Cooperatives as Socially Responsible Companies
By Pierre Liret
Director of Employment and Training at the SCOP Confederation
Cooperatives as a business model have attracted new interest from governments, policymakers and public opinion since the 2008 financial crisis and ensuing economic crisis. As
cooperatives focus on the interests of their members and not on returns to capital, and being
rooted locally, they appear as a safeguard against the excesses of financial capitalism, while
upholding many virtues. Indeed cooperatives are often presented by their own ambassadors
as companies compatible with sustainable development, and as being at least partially
socially responsible. They fit in naturally with the standards of corporate social responsibility
(CSR, variously and synonymously called the social responsibility of companies, social and
environmental responsibility, or even corporate citizenship).
This raises the question to what extent cooperatives can indeed be regarded as an
economically, socially and environmentally responsible form of business. Answering this
requires specifying what a socially responsible company is, and what this notion covers in
concrete terms. According to the ISO 26000 standard, which has been the international
reference since its publication in November 2010, CSR is the "responsibility of an
organization for the impacts of its decisions and activities on society and the environment
through transparent and ethical behaviour which: contributes to sustainable development
including health and welfare of society; takes into account the expectations of stakeholders;
is in compliance with applicable law and consistent with international norms of behaviour; is
integrated throughout its organization and practiced in its relations”.
In other words, a socially responsible company is a firm which examines its practices
towards the stakeholders with whom it works and develops ever more responsible practices
towards them. These stakeholders include: customers, shareholders, employees, suppliers
(and other partners), the company's territory (the local community and employment area) the
company as a whole and its natural environment, whose interests are mainly promoted by
NGOs, with public authorities acting to ensure compliance. It should be noted that such
concern for the environment is relatively new: sustainable development was defined for the
first time by the Brundtland Report of 1987, while the first international environmental summit
took place in Rio in Brazil in 1992. Before this, concern for social responsibility focused
exclusively on the ability of reconciling business performance with social priorities, especially
concerning employees. Consideration of the environment as well as of other stakeholders is
much more recent.
Before looking more closely at the case of cooperatives, it is important to examine in what
way social responsibility can be measured: when is it possible to say that a company is
socially responsible, and on what criteria? There are several national quality standards in
France (ISO 9001, ISO 14000, etc.), or laws such as the NRE law of 2001 which sets out
behavioural standards for companies concerning shareholders and governance. But these
standards and laws are partial and only cover a small area related to CSR. There are also
international benchmarks. However, given their geographic reach they are not – and cannot
be – normative but only indicative. This is the case of the ISO 26000 standard, which is the
most recent standard and is henceforth an essential reference for CSR.
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The ISO 26000 standard was published 1 November 2010, and is the result of the initiatives
by several consumer associations in different countries. 42 organisations worked on
formulating this standard, including the International Labour organisation (ILO), the United
Nations, the global compact, and the World Health Organisation (WHO). 99 countries
participated, with attention being paid to the balance between developed and developing
countries (LDCs). In its formulation, the ISO 26000 standard is aimed mainly at major
companies operating internationally and whose goods and services are sold to end
customers. This explains why respect for consumers and human rights is one of the seven
key issues covered by the standard.
ISO 26000 is non-normative, in other words it entails no obligations and sanctions. But it
goes a long way in setting out recommendations for companies. Respecting the standard
means managing negative impacts, as well as implementing positive impact models.
Implementing ISO 26000 means implementing extended governance, taking into account all
stakeholders. This would seem to be impossible by definition, because doing the best for one
stakeholder should automatically penalise other stakeholders: if shareholders are favoured,
then the company itself or its employees lose out. If suddenly the company decides to
concentrate all its resources in promoting the general interest of its territory and environment,
then this will necessarily carry a cost for clients, employees and shareholders, and hence
ultimately to the survival of the firm. By definition, complete CSR is impossible to implement.
Nevertheless, the ISO 26000 seeks to go as far as possible in respecting all stakeholders.
Lastly, the standard is also very ambitious because it is necessarily all-embracing, and this
means nothing less than examining the whole of a company’s strategy, if not the very
purpose of the organisation.
The ISO 26000 standard sets out seven major principles which must be respected
simultaneously: accountability, transparency, ethical behaviour, the principle of legality,
recognition of stakeholder interests, human rights and international standards of behaviour.
Accountability is the duty of the company to account for its impacts on society, the economy
and the environment. Transparency aims to reveal rather than hide decisions and activities
that have social or environmental consequences. Ethics is about behaving with honesty,
fairness, integrity and respect for others. The principle of legality is simply a reminder of the
rule of law, which seems to be self-evident in the developed countries, but which should not
be forgotten when working with less democratic or less-regulated countries at the local or
national level. Recognising stakeholders means taking into account their interests and
responding to them. Respecting human rights means acknowledging their importance and
universality. Finally, any organisation must be consistent with internationally established
standards of behaviour, not only nationally, for example the ILO’s Convention on redundancy
plans.
