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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Five reasons why football is co-operative, not just competitive

Ipswich Town are seventeen points ahead of our club, Charlton, in the Championship. But I do love the ‘tractor boys’. It is possible to co-operate as well as compete in football.

My school maths teacher, Mr Goldsmith, was a fan and used to give us double homework if they lost at home and time off if they won away. The year I did my Maths O levels, Ipswich won the FA Cup – although to be frank, while loving the time off, I was probably lucky to pass.

A second reason this week is a fabulous article in the limited edition rag of Ipswich’s Turnstile Blues supporters co-operative, written by Grant Bage. I will summarise rather than quote, but he gives a set of reasons why football is not how the media portray it, which is as a form of cut-throat competition managed by sociopaths and played by villains.

Football is about co-operating to compete, because:

1. It is played by teams, drawn from wider squads, which succeed when members pull together.

2. For every professional football team on the field, there is another team off the field supporting them – trainers, dieticians, laundry workers, coaches.

3. Teams agree to play by the rules – developed and codified over time, from muddy fights in 1860s Sheffield to today,with 208 associations subscribed to FIFA (more than there are nations who are members of the UN) in an extraordinary story of communal co-operation.

4.Teams play on a pitch, which is dug, levelled, cared for by honest manual workers, and by nature, open  to sun, rain, drought, frost and snow. The universal truth persists, says Bage, that “apart from in South Norfolk’s Sunday League, the pitch is a level playing field.”

5. Teams are watched in a ground – an ‘asset of community value’ – where fans, alongside a people’s army of hot dog sellers, terrace sweepers, police constables and programme sellers, have all agreed to meet, on time, and where the home-made songs of home and away teams rise and fall.

Of course, Yeovil fans, bottom of the league and facing relegation, may not agree. But, with good luck for you or bad for us, we will see you again very soon  the pitch, to co-operate again.

Taking power – the inspiring story of Tony Gibson

We have lost one of our great community activists and innovators in participation this week. Tony Gibson, who developed the participatory toolkit, Planning for Real, and helped tough neighbourhoods across the country to turn around, died just short of his 95th birthday. He was a passionate, co-operative Quaker and a determined force of nature.

Tony made his name on the Meadow Well Estate, Tyneside, hit by riots – as Nancy Peters, who started the local credit union with Tony’s support, said at the time “at one time, you could leave the door open, people wouldn’t venture in and steal but now whether your door’s open or shut, they need the money to survive and its the same with children. The shoplifting, the aggression, the anger. I have never seen anything like it.” Starting with a talent survey of random houses in 1991, residents came together to respond, with the idea of ‘a new heart for Meadow Well’ in the form of a development centre built on a discredited youth centre. The response, though, was inertia. Despite the efforts of one sympathetic local employee from the Council, a senior officer was heard to say “those fuckers couldn’t plan a pram shed.” A decision was taken, instead, simply to close the youth centre.

As this dragged on over five hot Summer months, the residents started to drop out and then… a group of young people locally burned down the youth centre. What followed was two days and nights of riots, with fires, a burned out corner shop, pot shots at a police helicopter cruising above. The riots forced everyone to think again. The working party held estate-wide elections to form a group that could negotiate with outsiders. They used Tony’s Planning for Real approach, which creates a mock-up of the neighbourhood, from trash on the ground to buildings up high, on a table that people can then walk around, explore and together discuss options for improvement. This led to the development of a new community building, launched with a fun day. The first of many community-led improvements, it was the first building scheme in the borough that had taken shape from day one to completion without a single case of vandalism or theft.

I worked with Tony in support of a similar pilot on the Teviot Estate in East London and with colleagues such as Pat Conaty, we developed an early training course on community economic development. It was called Nutshell – one of Tony’s acronyms, which stood for ‘neighbourhood use of time, space, homes and environment for livelihood and leisure’. Rather than start with money (the conventional economic or philanthropic route), Tony guided us to start by matching local resources to local needs. Nutshell was the potential for great oaks in every tiny acorn.

Planning for Real become an exemplar for the new participatory practice of community planning and open decision-making. This and other tools are now mainstream – for example with planning for real championed by the mutual housing group, Accord (a member of Co-operatives UK) and the UK participation charity, Involve, which I am proud to be trustee and chair of, recently completing work on open government and designing a new participative accountability frame for the NHS in England. But the tools were always designed to be one part of a wider culture change and here, Tony’s work is still unfinished.

