Changing times at the ICA

I am sorry that the International Co-operative Alliance’s current President Monique Leroux is stepping down after only two years in post.  Monique, who previously led the Canadian financial co-operative Desjardins, has contributed a great deal in recent years to the international co-operative movement.

Normally ICA Presidents serve four year terms.  Monique was elected for an initial two-year term (because Britain’s Pauline Green resigned two years before the end of her second term) and this may have made it harder for her to assert her leadership over a sometimes fissiparous global movement. Some people were reportedly already preparing themselves for a leadership challenge in the Presidential election which had to follow the end of Monique’s first two-year period.

I do worry about the ICA.  It has recently seen its Secretary-General Chuck Gould announce his forthcoming retirement, and its financial base remains more shaky than you’d wish. (It’s not necessarily easy to persuade co-ops than they need to support the global pyramid body).  Add to that some somewhat tedious internal politics between different national and regional blocs within the ICA and you have a recipe for difficulties. The forward-looking Blueprint for a Co-operative Decade, launched after the 2012 UN Year of Co-operatives, is now looking overly hopeful.

But of course we need internationalism in the co-operative movement, and we need the ICA to lead the way.  Fingers crossed that things will get sorted.  And good luck to the next President – it’s not an easy job.

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Making your savings work positively for good

Since the pioneering days of the nineteenth century the co-operative movement has had an interest in the way that investment capital can be used differently,  not just to make as much money as possible. That interest is still there: co-operative capital is one of the five key areas being focused on in the International Co-operative Alliance’s current strategic plan.

My personal and professional interest in this area doesn’t go back quite to the nineteenth century, but I’ve written over quite a number of years journalistically on some of the major initiatives for what has at various times been called ‘ethical investment’, ‘socially responsible investment’, ‘alternative investment’ and now, it seems, ‘positive investment’.

So I’m interested to see that the ethical share trading platform Ethex is at present supporting a major academic research study into the attitudes of ‘positive investors’ (ie people who make savings and investment decisions on more than simply the rate of return on offer). You may like to support this project by completing their online survey, which is to be found here.

Coops and capital: keep the fire bucket at hand

I think this may be an appropriate moment to repeat a comment from George Jacob Holyoake, one of the pioneers of the British cooperative movement, which I admit I’ve quoted a number of times before.  Holyoake, who was making the Inaugural Address at the 1887 Co-operative Congress, said this: “The co-operator is not against capital. Capital is exactly like fire – an excellent servant when it warms the inmates, but a bad one when it burns down the house.”

Capital remains a knotty problem for cooperatives, and indeed it is one of the five issues identified as needing attention in the International Co-operative Alliance’s current strategic plan. The ICA has a high-level ‘Blue Ribbon’ commission investigating the topic, and the commission has now published a new report The Capital Conundrum for Co-operatives. It’s worth a read.

Here’s the start of the report’s preface, which very much echoes Holyoake’s 1887 comment: “Capital is necessary and desirable for co-operatives, because it enables us to conduct business, grow, and meet the demands of our key stakeholders. At the same time, unlike other enterprises, co-operatives’ Principles and structure exhibit a profound guardedness and unease about capital and its power.”

The new ICA report is a series of separate essays from across the cooperative movement (both sectorally and geographically). There are some interesting discussions of the appropriateness or otherwise of cooperatives accessing standard equity capital by establishing plcs which they part-own, a model which has been common recently for some agricultural coops and indeed in banking. The problem with this approach of course is that it creates a wedge which investors can use, so that what was once a cooperative business can quickly be lost to the movement. (Cue a reference here to recent developments at the UK’s Co-operative Bank).  I am pleased to note that the report includes some voices warning of the risks of this practice, the first time for many years I’ve seen this view prominently expressed in the coop world.