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Accountability
Transparency
Ethical behaviour
Respect for the principle of legality
Recognising stakeholders’ interests
Taking into account international behaviour standards
Respect for human rights
On the basis of these seven principles, the ISO 26000 standard raises seven central
questions which an organisation can use to measure, evaluate and develop its CSR
approach. These include: the governance of the organisation, human rights, working
relations and conditions, the environment, fair practices, consumer issues, and taking into
account the community as well as local development. The seven questions are not explicitly
prioritised in order of importance. But they are always presented in the same order, with
company governance coming first, and hence the organisation’s decision-making system as
well as its relations with shareholders and management. The local community and local
development are always last on the list. This order is certainly constant although there is no
explicit ranking, but the seven central questions are all of key importance a priori, although
not necessarily of exactly the same importance. Overall however, they do indicate a method
and a plan of approach which companies can undertake in measuring CSR.
Corporate governance
-> Shareholders, managers
Human rights
-> All individuals, the company
Labour relations and working
conditions
-> Employees, subcontractors
Environment
-> NGOs, public standards, etc.
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Fair practices
-> Suppliers, clients, partners
Consumer issues
-> End customers
Community and local development
-> Territory, employment area
Each of these seven central questions of the ISO 26000 standard corresponds to one of the
organisation’s stakeholders. Governance focuses on the relationship to shareholders and
managers. Human rights address the relationship of the organisation to society, and to
individual persons in general. Labour relations and working conditions of course concern
labour law governing the relationship between employees and the company. But they also
concern the relationship with suppliers and subcontractors. The environment, in the sense of
nature and the natural resources which surround us, is by definition not a stakeholder. Yet it
has spokespersons, in the form of various local and international NGOs such as Greenpeace
or the WWF. These have taken on responsibility for the overall protection of the environment
or components of it. Public authorities and international organisations can also be considered
as one of the stakeholders representing the environment, insofar as they are responsible for
ensuring respect of environmental standards which they have been able to establish under
the impetus, pressure and support of NGOs. Fair practices refer to appropriate practices in
business, essentially with respect to customers, suppliers and partners related to the
business activity. It may be asked why “consumer issues” are raised so clearly as a central
question of CSR. In fact, not all companies work with final consumers (B2C) and many work
only with other companies (B2B). However, by raising this central issue, the ISO 26000
standard stresses the decisive responsibility companies have towards consumers, who are
ultimately the final customers of any economic activity. It should be recalled that the ISO
26000 standard is the result of the work of many consumer associations, and that they have
aimed to set the standard for companies, and especially large multinationals that work with
the end customer. Finally, the seventh and final central issue concerns the relationship to
community and local development. This question postulates that any organisation must think
and act with regard to its territory and its employment area, apart from simply paying taxes.
On the control of negative impacts, a business whose activity, for example, pollutes local
waters, must provide an outlet circuit other than natural sources of water for its waste, as well
as the processing and/or recycling of its waste. But the organisation must also be pro-active
and examine what its contribution to local development could be, whether it is to support the
local community or non-profits in economic, social, cultural or environmental areas.
Governance
The governance of an organisation is the system by which “an organization makes decisions
and implements them in order to achieve its objectives” ( ISO 26000). It focuses on the
organisation’s relationship with its constituents (company shareholders for companies) and
its directors. This includes integrating the principles of transparency, ethics, respect for
stakeholders’ interests into the decision-making process of the organisation and applying the
principle of legality. According to ISO 26000 standards, organisations are also expected “to
promote the participatory management of all employees, regardless of their responsibilities,
in all aspects of social responsibility. An equitable representation within the organisation of all
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groups of under-represented individuals (women, ethnic minorities, etc.) is also a key issue in
responsible governance”.
From this point of view, cooperatives are distinct from all other organisations: their
governance is not directed towards shareholders or towards the profit motive, but first of all
towards the beneficiaries of the services of the cooperative, be they farmers, craftspersons,
merchants, fishermen, customers of banks or workers. Cooperative capital is their vital fuel.
But it is a means, and not an end. In view of the aims of CSR, cooperatives therefore have a
decisive advantage in terms of governance over other companies concerning their services
to members. They also have an advantage over non-profits because they have real capital
and adhere to the logic of greater economic responsibility in their capacity for development
and
sustainability.
The second strong specificity of cooperatives in terms of governance concerns democratic
voting with members having equal votes according to the principle of “1 person = 1 vote”. As
partnerships, cooperatives (like non-profits and mutual societies) operate on the principle
that the opinions of each associate must be considered with equal weight. From this point of
view, cooperatives follow more naturally the democratic principles suggested by ISO 26000
than any other organisation. But this equality of accounting of votes only takes place at
general meetings, at most once or twice a year. And above all, it applies only to one category
of members. Historically, cooperatives are in the exclusive service of their members, which
all form a homogeneous category. Cooperative democracy, transparency and accountability
concern only a cooperative’s associates – farmers, fishermen, customers, traders, workers,
etc. – and by definition exclude all other stakeholders.
From this perspective, cooperative societies with a collective interest (SCICs, société
coopérative d’intérêt collectif) were set up in France in 2002, along with the social
cooperatives that emerged in Italy in the 1990s and the solidarity cooperatives of Quebec.
