The 2nd International Summit of Co-operatives

By any measure, the International Summit of Co-operatives convened in Québec City, Canada earlier this month was a fantastic success. Over 3000 co-operators from all parts of the world connected, heard presentations of cutting edge studies from leading consulting firms and researchers, and reinforced their commitment to co-operative principles.

When the first Summit was held in Québec in 2012, it was precipitated by the United Nations International Year of Co-operatives, and there was no assurance that it would be other than a one-off event. The success of that first Summit, however, inspired in its vision to be the Davos of co-operatives, assured that a second would follow. There will likely now be a third in two years.

The International Co-operative Alliance, the co-host of the Summit, along with the Desjardins Group, used the opportunity to unveil the latest edition of the World Co-operative Monitor. The Monitor has become the standard in financial reporting on the co-operative sector. Produced by the Alliance and Euricse, the European Research Institute on Cooperative and Social Enterprise, it identifies the leading co-operatives, by turnover, globally and by business sector. It can be found on the Alliance website, www.ica.coop. The call for data for the 2015 report has now opened. Please access it from our web site and provide your organisation’s information.

An additional ground-breaking co-operative report, on jobs, was also released at the Summit. Produced by CICOPA, the Alliance’s sectoral organisation for industrial and service co-operatives, it estimates that 250 million people are involved in full- or part-time work in co-operatives: 15 million as employees; 10 million as worker-members; and 225 million producers, such as farmers, who organise within co-operatives. It is an essential study that more reliably develops figures far in excess of earlier estimates.

Apart from these ‘co-operative’ reports, the Summit presented several significant studies by well-known consulting firms: Bain, Boston Consulting Group, McKinsey, Corporate Knights to name a few. The Alliance will now be scouring these reports to identify the most important findings and to determine how best to build on this work to advance the goals of the Blueprint for a Co-operative Decade. We anticipate further work in a number of the areas of the reports at our next global conference — the Alliance General Assembly in Antalya, Turkey, 10–13 November 2015.

I hope to see you there!

Economic Direct Democracy

Not every book worth reading is entirely about co-operatives. John Boik has made a valuable contribution to the social and economic framework that co-operatives hold dear in his recent work, ‘Economic Direct Democracy’, which can be downloaded at http://www.PrincipledSocietiesProject.org.

Dr. Boik writes in the context of the Principled Societies Project to set forth what he calls a LEDDA (pronounced lee-dah), a Local Economic Direct Democracy Association. Co-operators will recognise in this phrase an affinity with many of the principles enshrined in our Statement of Co-operative Identity.

‘Economic Direct Democracy’ concerns itself with a space beyond individual organisations, however. The particular focus of this book is on cities (admittedly on US cities/counties, but easily applied more widely), i.e. on the community-wide infrastructure needed to advance the sort of principled society to which co-operatives contribute.

The essential components of this society are: ‘(1) a monetary system that creates money and regulates its volume, value, and (interest) cost; (2) a financial system that uses savings or other sources of money to fund business and other organizations; (3) a market system that provides goods and services to consumers; (4) a property rights system that assigns ownership and use rights for physical, intellectual, and other types of property; (5) an incentive system that encourages desired behavior; (6) a governance system that regulates the preceding five components; (7) a conceptual model that describes how the economy functions; and (8) a purpose that gives meaning and direction to the preceding seven components.

It’s a thoughtful and thorough framework, and I commend it to any co-operator interested in advancing, at a societal level, the principles they are already living within their organization.

World Fisheries Co-operative Day

This past week saw the 4th anniversary of the World Fisheries Co-operative Day, launched in 2011 to recognise the substantial contributions that co-operatives have made to the livelihoods of fishermen and -women around the globe.

I had the privilege of being in New Delhi, India that day, delivering the Vaikunthbhai Mehta Memorial Lecture, honouring the memory and work of the doyen of the Indian co-operative movement, who passed away in 1964. Representatives of Fishcopfed, the National Federation of Fishermen’s Cooperatives, were on-hand and participated in the recognition of Fisheries Co-operative Day. Fishcopfed Chairman Prakash Lonore spoke, joined by Managing Director B.K. Mishra.