Together with Toby Gibson and regeneration academic Stephen Thake, I wrote an impassioned strategy in early 1997, arguing for a new model of local economic renewal in the UK – Taking Power, published by the New Economics Foundation, with support from the Joseph Rowntree Charitable Trust. In memory of Tony, whom I can’t think of without smiling, I repeat below the introduction and conclusion of that (now probably lost, online) paper.

Introduction: New imagination
As a society, the changes being forced on us are mind-blowing. There is not much we can take for granted any longer. This is neither a minus nor a plus: it is a fact of social and economic evolution which happens to be breathtakingly sudden. How we react to it, whether we feel helpless or exhilarated, depends on how we choose to think.

There are a hundred and one starting points for local community action, but all have one thing in common. It is the day you or a neighbour step over a broken pavement or rubbish dumped in a corner and say, not ‘someone’ should do something, but ‘we’ should do something.

Many more steps will have to follow. Everyone has a role to play. Communities are full of unused energy, talent, skills and knowledge. Once this is unlocked, great changes can take place.

But for every starting point, there are many premature end points, marked by the failure of those with power outside to let go. The change in mindset also has to work for the people who are, in Tolstoy’s words, sitting on the backs of the poor, decrying their condition, and willing to do anything but get off their back. This includes letting people make mistakes and giving the time needed for a participative local democracy to develop great deeds by small steps.

We have a choice of mindsets as a country.

The first is a continuation of the current paradigm of laissez-faire. This is the mindset of those who promise growth and a better tomorrow, but connive at cutting communities adrift through the rationing of welfare and resources.

The second is a commitment to a new paradigm in which communities can become agents rather than victims, with programmes that enable them to attack the structures of dependency and retake control of their destiny.

Conclusion: Power and poverty

Taking power means seeing what Vaclav Havel called ‘the power of powerlessness’. Typically, we identify power with ‘the powers that be’, those with money, political or police authority. But in its origin, power simply means the ‘ability to do or effect something or anything or act upon a person or thing’. This is not ‘power over’ but ‘power to do’. Taking power is not a revolution intended to establish a new hierarchy, but the subversive act of simply recalling how much we can do with those around us to change our own situation.

Tackling poverty means that we all have to see that this is for us: poverty is not something that happens to someone else (and no-one likes to think they are poor, however many research reports say they are). Poverty means relationships breaking up, bring fearful on the streets, not knowing your neighbours, losing your job, your child having asthma.

Perhaps the closest metaphors historically for what is implied are the 19th century campaigns for public health, or the 20th century creation of the National Health Service. It will require an all party commitment stretching over a generation, to implement. It will require public support and an understanding that community action can work.

We hope that this will fill a void in current thinking and offers a radical alternative to the rise of alienation in disadvantaged neighbourhoods. But it will require real change and devolution, and not the usual incorporation into other people’s agendas to serve other ends. That is the challenge.”

If you design a boxing ring, then what you get is a fight…

With Lord Myners resigning from his Board position this morning, it continues to be a tough time for The Co-operative Group – among the worst in its long history. Yet for all that, our research shows considerable goodwill at a public level with people hoping that the business can pull together.

By and large people are aware that this is just one co-operative and the wider mutual model is one that still carries a high degree of trust. There are over six thousand independent co-operatives across the UK, with a turnover of £36 billion. Only 6% of UK adults say, in polling research, that what has happened will change their view of co-operatives in general.

The financial results now due for the Co-operative Bank, like all audited accounts, will look back, but, however its final capital call is resolved, the bank itself is looking to the future. It may be a slow recovery path but it will remain distinctive in terms of its ethical position and will of course retain close connections with the wider co-operative sector.

As with The Co-operative Bank, The Co-operative Group has indicated that it will cut core costs in order to compete more effectively and this is a critical part of a wider business recovery plan which is now firmly in train. Any successful business needs effective governance, with change where needed, but in the short term, it is the performance and financial state of the Group’s businesses that matters most.

What we are seeing within The Co-operative Group are the pains of change in a much more public setting than you would in any other business. When you are owned by seven million people, what you do will always be of public interest. Business, in this case, has become a spectator sport. Ultimately that transparency is a good thing, for public trust, but of course what happens is framed in part by that public and media coverage. If you design a boxing ring, then what you get is a fight.

In reality, we have much more agreement than disagreement on the next steps. The principle of reform is accepted, so there is indeed now a consensus for change. But how to change is not yet agreed and that’s not unreasonable. There are pressures to move fast, but I have always said that there can also be unintended consequences when you move to something entirely new in governance terms, which is what the proposals of the independent review led by Lord Myners represent. The way to manage overall risk for The Co-operative Group is to test, refine and get the governance right.