They have opened up the revolutionary perspective of breaking with the historical principle
that cooperatives are exclusively directed towards a single category of members. They open
the capital of a cooperative and extend democratic voting to all the stakeholders concerned
by the same economic project. SCICs provide a priori the main legal status for implementing
CSR in law and multi-stakeholder governance.
This is an undeniable theoretical competitive advantage of cooperatives in the field of
governance in terms of the ISO 26000 standard. This advantage is even reinforced for socalled SCOPs (cooperative and participative societies, sociétés coopératives et
participatives) whose employees are majority shareholders, as by definition they involve
employees in their governance and are based on participatory management. At a practical
level, on the other hand, cooperative status offers no more guarantees than other legal
status in terms of respect for transparency, ethics and the principle of legality in their
decision-making processes and in the implementation of decisions. Just like all other
organisations, cooperatives are exposed to the practices of those who run them, and are not
protected from the risks of mismanagement or misappropriation.
NB: It should be noted that governance is the only one of the seven central questions of the
ISO 26000 standard which is not broken down into different fields of action.
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Human Rights
Central question: human rights
Action area 1: the duty of vigilance
Action area 2: situations which contain risks to human rights
Action area 3: prevention of complicity
Action area 4: addressing human rights abuses
Action area 5: discrimination and vulnerable groups
Action area 6: civil and political rights
Action area 7: economic, social and cultural rights
Action area 8: fundamental principles and rights at work
Human rights are “the fundamental rights to which all human beings are entitled because
they are human beings”: civil and political rights (essentially the right to liberty) and
economic, social and cultural rights (labour, health and education). If “the legal systems
diverge from one nation to another, human rights transcend all differences of systems. The
supremacy of human rights prevails. Wherever they operate, organisations must respect
human rights regardless of whether or not the State fulfils its duty of protection”.
Obviously, this central question is primarily aimed at large companies that operate
internationally and may therefore operate in countries which are not democratic countries or
which are characterised by poverty, corruption, etc. The central question of human rights
requires these companies to face up to their responsibilities and not to close their eyes to
practices which do not comply with human rights for the sake of business and the enrichment
of their shareholders. The ISO 26000 standard is very explicit on this: all organisations have
a duty to prevent any violation of human rights, to avoid and refuse all forms of
discrimination, to pay attention to vulnerable people, to respect the economic, social and
cultural rights of the people with whom they work and to ensure that these rights are
respected. Organisations have a duty to be vigilant not to interfere with the enjoyment of
these rights: the right to private property, security, the right to dignity, the right to work, equal
opportunities, non-discrimination, the prohibition of forced labour and child labour.
On this central issue, cooperatives have no more power than other organisations. In theory,
nothing intrinsically requires a cooperative to respect human rights: its priority is to serve its
members, to take into account the interests of other cooperatives and its “community”
(employment area). But there is nothing in the principles of the International Co-operative
Alliance on human rights. Only one principle indirectly alludes to these human rights: the fifth
principle posits that education, training and information are intrinsic to cooperatives. This role
of education, training and information is of universal importance and concerns all potential
audiences in the cooperative. Of course, it is a priority for a cooperative to train its members,
but cooperatives also have an implicit vocation to inform the public about their values and
principles. This principle of education and information in cooperatives does have a universal
scope, which in theory implies empathy towards everyone and hence a priori a more natural
aptitude for the respect for human rights. Cooperatives are by nature democratic and have a
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more developed social conscience than any other form of organisation. However, neither
cooperative law, nor legal status indicates that cooperatives have specific duties in the field
of human rights. As a result, respect for human rights in cooperatives is primarily a function
of the practices and values of their leaders and managers. At its core, a cooperative is not
just a legal status, but a humanist project of emancipation. Yet in the course of their
economic expansion, many cooperatives have become mere technical organisations for
pooling resources. They are precious and useful to their members, but remain simple
economic instruments. And from this point of view, human rights have no more place in a
cooperative than in any other form of company.
Labour relations and working conditions
Central question: labour relations and working conditions
Action area 1: employment and employer/employee relations
Action area 2: working conditions and social protection
Action area 3: social dialogue
Action area 4: health and safety at work
Action area 5: human capital development
We are at the heart here of the economic and social issues which are in the media
concerning the central question of labour relations and working conditions. This issue is
central to the ISO 26000 standard and the relationship between an organisation and its
employees, involving: responsibility for recruitment, layoffs, working conditions, health,
safety, hygiene, skills development, etc. All organisations have the duty to ensure “equality of
opportunity and treatment of all employees, to ensure non-discrimination, to prohibit arbitrary
and discriminatory dismissals, to encourage good working conditions in the workplace, to
preserve the physical and moral health of employees, to maintain a high level of safety, to
inform employees of risks, and to train employees”. In the present context, a specific aim is
to prevent precarious employment, abusive relocation and off-shoring.
Yet the central question of labour relations and working conditions also aims at “all policies
and practices related to work within an organisation, by the organisation or on its behalf”.
This explicitly includes relations with subcontractors: organisations should not favour their
own employees at the expense of workers in subcontractors or other external suppliers. It is
not because company must be competitive and profitable that it may strangle its suppliers,
pay its bills late, demand increasingly short delivery schedules and ever-more services.
