Co-operation: how?

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We are running our Co-operative Congress this weekend in the heart of Birmingham – 270 people coming together to look at where next for co-operation and mutuality. The theme is ‘co-operation: how?’

There is, as ever, a great starting point in the story of the Rochdale Equitable Pioneers Society, who in 1877, published this considered ‘Advice to Members’, including guidance that:

“Let integrity, intelligence and ability be indispensible qualifications in the choice of officers and managers, and not wealth or distinction.”

“Choose those only for your leaders whom you can trust, and then give them your confidence”

“Let committees of management always have the authority of the members before taking any important or expensive step.”

It is co-operative business advice that still stands strong.

One million co-operative strawberries

As a Wimbledon-born boy, I am excited that it is tennis time again and time again for… strawberries.

One million strawberries will be eaten over the course of the two weeks at Wimbledon, all from Kent’s Hugh Lowe Farms, a member of the soft fruit co-operative, KG Growers.

It is busy too across the co-operative sector, as the number of co-ops across the UK has leaped over the last year to over 6,300, with a total turnover of over £37 billion.

Our annual statistical digest of the sector, The Co-operative Economy, is out today, as part of Co-operatives Fortnight. It tells the story too of other member-owned businesses, including how English mustard growers came together as a co-op, to save the provenance of Colman’s English Mustard.

All this at its best is great teamwork, as with the best of the World Cup teams and with the doubles tennis we may see this fortnight.

When we get it right, co-ops can be like a north bound train – focused on member needs, co-operatives have the responsiveness, support and momentum for success. Without that clarity, and faced with the challenge of restoring The Co-operative Bank back to health, The Co-operative Group has indeed faltered.

While co-operatives are not immune to the stresses and strains faced by any business, the data shows that it is still an expanding sector, made up of resilient, ambitious and profitable enterprises.

Strawberries and cream – some things are wonderful when they go together.

The greatest hits of the Co-operative Group as an ethical retailer

It has been an awful year for the Co-operative Group. But alongside the sorry saga of conflict and confusion, it is worth remembering that the business has been a wonderful innovator for some time in one field, of ethical retail.

These are what I would pick out as the five greatest hits of the Co-operative Group as an ethical retailer.

1. The pioneer of ethical certification: from Fairtade to Freedom Foods to Leaping Bunny – the Co-operative Group has helped to develop the standards for success with green and ethical products.

2. A leader in sustainability reporting – alongside international co-operatives such as VanCity Credit Union, the Co-operative Group for years won global accolades for openness and transparency. This was a form of governance and accountability that was never found wanting.

3. A carbon cutter. Working in a collaborative way with other businesses to share learning, the Co-operative Group fully deserved its reputation as a sustainability leader – with reductions in operation GHG emissions down over 40% since 2007, saving over £100m. Over the last decade, the Co-operative Group has also become one of the world’s largest purchasers of renewable energy, backing new renewable energy co-ops and the substantive policy changes in support of them that Co-operatives UK and partners have won.

4. A campaigner. The advocacy work of the Co-operative Group, with members and typically in partnership with others, is now echoed by mainstream companies such as Unilever, Aviva and IKEA. A great example was the groundbreaking work of Plan Bee in 2009, which highlighted the impact of neonic pesticides on pollinators, that in turn is now the subject of a temporary EU ban.

5. An inclusive company. One of the most underrated aspect of the Co-operative Group’s ethical work was to engage all classes in radical change. When I was comparing the health record of retailers at the National Consumer Council years ago, what stood out was that the Co-operative Group was the one who was taking healthy eating beyond the middle classes. When it was first to convert all own brand hot beverages to Fairtrade, the first to remove artificial colourings of concern and MSG from own brand products or to use free-range eggs, it did it for all stores rather than just the better off areas.

Now, these will change, not just because the Co-operative itself is resetting its purpose and priorities but also because ethical demands change over time. My hope is that the focus is on the challenge of sustainable retail as a commercial opportunity and a source of innovation.