Lord Myners, who will still complete his independent review of governance this month, proposes a ‘twin peaks’ model, with an expert Board, focused on commercial performance, and a wider Membership Council, focused on social goals. He wants to bring The Co-operative Group into line with the practice of other consumer co-operatives of having direct elections to the Board from the full membership. But he has not published the full proposals in anything but outline form, so it is not unreasonable for there to be debate on how something like this could work in practice.

It is true that this may yet spill over into conflict or into gridlock, if we move into megaphone debate, with critics taking aim at each other, saying that this is the end of the business or the end of its mutual values. The Co-operative Group will survive if it successfully navigates both challenges.

The traditions of co-operative action, which are about listening and dialogue, ought to help.

What I am confident will emerge over the next period is a strategy for a transitional process of getting the business from where it is to where it wants to be. It doesn’t need every single actor signed up, but it does need sufficient consensus – failure to take people along on this journey could simply create a new set of problems down the line.

It remains a relatively simple step, once Lord Myners has reported, and if the leadership is there to start this, for dialogue among the key representatives to lead to a governance reform package that is timely, best of class and fit for purpose for a modern mutual.

Is there any gain in pain? Reflections on the Co-operative Group in the news

It has been an extraordinary period for the UK’s largest co-operative over recent months and weeks. Commercial challenges, financial losses, capital constraints are not uncommon in business. But what has turned this into a very modern celebrity business crisis has been internal conflict, played out in such a public setting.

When I was young, I was told ‘if you can’t say anything nice, don’t say anything’ and it is fair to say that those words have come to mind more often recently, as the leaks, briefings and comment spill over. As I wrote in the Huffington Post recently, it is an odd form of corporate self-harming, as many of those involved and reviews conducted are or were paid for by the Co-operative Group itself – so that’s either honesty (one of the co-operative values) or an overly masochistic view that there’s no gain without pain.

At the same time, of course I accept that this is a legitimate public topic. There is a need for radical change, to raise standards, cut costs, borrow less and then invest more, innovate again. And when a business is owned by millions of members, then there is going to be public interest in what those changes are.

Although this story is far from complete, with results and reviews to come and capital calls to cushion the Co-operative Bank, I do at least get a sense behind the scenes of an emerging consensus over the need for change. Far more of the talk is about the right kind of change – how, in other words, rather than whether. If so, that in itself is a corner turned.

I am interested too in how those most closely involved have also instinctively rallied round to support each other. I am astonished by the resilience and character showed by staff at the Co-operative Group, with the awful drama they have faced. I am proud of co-operative members who pop up at random in the media, unscripted, unpaid for, but with a passion and hope for the Co-operative that is the signal of something still special that has been tested but not broken. And of course there is the reminder in my daily work and contact with our own members that this is just one co-operative and there are six thousand that are trading well, ahead of the economy at large.

This idea of resilience is an entirely contemporary and compelling business issue. Companies that go from good to great, and that last are resilient. The great strength of the Co-operative Group is precisely that it has faced real crises a number of times over its long life. The corporate raiders, for example, have tried before, are trying and will try again.

Each time, the Co-operative Group has emerged stronger, more agile as a result of the experience. Each time, it has drawn strength by becoming more distinctively co-operative rather than less. No-one can take the same outcome for granted – it has to be earned. But for all the foibles, its character and values as a mutual business have always been a source of renewal.

Some years ago, I contributed a chapter on co-operative character to a book by the think tank Demos, focusing on individuals rather than enterprises. In more recent work, nicely supported by the employee-owned, mutual business Arup, Demos now defines resilience as “the capacity of an individual, community or system to adapt in order to sustain an acceptable level of function, structure, and identity.” The subtle point is that survival is not about continuity, but about the change that enables that continuity.

Robert Owen, the pioneer of co-operation, was also fascinated by the idea of character. Penning the first of his “Essays On The Formation Of Character” in 1812, Owen saw character as a set of habits, behaviours and beliefs that were formed by the environment in which people operated. Character was not fixed. It emerged from people’s circumstances, but could in turn shape or reinforce the context and community that people lived in.

On January 1st, 1816, Owen opened the New Institution for the Formation of Character — two buildings financed out of company profits for learning and leisure, including the world’s first workplace nursery, or creche. As soon as children were able to walk, they were taken into the creche and, at the age of three, they entered the infant school. The teachers were specifically instructed to be kind and encouraging to instil self-confidence.

Is there any gain in pain? Probably not. But if pain is a symptom of a great business bringing itself to a point of change and the chance of renewal, then pain for now, it just has to be.