Moreover, there is no question of endorsing subcontracting relationships which could hide de
facto wage labour. Many companies have lightened their payroll while continuing to make
their former employees work for them as subcontractors, thereby obtaining greater flexibility.
Are cooperatives by nature or in practice more socially virtuous than other organisations?
This is indeed the message which comes across in many press articles, studies or indeed
recommendations by public authorities. In practice, cooperatives taken as a whole have no
natural vocation to treat their employees or suppliers better than any other organisation. A
cooperative is an association of producers or consumers who have come together to create
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an instrument to provide them with services. They have a clear social advantage when for
example they allow farmers, craftspersons, and retailers better purchasing conditions or
easier access to markets through mutualisation or the sharing of services. However when
cooperatives are sufficiently large to employ staff or order goods and services from different
suppliers, there is no cooperative law which sets out any responsibilities cooperatives may
have to these parties.
Employment
No cooperative legislation mentions the employment issue, except the 1978 law in France
on SCOPs (cooperative and participative enterprises). In fact, SCOPs are the only
cooperatives whose associated members are its employees (called salariés in France, or
salaried employees). By nature, the relationship of a company to its employees is at the very
heart of governance and the overall project of cooperatives of associated work: this
relationship actually shapes their identity. A SCOP – or more generally a workers
cooperatives if we look beyond France – is in fact a collective of people who are associated
to create a common instrument allowing them to carry out their professions and develop their
skills. The very principle of a SCOP is therefore to allow people to work, based on a different
relationship to work than is found in the classical subordination of labour to the higher
economic interests of the shareholders. SCOPs strive to provide jobs to their members and
improve the quality of work constantly, so that the associated employees develop their skills,
competencies and employability, thanks to the enterprise. This characteristic distinguishes
SCOPs from all other forms of organisation, including other cooperatives. There is no doubt
that SCOPs and other cooperative labour associations are fully part of this dimension of
employment, which is the first of the five areas of action specified by the ISO 26000 standard
concerning the central question of labour relations and working conditions.
Employer/employee relations
SCOPs also by nature fit in well with the second action area of the employer/employee
relations. As employees are majority shareholders, and thus decision-makers in their
company, the SCOPs operate on the basis of an original form of governance that reflects a
different type of employment relationship than the traditional subordination of employees to
their employer. Of course, SCOPs respect labour law and the contractual relationship
between employers and employees. But there is a big difference as employees choose their
own organisation and their managers. Subordination exists, of course, but it is chosen and
not imposed. Whoever works in a cooperative knows that constraints exist and that rules and
an organization are needed. Being free is not therefore being free of all constraints that are
inevitable, but it means having the power to choose them.
Working conditions
The third action area of the central question (after employment and the employer/employee
relationship) concerns working conditions, i.e. wages, rest periods, leave, well-being, social
dialogue, relations with the representative institutions of personnel. From this point of view,
the worker cooperatives also offer an original model. In any traditional company, the
employer’s priority is profitability, with the objective of rewarding shareholders. Social issues
are handled by employee representatives, who put their social demands to the HR director or
to the general management. At first glance, this is pretty similar in SCOPs: management and
the management committee are concerned with business performance while social issues
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are dealt with where they should, via meetings of staff delegates or the works council. But
SCOPs differ on two essential points. First, their partners are mainly employees and there is
thus less risk of cleavage or contradiction between the interests of both parties: the
associated or partner employees themselves arbitrate collectively between the business
imperatives of their company and how the company's situation may allow for working
conditions to be improved. Secondly, and linked to this, the economic performance of a
SCOP does not involve accumulating wealth for the owners and/or making financial gains as
in other companies. Instead, the organisation's aim is the professional development of the
company and each of its members. Debates over the distribution of profits are less about the
choice between paying more to shareholders or employees but rather about choosing
between improving the plant and equipment of the company and improving working
conditions: in other words, the choice between the economic imperative of sustainability of
the company and the opportunities for social progress, given the firm's economic
performance.
Clearly, SCOPs have an organisational structure which best favours the improvement of
working conditions, given that employees are statutory partners and their emphasis on the
quality of the workplace. They are shaped by their primary objective of professional
emancipation, the rise in skills of their members and the sustainability of the concern.
Keeping one's job, making progress professionally, improving one's skills and one's
employability is one thing. Improving working conditions is another matter, which, in a SCOP
is an objective, but remains secondary to the primary business objective of the enterprise, as
in any other company, even if improving working conditions is usually viewed more in SCOPs
as a factor contributing to economic performance. As other companies, SCOPs always face
economic imperatives, and hence business priorities. Improving social conditions and the
redistribution of wealth can only take place if such wealth has been created beforehand.
Then there is the trade-off between the company and its management concerning the
threshold at which it is possible to redistribute earnings to employees or use them to improve
working conditions. Many SCOP employees, even when partners, do not necessarily
understand the willingness of their management to further strengthen the company's capital
or to carry out this or that investment even though their business is already prosperous.