Fishcopfed itself is an impressive story. As the national apex body for Indian fishery co-operatives, it works to improve their welfare and better their working conditions. Its accident insurance scheme provides around-the-clock coverage for those in this very hazardous profession. It provides training to enhance fish production while promoting aquaculture. Its chain of Retail Fish Centres throughout India is one of its various efforts to ensure fish marketing that rebounds to the benefit of the fishers. It also promotes the export of fish and fish products.

Much of the leadership in this important economic sector has come through the International Co-operative Alliance’s fisheries sectoral organisation, known as IFCO (International Fisheries Co-operatives Organisation). Its current Chairman, Lee Jong Koo, has led the way, setting the example for others through the organisation he leads full-time: the Korea National Federation of Fisheries Cooperatives (KFNC).

There is today a global crisis in the fishery food supply, exacerbated by climate change and global warming. The Alliance is a committed partner of the Food and Agricultural Organisation of the United Nations in its efforts to address this situation, which cries out for responsible global policy.

As in so many economic sectors, co-operatives are at the forefront of adopting sustainable practices while ensuring the livelihood of those working in this field, who are among some of the poorest people in the world. It’s a privilege to salute them and their co-operatives on this day in particular.

Co-operative Capital Survey

The International Co-operative Alliance has just commissioned an exciting piece of research that we wholly expect to serve as the foundation for a periodic report of key business intelligence: A survey of co-operative capital structure.

We have partnered with the respected Filene Research Institute in the USA to complete this. Filene characterises itself as an independent, consumer finance ‘think and do’ tank, deeply embedded in the credit union tradition. We have together selected A. Michael Andrews from Canada as the principal investigator. Mike has thirty years’ experience in the financial sector, including with Canada’s Department of Finance and with the International Monetary Fund (IMF).

The goal of this foundational report will be to provide an overview of current capital structure and recent capital issuance among large and smaller co-operatives. It is our intent to touch on start-up capitalisation, as well, and to identify examples of particularly innovative approaches to capital planning and management.

A full assessment of co-operative financing will require persistent efforts over a few years, similar to the progress we now see from the World Co-operative Monitor’s assessment of co-operative turnover. Such works always have a beginning, and the capital survey now has its.

The project timelines have been established to allow for a presentation of high-level findings at the Co-operative Summit in Québec City, Canada, 6–9 October 2014, with a formal report to follow before the end of the year.

This survey is a critical undertaking within the framework of the Blueprint for a Co-operative Decade, which the Alliance membership in 100 countries adopted at the close of the United Nations International Year of Co-operatives in 2012. The Blueprint identifies capital as one of five essential areas where game-changing strategies are needed. The survey is undertaken within the auspices of the Blue Ribbon Commission on Co-operative Capital, comprised of global co-operative experts.

Anyone with information to contribute to this important initiative is encouraged to contact Hanan El-Youssef, Strategy Manager for the International Co-operative Alliance, at elyoussef@ica.coop.

International Handbook of Cooperative Law

A new must-have resource for any serious co-operative scholar or thoughtful practitioner was recently released — the International Handbook of Cooperative Law. Edited by Dante Cracogna (Argentina), Antonio Fici (Italy), and Hagen Henrÿ (Finland), it is the new definitive text on legal matters for all types of co-operatives thoughout the world.

The bulk of the work — about 600 of its 800 pages — consists of chapters dedicated to a study of the legal framework in specific countries, 31 in total. This massive effort is supplemented by a preceding review of various public law frameworks: Latin American, European, African, as well as public international law. This international and regional review substantially expands the scope of the coverage.

Equally important to the detailed review of the particular legal frameworks, however, is a very thoughtful introduction to co-operative law, which usefully distinguishes its objectives from legal frameworks designed for other business forms. It serves as a valuable reminder of how co-operatives differ and why public policy should reflect their unique needs.

As the International Co-operative Alliance implements initiatives to advance the Legal Framework strand of the Blueprint for a Co-operative Decade, the International Handbook of Cooperative Law is certain to be a resource kept close at hand.

It can be obtained from Springer press at: http://www.springer.com/law/international/book/978-3-642-30128-5

Collaborative Commons

Jeremy Rifkin’s new book, ‘The Zero Marginal Cost Society’, is must reading for anyone interested in the future of co-operatives. Professor Rifkin, a noted economist, describes the changes the world is undergoing today, changes of profound importance for the co-operative sector.