Yes, sometimes, there are costs in doing the right thing, for sure, and it is right to be clear and transparent on those – but the Co-operative Group is a business and therefore while people don’t expect it to behave like Friends of the Earth or RSPB, members should expect it to be entrepreneurial and innovative in pursuing sustainable business opportunities and benefits.

Looking forward, the Co-operative has remarkable untapped strengths in terms of local outlets and local community connections that have been neglected in the mimicry of the vertically integrated retail. Where, after all, is the sustainable honey? Sustainability for a retailer, in my climate-constrained world, needs to be about aspiration and innovation.

The Co-operative Group has not been the only ethical pioneer in the sector either and it can learn from others. Our analysis of money flows for Lincolnshire Co-operative showed that one pound spent in a Co-op Food shop stayed for five rounds in the local economy, before the final penny stopped creating local wealth. East of England Co-op has been persistent and creative in getting to record levels of local food – fish from Lowestoft, bread from Woodbridge, pork and lamb from Bury St Edmonds, beef from Framlingham. Southern Co-operative has ensured that it is Isle of Wight milk that is sold in their stores on the island – obvious, but radically different from the big supermarkets and commercially astute.

The big gathering for the co-operative sector is coming up later this month, Co-operative Congress on Saturday June 28th, in Birmingham (and we are ten days now to the start of Co-operatives Fortnight). Over two hundred people are registered for Co-operative Congress. One of the central issues I expect will be new strategies for being competitive by being not just better all round, but by being different.

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Fairtrade comes up roses

After the media scrutiny of Fairtrade over recent days and my last blog in support, I received this warm note from Fairtrade grower, John Nevado:

“Ed – as a grower of FairTrade roses I can only thank you for this short post. I see hands-on, every day, at our farms, what good FT does. And the benefits for our co-workers are not only economic, but also dramatic in terms of worker empowerment, female empowerment in the workplace, and a general sense of cohesion at our farms that we simply would not have without the FT “glue” to hold it all together. Thanks Ed, and whenever you wish to visit an FT farm in full bloom – do pay us a visit.”

Time to pack my bags?

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Fairtrade is good for producers – what research does and doesn’t say

The halo effect of Fairtrade has lasted many years, despite periodic critics popping up wanting to complain either that it distorts markets or that it doesn’t distort them enough.

Development is a complex business and there is always a risk that Fairtrade is seen to overclaim what it can achieve as a way to tackle poverty. There is only so much you can pack into a label, or that you can unpack as a tool to address the deep inequalities of world trade. The research field on Fairtrade has grown over recent years, and played a helpful role in improving practice and standards from what its findings have been.

I remember sitting down with a colleague from Oxfam in 1991 in Brixton around the launch of the Fairtrade Mark and trying to write up standards for fair trade products. We were starting from scratch and it was extraordinarily amateur – but it was an attempt to do something no one else had done, which is to put a frame of assurance around what consumers could do to help.

Over the years, the standards have improved dramatically. They are more international, less bureaucratic. They are led and shaped by Fairtrade producers. The constructive challenge from academics and trade unions has helped to sharpen them up.

The latest research is out from the School of African and Oriental Studies and while it is useful, methodical work focused on two countries in Africa, the shame is that the findings are being used to attack Fairtrade rather than help it improve.

The news coverage – Fairtrade goods ‘not helping the poor’ – completely misses the point, at least on my reading. The research was focused on workers employed in the production of commodities. What it set largely aside was that Fairtrade started with a focus on producers – small farmers organised democratically in co-operatives, rather than those who came into harvest and labour on a paid basis. Of the two, the informal workers are no doubt poorer than farmers and there has been debate and improvements over time in terms of integrating their needs within the model – so that there is reflection of this in standards today. But this is not to say that smallholder farmers themselves are not poor.