Social protection
Social protection supports employees in terms of health, retirement (old age) and
unemployment. Historically, social protection was at the heart of the social economy project,
beginning with the birth of friendly/mutual societies to manage savings, solidarity and
benefits in the second half of the 19th century in Europe, in contrast to the paternalistic
services provided by major industrial companies at the time. Social protection was also
pioneered in the historical cooperative project. The weavers of the Rochdale Society of
Equitable Pioneers sought primarily to provide consumers with goods and services at lower
prices. But their original project also provided for the participation of employees and an
economic project aimed at building a global community of life, in which consumer
cooperation was only a starting point. The Familistère de Guise, created and developed by
the French industrialist Jean-Baptiste Godin in the second half of the 19th century, is today
recognized as the only real example of a Phalanstère imagined by the French early socialist
philosopher Charles Fourier (1772-1837). But the Phalanstère was based on the idea of
building an ideal community of life by bringing together an optimal number of people, with a
fair proportion of men, women, young people, with different traits and personalities.
Economic activity and work were one the facets of the community of life, whose purpose was
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truly social, encompassing solidarity among members of the community through mutual
protection.
Over time and with "professionalisation", all the actors in the social economy have become
specialised around their preferred objective: consumer cooperatives defend consumers,
some mutual insurance schemes cover health costs, others provide insurance for property,
etc. So today there is no clearly stated or even implied mention in the cooperative laws of
any cooperative responsibility for social protection. Even worker cooperatives do not
encompass the social protection of their members in their objectives: their aim is the
professional emancipation of their members, which does not presuppose a priori any social
protection obligation. Nevertheless, cooperative work is indeed distinguished by a culture
that takes into account the interests of workers, and both the history and the study of current
practices testify to SCOPs’ frequent consideration of this issue, which of course, is more or
less acute at the company level, depending on the scope of protection offered by
government in the country of affiliation. Many French cooperatives whose employees benefit
from French social welfare laws make sure to set up arrangements for the employees of their
subsidiaries in foreign countries with less social protection.
In conclusion, from a doctrinally and statutory point of view, no cooperative has a specific
advantage in social protection compared to other types of organisation. But in practice, any
cooperative operating in a country where there is public social protection will generally try to
spread some or all of these mechanisms to other countries in which it is operating and where
less protection exists. More specifically, it is part of the culture of SCOPs to be concerned
about improving the conditions of its working members, including in social protection, even if
this is not included in their statutes.
Social dialogue
Social dialogue is the relationship between the employer and employee. In France,
companies with less than 10 employees are not obliged to have any formal employee
representation. Above 10 employees, they must appoint a staff representative. Above 50
employees, they have to create a works council and have trade union delegates. These
obligations apply to all organisations, whatever their governance or legal structures.
Cooperatives whose associate members are entrepreneurs or consumers and which do not
have associate employees have no particular competitive advantage in terms of social
dialogue compared to other organisations. Again, only SCOPs standout by having
employees who are themselves associates and co-decision makers in the company. They
are co-employers by delegation to the general management they have chosen. This raises
the question of what interest staff representatives have concerning the social questions of
the SCOP, given that all associated employees have access to all information about the
company and have a say in the company’s main decisions. The overwhelming majority of
employee cooperatives around the world rely on the assumption that as associates and coentrepreneurs, employees already have the possibility of expressing their point of view,
which makes formal staff representation mechanisms unnecessary.
The situation in France is different because during the 20th century a very structured legal
system was put in place to ensure that the interests of staff can the represented. By their
nature, French SCOPs have social objectives taking into account employees interests, and
so have been able to incorporate such legal obligations without requiring any waivers or
derogations. SCOPs therefore apply all staff representation mechanisms set out in France's
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labour code. That said, the question of what social dialogue in a SCOP, in which members
are also employees, is or should be remains open. Several observations can be made about
this. First, the very fact that not all employees are necessarily associates of the company
makes it imperative that a formal body is established in which non-associates can assert
their interests. Second, when employees express themselves as associates in general
meetings, they do so mainly to discuss the company, its results, its strategy and projects etc.,
in other words its business performance. Social questions are not discussed in general
assemblies, or at least they are not a priority. It is therefore sound to envisage a specific
forum for dealing with the social questions, especially as someone working in a SCOP
spends much more time as an employee rather than as an associate. Thirdly, the experience
of many cooperatives shows that the specific mandate of a worker representative or union
delegate actually creates a feeling of responsibility by people fulfilling it. Also it is not unusual
for former union representatives to sit on the company boards subsequently, and even
become managers in the firm. Along these lines, a fair number of SCOPs that have arisen
from company takeovers by their employees are in fact the results of projects initiated and
conducted by union representatives who are concerned about creating an entrepreneurial
project which pays more attention to employment and personnel than was previously the
case.
Health and safety at work
As in other action areas related to labour relations and working conditions, SCOPs standout
compared to other organisations, including cooperatives operating in health and safety at
work. There is nothing in the statutes of worker cooperatives – even in France where the
rights and attention paid to employees are particularly strong – which prescribes or pays
specific attention to health and safety at work. But for SCOPs, their objectives concern
employment, professional emancipation of associated employees, the development of skills,
the improvement of plant and equipment, all of which reflect a culture oriented towards
employees and anything that allows them to enhance individually or collectively the
professional quality of the firm. This includes the health of employees in particular, as well as
their working conditions. Fortunately, many other companies are also strongly concerned
about their employees’ welfare, especially some family businesses with significant employee
shareholdings. However given all these various situations linked to management policy or the
culture of top management, SCOPs (and all other worker cooperatives) are the only firms
whose organisational model fully incorporates health and safety considerations. This is borne
out for example by the survey conducted in France by Patrick Guiol and Jorge Munoz, two
academics at the University of Rennes, which shows that absenteeism and sick leave are
significantly lower in companies with participatory management (especially SCOPs),
compared to firms with more authoritarian management.