There’s an essay I particularly like from two authors working for The Co-operators insurers in Canada, and I will end this blog with a quote from their conclusion “The thesis of this article has been that co-operative capital is inherently incompatible with investor-owned capital, and that there is an abundance of co-operative capital available to support co operatives. The real issues, however, relate to the Co-operative Principle of Co-operation among Co operatives and how co-operatives may be empowered to access the co-operative capital that is available.”  There are, as they say, both ‘capital needy and capital rich’ cooperatives: there must be mechanisms in place to enable them to cooperate together and realise the capital resources which, collectively, are held within the movement.

The report is at ica.coop/en/media/news/new-report-capital-conundrum-co-operatives (Actually, the link wasn’t working today, but I’ve sent an email to the ICA to tell them, so hopefully it will be soon).

ICA2020: one way we could record the cooperative difference

I’ve been reading today a thought-provoking report, still in draft form, which the International Co-operative Alliance (ICA) will be bringing out shortly: The Capital Conundrum for Co-operatives. And it has done its job: it’s provoked me to think.

Curiously, though, it hasn’t just got me thinking about cooperative-friendly capital instruments (always a favourite topic of mine). Instead, it’s made me think more broadly. And it’s made me wonder if the time is right to encourage the ICA to pioneer a ‘Global Cooperative Index’, one which measures just how well (or how badly) an individual cooperative enterprise is doing in meeting agreed international cooperative principles.

What defines a cooperative?  Not the legal structure: in Britain (and elsewhere in the world too) coop businesses nestle under all sorts of legislative frameworks. Not the capital structure, either: businesses which most people would accept as being within the cooperative family have developed all sorts of equity and quasi-equity financial instruments to meet their capitalization (or regulatory) requirements.

So it has to come down to something else: what Singapore’s Tan Suee Chieh and his colleague Chuin Ting Weber call in the ICA report ‘the cooperative spirit’. Or in other words how well these businesses really meet the essence of cooperation.  How well their business practice tallies with cooperative values and principles.

Recent years have seen businesses signing up for a whole range of Corporate Social Responsibility measures (I thinking of such things as Social Accountability International’s SA8000 standard, as well as the UN’s overarching Global Compact initiative). So what about a Global Cooperative Index, which I feel the urge to name ICA2020?

ICA2020, which would score cooperatives’ practice in a range of areas, would of course be a voluntary undertaking by cooperatives – although it would be good to think that there’d be some peer pressure to participate (and benchmarking is all the rage in business these days). So what would sort of things would ICA2020 monitor? Oh, you know: member engagement, the percentage of members voting in elections and attending meetings, employee satisfaction, employee understanding of cooperative principles, customer satisfaction, internal pay differentials (the lesser the better), the CEO’s ego quotient (the lesser the better, although I accept this is hard to measure), gender and diversity indices, socially responsible investment practice, the percentage of profits used for charitable or community purposes, average time taken in paying suppliers, all kinds of environmental indicators…

I think you get the idea.  And, you know what, it might just take off.

Cooperative governance, and how it could be better

Pauline Green, who has just stepped down as President of the International Co-operative Alliance, gave me a moving and inspiring interview yesterday for a feature I am writing for one of my clients, the International Co-operative and Mutual Insurance Federation. Pauline mentioned in passing the dire straits in which the ICA found itself at the start of this century, starved of funds and losing members fast. The achievement of Pauline and her colleagues since those dark days not only in stabilising the ICA but in making it an increasingly powerful and respected voice globally deserves proper recognition.

One sign of the ICA’s renewed energy is the determination with which it is trying to implement its current strategy, the Blueprint for a Co-operative Decade. This is represented among other things by the publications emerging from within the ICA. I enthused last week about the new Guidance Notes on the Co-operative Principles. Today I want to mention a second useful publication, on cooperative Corporate Governance.

As Pauline Green puts it in the foreword, “Governance is a key component of the co-operative difference. The cooperative values and principles call for an open, voluntary and democratic process of decision-making, and cooperative governance is an essential tool in applying those values and principles.” But as I think we all know, cooperative governance is not always all it might be. In fact, it can be pretty appalling.