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Foraging for innovation – lows and highs of a co-operative life

It has been a roller-coaster of a few days.

The CEO of the Co-operative Group has bowed out after a weekend in which his pay and bonus was front page news. What he was paid to do though wasn’t, he felt, achievable. Every step of this poker game seems to have been leaked to the press, which is a rare return to the worst days of the demutualisation attempt by Andew Regan – when one executive went to jail for leaking confidential information.

There will need to be change and renewal at the Co-operative Group and the hopeful signal is that of a clear strategy and purpose underway, to be championed by the capable new (interim) CEO, Richard Pennycook, and his team. This is a very challenging time, but it helps to remember that this is not the first time the business has been tested and it has always emerged as a stronger, more agile, resilient enterprise.

The highlight of today, in contrast, was something deeply co-operative, which was a visit to Glasgow’s Greencity Wholefoods. Babs, pictured here with me below, confesses that “my first love is warehousing”, which is a perfect fit for one of the 40+ members of a wholesaling worker co-operative.

While the Co-operative remains an ethical retailer, because of its ownership structure, Greencity, which only stocks from ethical suppliers, has had to delist some of the former ethical business wonder kids that, with investor ownership, have grown by being sold off to big business – Rachel’s Dairy, Ben and Jerry’s. As a result, they are on a constant search for product innovation, particularly from Scottish suppliers.

One of these, Babs shows me, is Sea Buckthorn Juice. It is labelled as ‘wild and Scottish’ – “just like us” she laughs. Sea Buckthorn is a shrub that you find on the coastlines. The product is gathered by a collaborative enterprise of foragers. Its bright orange berries are full of vitamin C and E, omega oils and minerals. Low carbon, sharp tasting… It is quite something.

Enterprises such as Greencity give me plenty of hope for the co-operative model. It is never so easy in business to organise around ethical values at scale, but if there is a right way to do it, it is to turn those values into a source of innovation – or to return to those values as a source of renewal.

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Co-operatives and executive pay

There have been debates on how much to pay managers and wider staff in the co-operative sector right from the early days.

As perhaps with any issue of economic fairness, there have tended to be two schools of thought. The first is that there might be a universal standard of fairness, that a co-operative can embrace. The second is that what matters is ‘process fairness’, in which executive pay is considered openly and appropriately by members, reflecting the democratic governance model of member-owned coops.

An example of a universal approach may be, for example, that you get out what you put in. The training co-op Zebra Collective has a flat management and pay structure, and pay is decided according to how much training and how much administration staff members do. Or it may be an egalitarian principle of equal pay. At SUMA, the wholefood co-operative, all staff are paid an equal salary and share from success in an equal way through dividends. Others, like Co-opportunity, have equal basic pay but pay a large divided based on a series of weighted factors which differ between individuals.

With the Spanish worker co-operative Mondragon, winner recently of an FT global business award, there has long been a ratio set between top and bottom pay. The original ratio was up to 1:6 and was chosen as a way of encouraging managers to raise pay if they needed a pay rise themselves. In the 1980s, the ratio grew to 1:15 – as too many managers were being lured away by higher pay elsewhere. Fairness, after all, in a competitive market sits alongside the test of effectiveness. Alongside this, pay at Mondragon is set according to measures which include productivity and absenteeism and measures of how well staff members get on with other people (constituting 20 per cent of the pay decision).

There tends to be something of a difference, though, between worker-owned co-operatives on the one hand and consumer-owned and enterprise-owned co-operatives on the other. The member benefit for one is about fulfilling work, including earnings, while for the other it is about the gains of trade – and executive pay, including valuing the role of executive leadership, is part of a primarily commercial set of judgements on how to achieve that.

So, there is no single right answer. What matters is that there is an open conversation with members on these issues – executives are paid with members’ money and what is paid to them to get the job done, whether too much or too little, is ultimately down to members. These are not issues hidden away from sight – in fact, there has been healthy and lively debate within the member governance of The Co-operative Group in recent years around issues of pay and co-operative values, from exploring the living wage through to details in the accounts on who among senior staff was paid what when they left. Debate like this can be a sign of strength.

But when you run a democratic model, process matters. The last period has seen what from the outside has sometimes looked like a trickle of media comment that reflects one group of decision-makers criticising another and vice-versa. That is no way to operate, let alone co-operate.

In Mondragon Co-operative, salaries are called anticipos, because they are intended to be seen as advances on future wealth creation. That must be right. Rather than talk about executive pay in the distorted frame given to us by mainstream business, of ‘compensation’ and ‘entitlements’, the focus should be on what will deliver success for members, in line with their values, over time.