Human capital development
The fifth and final action area of the central issue of labour relations and working conditions
is human capital development. It includes all questions linked to training and education
viewed broadly. From a doctrinal point of view, education and training are at the heart of the
cooperative project. Legally speaking, a cooperative is a means for pooling resources, a
grouping of forces uniting in the face of competition and to achieve stronger negotiating
power upstream and downstream. But in the doctrinal and original sense, in other words the
concept which lay at the heart of the emergence of cooperatives, they exist to emancipate
their members. Education and training are part of the seven universal principles of
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cooperatives, which were updated in 1995 in Manchester: “all cooperatives provide their
members, their elected leaders, their managers and their employees with the education and
training required to contribute effectively to the development of their cooperative. They inform
the general public, especially young people and opinion leaders, about the nature and
advantages of cooperation”.
No other organisational form has the development of human capital as a key objective as do
cooperatives. Does this mean that all cooperatives have more virtuous education and
training practices than other enterprises? In any event, cooperatives do not have stronger
legal obligations in this respect, expressed in their laws and statutes, than other companies
do. Practices observed to differ markedly between countries, regions, sectors of activity, the
size of the cooperative, and the public of the cooperative: some may be exemplary in terms
of the training they provide to their members and employees, whereas others stick with the
“legal minimum”.
SCOPs and other associated worker cooperatives, by nature, pay particular attention to the
training of their employees. In France, cooperative and participative companies are linked in
a network of solidarity and dedicate part of their contributions to pooling the implementation
of services to train their employees in the rights and duties of associated members
(cooperative training). They also have a financing fund dedicated to cooperative training,
equivalent to 0.1% of their gross wage bill, on top of their legal contributions (the Form.coop
scheme). Lastly a large number of cooperative and participative enterprises dedicate more
money to training than their legal social contributions. The cooperative enterprises of
collective interest (SCICs, sociétés coopératives d’intérêt collectif) follow the same doctrine
and even practices, but in fact they provide training for a much wider public, as their
associate members may include clients, partners, volunteer workers, etc., as well as
employees.
Lastly, when discussing education and training it is also important to mention activity and
employment cooperatives (CAE, coopératives d’activités et d’emploi) which are an
emancipatory project in themselves. Born in France in 1995, the CAEs are firms with the
status of SCOPs of SCICs and which have the task of allowing persons to test a business
project in a secure environment. Specifically, the cooperative provides a project initiator with
a legal structure: it takes care of invoicing and administration to allow the entrepreneur to
concentrate fully on the development of her/his activity: it follows her/him in learning to be an
entrepreneur and finally favours such learning by organising group discussions and
exchanges with other project organisers. As soon as the first euro in turnover is generated,
the CAE signs a permanent job contract with the project organiser and once the business
has reached cruise altitude, she or he may choose to leave the cooperative to create her or
his own legal activity, or may remain within the cooperative and become an associate. In
short, the CAE acts as a business incubator and ensures wage portage.
The environment
Central question: the environment
Action area 1: preventing pollution
Action area 2: the sustainable use of resources
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Action area 3: limiting climate change and adaptation
Action area 4: protecting the environment, biodiversity and rehabilitating
natural habitats
The environment is another central question for ISO 26000. Alongside the economic and
social pillars, this is the third pillar of sustainable development. It was even originally the
most important pillar, since the concept of sustainable development was officially born in
1987 with the Brundtland Report and the examination of finding ways to hand down a
liveable planet to future generations, and the awareness of the need to adapt our lifestyles to
deal with global warming, the scarcity of resources and especially energies, and the
disappearance of species and biodiversity.
For a company, taking the environment into account therefore means developing the
sustainable use of resources, knowing how to save energy and raw materials, developing
responsible purchasing, implementing the responsible management of waste, measuring the
impact of its activities in terms of resource use, drawing the consequences entailed by
production processes, preventing pollution, implementing the precautionary principle, putting
in place awareness raising activities, systems of emergency action in case of accidents,
developing a sustainable approach to the product life-cycle and eco-design, and knowing
how to implement carbon offsetting.
Given that cooperatives emerged as a social project, they provide no particular value added
in terms of the environment compared to other organisations. This is perfectly clear in the
food and agriculture sector, where cooperatives did not escape the all-out productivity culture
of the 1960s, 1970s and 1980s. And yet, their principles and statutes are naturally inclined to
meet the needs of firms operating in environmental activities. Cooperatives are in fact well
adapted from many points of view to business projects that are concerned with the ecological
management of their operations.