Rebuilding the cooperative movement means among other things encouraging better governance, appropriate to the size and purpose of each individual coop. This new publication aims to start a debate. Among other things there’s a thoughtful account by Johnston Birchall on governance in large coops, and a (perhaps deliberately) provocative chapter from Cliff Mills, who criticises the old approach in the Co-op Group and calls for adequate professional expertise to be harnessed. And there’s a delightful account from Bob Cannell on Suma’s egalitarian – and highly successful – approach to governance and management. You’ll find the report here.

Bibby says: read this!

I want to blog today about what I consider the most important publication to have come from within the cooperative movement so far this century. I think every coop in the country should have a copy, readily available to be consulted (and debated). However, unless you were at the International Co-operative Alliance’s recent conference in Turkey, my strong suspicion is that you may not yet have seen it or read it.

The publication comes from the ICA and is entitled Guidance Notes to the Co-operative Principles. In other words, its starting point are the seven agreed core international principles behind the cooperative concept. These principles help to bind together what (let’s be honest) can be a very heterogeneous movement. Encouragingly I have noted a trend in recent years for British coops (particularly workers’ coops) increasingly to make reference to them.

The principles were last agreed in 1995, at what was the centenary conference of the ICA held in Manchester. The 1995 iteration followed two earlier versions, agreed by the ICA in 1937 and 1966.  But all three statements of cooperative principle were heavily influenced by early debates among cooperative pioneers, particularly the ‘Rochdale Principles’ developed in the British cooperative movement in the mid nineteenth century.

So what does the new publication offer us?  It offers us for the first time a comprehensive set of proposals for how the principles can and perhaps should be put into practice by cooperatives, in real life. As Pauline Green puts it in her foreword, the Guidance Notes “allow cooperatives themselves to fully grasp just what it means to be a cooperative in the world in which they are now working”.  It’s a tool.

Almost all the key ethical, managerial and governance issues facing cooperatives are covered here somewhere. Look carefully and you’ll find, for example, guidance on the importance of indivisibility of coop reserves (avast, you would-be demutualisers and carpet-baggers!), on member democracy and executive power, on executive pay (this last section should perhaps be stronger), on issues associated with equity capital, on enlightened treatment of employees and the importance of ILO core labour standards, on coop responsibilities in relation to environmental sustainability, and so much more.

What’s here is, of course, guidance not dictat – some coops will cheerfully disregard the lot, just as they disregard the seven principles at the moment. But it’s a collective expression from across the global coop movement of what is considered appropriate and best practice. That’s why I think it is important.

One irritation: the PDF on the ICA website is hard to cope with. Hard copy versions need to be acquired, and distributed widely.  As soon as possible, please.

Monique Leroux is new ICA President

Monique Leroux, the CEO of the Québec-based financial cooperative Desjardins, has just been announced as the new President of the International Co-operative Alliance. Leroux was the inspiration between the two successful Cooperative Summits held in Québec in 2012 and 2014 (another is to be held next year), initiatives which have meant that she already has a high profile in the global cooperative movement. So the result (there were three other candidates, all men) wasn’t entirely unexpected.  (I’m pleased to say this outcome was predicted on this blog some time back!)

Monique Leroux takes over from Pauline Green, who deserves considerable credit for the way she has transformed the role of ICA President. What was once a position which meant little more than chairing ICA board meetings has been converted into an active leadership role.  Pauline Green has been tireless in criss-crossing the world to promote the cooperative business model, knitting together a sometimes disparate movement and giving the ICA a much more strategic sense of purpose. Pauline will be missed internationally, although British cooperators will welcome the chance to see her once more giving her energies to the national coop movement.

Monique, a francophone Québécoise who is also fluent in English, will be a different kind of President from Pauline but will I think continue to see the role as one of giving political leadership to the movement. She has valuable experience too in leading a powerful banking and insurance business.

The ICA conference in Turkey which is now just drawing to a close has also seen the publication of a number of valuable new documents, most notably the new Guidance Notes to the Co-operative Principles, which for the first time set out in detail what the seven international coop principles should mean in practice. I’ll try to return to this document in a future blog.