produced for the ICA, examined how co-ops use the language of sustainability on their websites and in their reporting.

It concludes that “co-operatives embed sustainability into their operating model and values,” but stresses that co-ops put more emphasis on the positive impact they have on the community, and less on their impact on the environment or the wider economy.

Community

The focus on their role in creating more sustainable communities is evident in the UK’s consumer-owned retail co-ops. East of England Co-operative, for example, has been a pioneer of retailing local food; its Sourced Locally range has increased the number of products sourced from its trading area from a handful to more than 2,000 since 2007.

Lincolnshire Co-operative has a similar approach to local food, with a recent study calculating that the co-operative generated an additional £40 for the local community for every £100 spent by a customer.

The Co-operative News’ impact index, compiled earlier this year, offers further evidence for the role co-operative retailers play in communities.

The study found that retail co-ops invest on average 6.3% of their profits in communities through charitable giving, volunteering time and supporting other co-operatives.

The ten largest retail competitors to the co-operative sector contribute only 3.7%, showing that co-ops are giving nearly 60% more than corporate rivals.

Beyond the retail sector, the community focus of co-operatives is equally strong. More than 300 community-owned shops have sprung up over the last decade.

This is usually the result of village stores closing down, prompting local people to band together, pool their resources and buy the shop to run collectively.

“These communities have rallied to save their shop from closure, reopening it under community ownership,” says Peter Couchman, chief executive of the Plunkett Foundation, which supports this new wave of co-ops.

“They have built a committed team to engage with everyone within their community to keep their shop up and running,” he added, “delivering a vital service, day in, day out.”

Environment

While the Sustainability Scan finds that co-operatives refer less to their impact on the environment, many co-operatives have strong green credentials.

The Southern Co-operative recognises that, as a retailer, it has a large footprint and has been working to reduce its environmental impact. It aims to reduce in-store energy consumption by 32% by 2016 through a range of energy-saving measures. Last year, it achieved its target of ensuring that none of its food waste went to landfill but was instead redistributed or recycled. It is working hard to deal with non-food waste, with 63% being recycled and the remainder being used to create energy from the waste.

As the society’s chief executive, Mark Smith, explains, “a top priority for our business within our three-year plan is our firm commitment to being a responsible and sustainable business”.

He adds: “What sets us apart from other businesses is our co-operative ethos of operating in a fair and responsible manner, and having a purpose beyond profit for the good of the communities in which we trade. This is entrenched within our business strategy and we’re engaging members and colleagues to make a positive difference in the way we work to ensure its success.”

Distinct from co-operatives that try to put environmental sustainability into their business practices are those co-ops that are set up specifically for green purposes.

Over recent years, more than 40 renewable energy co-ops have been started to generate green energy from wind, water and sun, while others put the environment at the heart of their work. Essential Trading, one of the UK’s largest worker co-ops, includes green concerns in its five trading objectives: opposition to the exploitation of animals; promotion of healthy eating; concern for protecting the environment; commitment to human rights as a trading issue; and ‘dedication to the co-operative principles’.

Economy

Although the co-operative model of ownership, and its place in the wide economy, is critical in defining what a co-operative is, Sustainability Solutions’ report indicates that this gets the least attention from co-operatives in their reporting.

There are, however, examples of co-operatives that put a strong focus on how they provide an alternative for their members in the economy. Agricultural co-operatives, in particular, appear to put a spotlight on this role.

GrainCo, for example, which markets cereals for approximately 2,000 farmers in Scotland and the north of England, explains that it “recognises the need for a strong commercial marketing organisation run on behalf of farmers to balance the activities of the multinational organisations. By maintaining a direct producer role within the grain supply industry, we believe we benefit all arable farmers across Scotland and the north of England”.

Similarly, many of those in the worker co-operative sector view their model as a direct alternative to conventional business structures. The mission of Essential Trading, for example, which turns over more than £12m a year, is to be “a sustainable, scalable business, providing secure employment and satisfactory remuneration to its members whilst benefiting the global community”.

On key areas of sustainability – community, environment and the economy – co-operatives, in different ways, appear to put a high value on sustainability and operate differently from conventional businesses. Whether this is instinctive, and whether this applies for all co-operatives, is a different question. But, to echo Yuill Herbert, sustainability may indeed be a ‘sweet spot’ for co-ops.