This future is largely shaped by a rediscovery of the Collaborative Commons, shared access to goods and services, a value embedded in human history, but largely extinguished during the dominance of market capitalism. Rifkin makes his case through extensive examples across economic activity, from printing to education to transportation.

Driving this rediscovery is the advent of near-zero marginal cost, the ability to deliver goods and services to mass markets at very little additional cost, which technology has made possible. Rifkin argues that, while capitalism has enabled this end, it will now (over the next 50 years) give way to a third industrial revolution, characterised by a sharing economy.

While in the abstract, this can sound idealistic, the details and examples make for a compelling read. In the process, Rifkin gives a nod to the International Co-operative Alliance (chapter 12), and writes of the ‘cooperatives’ renaissance’. His arguments reinforce the thesis of the Alliance’s Blueprint for a Co-operative Decade, that these times are ripe for a broad expansion of co-operative reach and impact.

International Summit of Cooperatives

It’s not too soon to make your plans to attend the International Summit of Co-operatives in Québec City, Canada this 6–9 October 2014. The International Co-operative Alliance is again co-sponsoring this world event with the Desjardins Group, the Canadian co-operative bank and insurer. The first Summit, during the United Nations International Year of Co-operatives in 2012, also sponsored by the Alliance and Desjardins, drew 2800 participants from 91 countries and we expect similar numbers this year.

The hallmark of the Summit is its unveiling of specially-commissioned world class studies addressing key aspects of co-operative business. This year’s studies include:

  • Member Driven Strategies — Leveraging Cooperatives’ Competitive Advantage (Bain & Company)
  • Creating People Advantage (The Boston Consulting Group)
  • Disruptive Technologies (McKinsey & Company)
  • The Digital Cooperative — Mapping Digital Stakeholder Engagement in the Global Movement (University of Sherbrooke, Olivier Frey)
  • The Status of Cooperative Management Education (Sobey School of Business, IRECUS)
  • Sustainable Finance — How cooperatives can lead the way in creating symbiosis between capital markets and the planet (Corporate Knights)
  • A Roadmap for Worldwide Financial Services Innovation (Filene Research Institute)
  • Global Report on Cooperatives and Employment (CICOPA)
  • Achieving the New Vision for Agriculture, New Models for Action (McKinsey & Company)
  • Policies to Address the Growing Instability of Agricultural Markets (Momagri)
  • Securing the Food Supply Chain and Selecting Appropriate Mode of Financing (PwC)
  • Health Cooperatives Around the World (LPS Productions)

These are just some of the more than two dozen studies that will be presented this year, and which will be complemented by 150 speakers in five thematic areas:

  • Developing co-operative and mutual enterprises
  • Economics, finance and capitalisation
  • Employment
  • Food security
  • Health and social care services

 You can learn more and register at the official Summit site: www.intlsummit.coop. I hope to see you there!

Blue Ribbon Commission on Co-operative Capital plans two complementary workstreams

One of the five strategic areas that the International Co-operative Alliance identified as needing a game-changing strategy in order to achieve the goals of the Blueprint for a Co-operative Decade is Capital. We’ve established a Commission on Co-operative Capital, which began its work at our Global Conference in Cape Town, South Africa last November, convening a ‘town hall’ forum with conference participants to better understand precise issues.

The Commission has been progressing in its work since then and is about to launch a high-level survey of co-operative capital. The report will specifially address current sources, uses, returns on, and structures of capital utilised by co-operatives around the world, and is intended to provide an understanding of the risks and opportunities of investing in co-operative enterprises, as well as the risks and opportunities for co-operative enterprises in accruing capital from a variety of sources.

Some of the questions the survey is anticipated to consider include:

  • Where is growth currently coming from?
  • Of existing co-operative capital, how much comes from members, from co-operative financial institutions, from non-co-operative financial institutions, from public sector, micro-finance institutions, development finance institutions, etc.?
  • What is the nature of that capital (i.e. source, size/amount, type, instrument, etc.)?
  • What is the capital interface with regulatory regimes and capital markets?
  • Need for capital in the last 3-5 years? One-time occurrence? Frequency of need?
  • How much capital has the co-operative been able to raise? To what percentage has this met the capital needed?
  • What institutions/organizations did the co-operative solicit in order to find and raise capital?