The strength of Fairtrade is that it gives a voice to those farmers. Of course, how they choose to share the gains is something that is up for scrutiny. But a London-based university should be wary of criticising their choices if it overlooks the fact that it is exactly this power – to make choices in a democratic way – that Fairtrade offers producers and which they do not get in the mainstream supply chain.

Fairtrade is good for marginal producers. All the research bears this out. It is not necessarily good for everyone involved in the long chain from farm to fork. That is a good reason to innovate and improve, but not to overthrow the model.

I was part of the team that created the Fairtrade Mark and I have always said on fair trade and poverty that just because you can’t do everything, doesn’t mean that you shouldn’t do something.

Renewable energy success

Good news! Co-operatives and our partners in the field of renewable energy can celebrate a very welcome decision by the Government to introduce a carve-out for community energy generators.

We have helped 40 community energy generation co-operatives in recent years to raise £13.5 million from around 8,000 members through the Community Shares Unit.

In the March Budget though, the Treasury introduced new limits which would have ended use of the flexible Enterprise Investment Scheme in support of these. Earlier this month, Co-operatives UK, with the backing of around 70 community energy schemes, submitted a call for Government to change its mind and guarantee a carve-out for community energy.

Baywind Energy Co-operative, the UK pioneer, is currently looking to repower their Harlock Hill site, for example, with the intention that the venture will support a substantial community benefit fund. This would have been called into question without a carve-out, as could have been been a current 4MW community solar project in Cornwall, and a planned 10MW community wind project in Scotland.

The case for renewable energy is compelling and the case for community ownership as a positive way through planning strife is proven. All credit to the Government for listening to the sector on this vital change.

The Co-operative Group – Shakespeare’s view?

For the past few months, the story of The Co-operative Group has tumbled onto the public stage like a Shakespearian tragedy. It has felt as if, when the end came, there would always be dead bodies all around and a realisation and a reckoning of past flaws.

While at Co-operatives UK, we connect many, many co-operatives, not just this one, the largest consumer co-operative, it was somewhat cathartic for me therefore to watch the great actor Simon Russell Beale on Friday take the role of King Lear. So many of Shakespeare’s plays are about governance and Lear is perhaps the bleakest. With Lear and all his daughters dead, it is young Edgar that is asked to “the gor’d state sustain”. As with King Richard III, if there is any light at the end, it is the promise of better governance going forward, and closure not just through pain but through learning.

The Co-operative Group, by my reckoning, is not the King though (far too democratic for that), but the suffering nation – England/Albion or Scotland (Macbeth), Denmark (Hamlet). The cast include a tragi-comic Archbishop, the Prince brought up overseas, a truculent mob (often present in Shakespeare’s plays) and a righteous, noble Lord. Some are struck down, some wounded. But, at the end, despite the pain, the nation endures, because it has to and because it is a larger idea than any of the individual characters alone.

With the welcome launch of the proposals for governance reform by Lord Myners, and signs of consensus around a clear vote for change at The Co-operative Group General Meeting on Saturday, the tragedy could soon be over.

We have published an analysis of the governance reform proposals that support that vote for change, and we add straight-forward options to improve further what the Myners Review suggests. We call this ‘Myners Plus’.

It is right for any new governance design to be tested with care, to avoid unintended consequences down the line, but if there is consensus on the case and timetable for change, then what was conflict can become dialogue.

The way that The Co-operative Group has operated has seemed eccentric to conventional media business analysts. It is the same way, though, that I have seen the fair trade movement respond to complex challenges – it is a social movement and not just a business hierarchy.

What has seemed eccentric to me though has been the way that the main characters have courted external conflict as a way to make internal change. Morrisons has just suffered a sales collapse unprecedented for a large food retailer – but I doubt you will see it pay £4million for a published review of what went wrong or see those involved risk trashing the brand in public. When the case studies are written for business schools, there will be a strand on leadership and the tragic consequences of corporate self-harm.

Things are looking up, after a bleak period. Risks will remain, the business recovery will take time, but it will no longer necessarily be a descent to darkness.

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