Global co-operation between co-operatives matters more than ever, says Peter Hunt

‘We want every country to have a world class environment for co-ops and mutuals’

Global co-operation is crucial to the growth of the co-operative sector, thinks Peter Hunt, managing partner of Mutuo, in a keynote speech to the UK Society for Co-operative Studies annual conference.

Mr Hunt talked about his organisation – set up in 2001 to improve the business environment for the sector – which works in the UK and internationally. Prior to establishing Mutuo he was secretary general of the Co-operative Party for ten years.

Mutuo’s international work started in 2013, in response to the similarity between issues faced by co-ops in the UK and other countries.

“We want every country to have a world class environment for co-ops and mutuals. That means that they’ve got the best legislative environment, the best regulatory environment and the best possible policy understanding,” said Mr Hunt.

However, Mutuo is “not trying to find the Holy Grail of co-operation and then apply it uniformly in different parts of the world … There are different ways of doing things that are not necessarily always the same.

“We have a broad base of different cultural appreciations of cooperation and how it’s applied in different parts of the world. At the same time, there are some shining lights around the world, some countries that have excellent cooperative business environments.”

He added: “What we have to do is to see which ideas are applicable to different countries and to different cultural and historic contexts, and see how they can be made to work in each of those cases.”

Mutuo is not so much concerned with a particular entity or a particular structure or way of doing things, said Mr Hunt, but looking towards achieving an end.

He believes international co-operation can also help to solve some of the problems encountered by the sector, such as the lack of understanding of what co-ops and mutual are, inflexible business frameworks, and demutualisation.

He encouraged co-ops and mutuals to work together not just within their sector, but across sectors, adding that international representative bodies need to become more relevant for big co-ops.

And he warned that, as more conventional businesses adopt sustainable policies in response to changes in customers’ expectations, co-ops and mutuals could find themselves lagging behind some of the corporate players. This means it’s important for the sector to engage with these issues and take the lead on them.

“This idea that capitalism is moving on from this obsession with neoliberalism has to be welcomed by us,” he said, urging co-operatives not to become complacent by thinking they are the original social business model.

“The problem in all of that is that the world thinks it’s reinvented the wheel,” he added. “And in developing standards, in developing reporting requirements, the risk for us as a sector is and we could be left behind.

“We end up being bystanders while everybody else sets up how to do it, and the sustainability reporting and global standards and all of the new accounting standards that will be brought in will once again, not reflect what co-operatives stand for.”

International co-operation could also be beneficial to tackling the issue of demutualisation. Mr Hunt said these only happen in countries that allow them – including the UK. This flaw in legislation, which allows the sale of the legacy assets of mutuals or co-ops also exists in some former British Empire countries, he added.

Some recent examples of demutualisations are MEC in Canada, Economical Insurance in Canada and LV= in the UK.

“All these successful businesses were lost to the sector because of the greed of others,” said Mr Hunt.

He also talked about the need to innovate, change and develop the co-operative model and encouraged delegates to be open to exploring hybrid models for different types of co-ops and mutuals.

“More mutuality is a good thing,” he said. “And more co-operation is a good thing. Sometimes they will fit neatly into the legal structures that we have in different types of co-ops and mutuals and sometimes they just won’t, but we shouldn’t be sniffy about those that don’t.”

One example of successful cross-border co-operation was the adoption of new federal legislation in Australia to allow a new capital instrument for mutuals, a process Mutuo was involved in. The initiative came about when a group of Australian co-ops and mutuals who wanted to be able to issue shares without demutualising them came together via their trade body, the Business Council for Co-operatives and Mutuals (BCCM). The legislation enables them to get external capital into their business without risking the mutual structure of the business. The new legislation also defines what a mutual is.

While this is one example of successful co-operation among co-operatives, more such initiatives could help to strengthen the sector, argued Mr Hunt.

“We have to work together to have this broader view of co-operation, I don’t think we benefit from being narrowing our thinking,” he said.

“I think we should be open, and I think we should be accepting that co-operatives and mutuals have far more in common together than they do with listed companies and others and we should come together and work on that basis. And so those representative bodies should reflect this imperative. And that way, we will have relevant bodies, which large co-ops and mutuals can be active in and take a leadership role can fund can support and can make them succeed together.”