We recognise that this cannot be an exhaustive survey across the full range of co-operatives, but we are committed that the survey reflect diversity across regions, business sectors, and size of co-operatives.

While this survey is underway, the Commission is drafting a White Paper on Co-operative Capital to clarify how and why co-operative capital is and should be distinct from other models. This paper is expected to highlight the co-operative difference regarding capital and, building on the values and principles, determine the appropriate framework for co-operatives in accessing and using capital. Ultimately, the paper would be used to influence the global conversation on capital and the contributions of the co-operative model to sustainable market behaviours and practices.

Some of the questions this paper is asked to address include:

  • What are the appropriate conditions for capital involvement with non-members?
  • What sources of capital prove most aligned with the co-operative values and principles?
  • What specific instruments prove most aligned with the co-operative values and principles?
  • How will the co-operative community evaluate trends, tools, and behaviours?

These workstreams are designed to complement one another. The first provides an essential understanding of where co-operatives are securing capital today, and what sources are failing them. The white paper then provides the thoughtful framework against which to assess these capital sources. Together, they should help to identify the type of financial instruments missing to co-operatives and where the next stage of work should be focused, to identify new sources of capital. It’s the next stage in a deliberate and promising mission.

A co-operative perspective on growth

One of the keystone documents for the co-operative sector last year is ‘Cooperative Growth in the 21st Century’, which the International Co-operative Alliance commissioned from CICOPA, our sectoral organisation for industrial and service co-operatives. It was presented at the Global Conference in Cape Town, South Africa last November and is available online in English, French and Spanish at

http://ica.coop/en/blueprint-themes/co-operatives-are-acknowledged-leaders-economic-social-and-environmental

Seven co-operative thinkers from around the world contributed to this thought leadership piece, probing how co-operatives should think about growth, a highly-contested notion of late among economists and environmentalists. ‘Cooperative Growth’ approaches this timely topic from differing perspectives, and raises helpful observations about scale, market share of competing business models, sustainability and community values.

This document was intentionally commissioned as the foundational implementation piece in the sustainability strand of the Blueprint for a Co-operative Decade, along with a scan of co-operative sustainability, which is available at the same link. In 2014, the Alliance will use the findings from the scan and the reflections in the thought leadership piece to shape a course for sustainability strategies to 2020.

Concurrently, the Alliance is seeking feedback on draft Guidance Notes that were drafted last year as the first three in a series of Notes intended to interpret and ensure the contemporary relevance of the Co-operative Principles. One of these in particular is pertinent to this blog, as it addresses Principle 7, Concern for Community, where sustainability is most clearly covered. I encourage you to review these Notes and provide your feedback, at 

http://ica.coop/en/co-op-decade/call-comments-co-operative-principles-3-5-and-7

Together, these documents signal the intentional, multi-year approach the Alliance is taking to address intractable issues of relevance to co-operatives around the world. We’ve been delighted at the responsiveness of the global co-operative community to this work and welcome your engagement!

Exciting times for co-operatives

If you were at the Global Conference of the International Co-operative Alliance in Cape Town, South Africa last month, you will have felt the energy and promise there, as we released the key initiatives from the first year of our Blueprint for a Co-operative Decade. The new global Co-operative Marque was everywhere visible, in our venue and throughout the city, and soon we hope throughout the world. The newly-established Blue Ribbon Commission on Co-operative Capital held a ‘town hall’ forum, its first public meeting, where co-operators shared their experiences and their ideas on how best to ensure a reliable stream of co-operative financial capital. Our sustainability scan revealed the commitment co-operatives have to sustainability, providing us with the baseline we need to advance our work in this vital area. The general feedback was that this was an event with clear strategic vision, engendering confidence in the direction of the movement.

In the past couple of decades, the co-operative sector has become especially robust and diverse. Our World Co-operative Monitor, also released at our Conference, reports that the 300 largest co-operatives now have aggregate turnover in excess of USD 2 trillion. We have a healthy and dynamic organisational model. This should be celebrated. Even this month, as one example, Nationwide Building Society, in the words of the Financial Times, ‘conquered one of the biggest challenges for UK mutuals by raising GBP 500 million of fresh capital through a new form of instrument that will bolster its financial strength without requiring support from outside investors.’ This is exactly the stuff of which the Blueprint is made.