First, the status of cooperatives is grounded in the idea of pursuing long-term construction, in
other words escaping from the cyclical upheavals which are typical of capitalism, as
illustrated by stock market gyrations, which in turn may make and unmake companies and
their jobs from one day to the next. By stressing the importance in their rules of building up a
capital stock which can be handed down from generation to generation, cooperatives assert
their respect for the collective interest, not just at time t, but also from a perspective which is
as sustainable as possible. This is a condition for all sustainable development projects.
The second advantage of cooperatives lies in the power given to associate members as
individuals and not in relationship to the capital they hold. This expresses itself in voting at
general assemblies, based on the principle of 1 person = 1 vote. This underpins the
collective interest and the equal opportunity for all to speak. There are no projects with an
ecological dimensional which cannot be based on this approach. By definition, ecological
problems do not fall within the private sphere. Instead they are linked to the public interest, at
a global level. It directly follows that there is no alternative to dealing with ecological
problems which does not associate all the stakeholders concerned, within a process that is
necessarily democratic. To be sure, it is the major international companies operating in oil,
nuclear energy or the car industry which invest substantial means in research and provide
populations with new energy sources or new transport solutions. Yet these companies have
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to obtain authorisation from public authorities in order to apply their solutions in the market,
given the issues of general interest at stake. In fact, the quality and nature of products and
services provided by these major multinationals are necessarily conditioned by their
obligation always to be profitable for their shareholders, without any guarantee of utility or
real value added to consumers and society. In contrast, many companies with an
environmental objective adopt a non-profit or cooperative status. This is the case of Terre
Vivante, which publishes pedagogical texts on daily “practical ecology”. It began as a nonprofit organisation before becoming a cooperative and participative company. The same is
true for Enercoop, the only and unique supplier of electricity made from renewable sources
and organised as a collective interest cooperative with the aim of associating all social actors
in this general interest objective. Clients themselves are called on to become members of the
cooperative, to be informed transparently of the evolution of the company and to express
their views and participate in the evolution of the supply of electricity in their local territory.
That is many companies operating in the recovery and recycling of waste (of all sorts), which
associate their employees with the project, but also their clients, their public and private
partners, be they organised in SCOPs or SCISs, and often also associated with a project for
reintegrating people back into the labour market who have employment and skills
weaknesses etc.
Fair practices
Central question: fair practices and good business practices
Action area 1: the struggle against corruption
Action area 2: responsible political engagement
Action area 3: fair competition
Action area 4: promotion of social responsibility in the value chain
Action area 5: respect for property rights
The fifth of the seven central questions in the ISO 26000 standard concerns fair practices
and good business practices focusing on the ethics of relations by an organisation with its
clients, its suppliers and its partners. It is broken down into five action areas: the fight against
corruption, responsible political engagement, fair competition, the promotion of CSR in the
value chain and the respect of property rights. The risks of drifting into inappropriate
behaviour mainly affect organisations working in non-democratic or insufficiently developed
countries, sometimes extreme difficulties. To do business, you need to be at least two, but
how can you work with another party, if that party lives in a country where corruption, the
abuse of authority, threats, coercion and disinformation are an integral part of the culture?
Moreover, clientelism, favouritism, pressures, capacity and corruption are also present in the
most democratic countries. They are usually denounced when widespread or when affecting
large companies and political parties. But even if they are less shocking on a small scale,
they may still occur due to the close links that may exist between entrepreneurs and local
elected officials.
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The same is true for fair competition whose scope may be interpreted more or less broadly
and more or less restrictively. A company working to help people get back into the labour
market in France may be accused of unfair competition if it receives aid for workers returning
to work, allowing the company to offer low prices. But by participating in such reintegration,
such firms help people find jobs, get skills, find a new raison d'être and dignity. The situations
are sometimes complex.
However, for the ISO 26000 standard, the demands of fair practices go further and also
involve ensuring that everyone can participate in promoting CSR in the world of work and
encouraging other organisations to adopt a CSR policy too. Lastly fair practices involve
respecting property rights which guarantee economic and physical security, favour
investment, creativity and invention. Here again, there is much to be done when one thinks of
multinationals which are buying up land at low prices that they need to exploit to obtain
resources and hence take from peasant farmers in developing countries the only assets they
have and which they have owned for centuries under customary law. More generally, all
transactions between actors with unequal levels of training and information create inevitable
risks of non-respect for the property of the weakest shareholders.
In all these areas linked to ethical behaviour in business, cooperatives are exposed to the
same risks as other companies and like them depend on the leading managers. To be sure,
the values of cooperatives are hardly compatible with the non-respect of others and the
expropriation of rights. But nothing in the doctrine, in the principles, nor the laws of
cooperatives sets out any rule of conduct in the commercial relations of the cooperatives with
their clients, suppliers or partners in general.
Questions concerning consumers
Central question: questions concerning consumers (B2C)
Action area 1: fair practices in terms of marketing, information and
contracts
Action area 2: consumer health and safety protection
Action area 3: promoting sustainable consumption
Action area 4: after sales service, assistance and claims resolution and
litigation for consumers (transparency, impartiality)
Action area 5: protection of data and consumer privacy
Action area 6: access to essential services
Action area 7: education and awareness
The sixth central question of the ISO 26000 standard deals with consumer relations. It
covers: the exactitude of information given about products and services, respect for health
and safety, promotion of responsible and sustainable consumption, protection of private data,
after sales service, satisfying basic needs, the right to choose, to be heard, the right to
compensation, the right to a healthy environment, etc. This question aims primarily at large
multinationals which distribute consumer products throughout the world into mass markets. It
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excludes a priori the very large number of companies, including cooperatives, which work
with other businesses (B2B).
Again, cooperatives are based on values of equitable service, sharing, permanency and
respect primarily for associated members and then only for other stakeholders with whom
they work. They create no intrinsic value added compared to other organisational forms in
terms of consumer protection. At the most, it could be stressed that the cooperative culture of
equitable and sustainable trading should in principle encourage respect for others and the
construction of business relationships built on reciprocity rather than the balance of power. It
is therefore probably not by chance that many of the Biocoop shops which sell organic food
are organised as cooperatives and that these Biocoop shops have opted for a cooperative
organisation of their distribution network.
Communities
and
local
development
Central question: communities and local development
Action area 1: involvement with communities
Action area 2: education and culture
Action area 3: job creation and skills development
Action area 4: development of technologies and access to technology
Action area 5: creation of wealth and income
Action area 6: health
Action area 7: investment in society
The seventh and last central question concerns communities and local development and
postulates that every organisation has a responsibility with regard to the territory in which it is
developing its activities. The first action area concerns the “involvement in the community”, in
other words, activities which reflect the territorial presence of the organisation and its
dialogue with different local actors. In terms of involvement with the community, most
enterprises act by financing sports clubs, a cultural association or some other event,
according to its available means, the interests of its managers, their local relationships and
how they may be solicited locally. In times of crisis or catastrophe, local companies are also
solicited to contribute to the safety of populations in terms of health and food.
Cooperatives act like all other businesses but also go beyond this. Respect for actors in the
territory with whom they interact, apart from the actual members of the cooperative itself, is
part of their fundamental values, and is expressed unambiguously in one of the seven
principles of the International Cooperative Alliance: “cooperatives work for the sustainable
development of their communities through the policies approved by their members”. In
France, cooperatives using agricultural machinery (Cuma) are a prime example. They have a
statutory right to dedicate up to 20% of their activity to non-members, and so participate in
the use of their equipment for the maintenance of the territory in which their operate in
partnership with local communities and municipalities.
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Moreover, the cooperative project itself is a project of “community involvement”, as it involves
bringing together several actors in the territory to work on the same economic project, as well
as to support their common development and destiny. Cooperatives have a distinct
advantage in community involvement, because it is a practice enshrined in their universal
principles. But they also have their own territorial development projects as the aim of
cooperatives is to support their members wherever they are, and help them develop at the
level of the territory, be it local, national or international.
From this perspective, cooperatives can claim to have a strong specificity in the action area
of “the creation of jobs and skills development (of local populations)”. Again, this is one of
their goals and at the heart of their identity. Cooperatives are characterised by the fact that
they are operating in a competitive environment, but that their finality is employment and
local development. This contrasts with traditional companies for which employment exists for
the benefit of shareholders, and public authorities that guarantee the public interest in all
areas, and have primarily a roll of leading change and regulating. SCOPs stand out from this
point of view as their employees are associate members, and as they develop plant and
equipment in order to provide permanency of employment. But this is also true for
cooperatives whose associates are consumers and who want to have control over their own
distribution channels by developing their own enterprises locally. Moreover, it is just as true
for cooperatives which bring together craftspersons, farmers or entrepreneurs who have
created a cooperative to face competition upstream and downstream in their production
chain and in so doing can maintain their individual business locally. For example, thanks to a
cooperative providing marketing services and a national purchasing policy, a local optician
belonging to a particular brand can continue to operate and develop locally.
The fifth action area on creating wealth and income seems to be the corollary of the action
area for employment and skills development. By definition a cooperative is a group intended
to serve its members, who are all committed to expanding their business where they are
situated and actually create a cooperative to maintain such business within a specific territory
and to develop it. Would companies have an additional responsibility to help in the creation
of wealth and income, while supporting the creation of companies beyond their own
activities? The ISO 26000 standard says nothing about this. But in this case, a cooperative
would not have any particular advantage over other types of organisation.
Similarly, in other action areas related to the central question of local development,
cooperatives have less, and sometimes even no distinctive advantage over other
organisations. The action area concerning education culture, in other words respect for the
local culture and the willingness to promote it, the importance of not infringing on the rights of
communities refers to the fifth principle of the International Cooperative Alliance on the
educational and informative role of cooperatives. However this principle has no real legal
effect and is therefore based on the culture of each cooperative and the managers running it.
And indeed, their practices concerning local communities and the environment are very
variable. In the action area linked to the development of technologies and access to
technology, as well as that concerning the reduction of the harmful consequences of its
activities on health, cooperatives again do not have any specific advantage compared to
other businesses. Lastly, concerning the more general investment in society (action area 7),
cooperatives manifest a universal culture and practices which a priori give them a distinct
advantage. But there are no legal requirements here, and no studies exist which show that
their behaviour is more virtuous than that of other organisations.
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Conclusion: the social responsibility of cooperatives has limits
A cooperative is basically a group of persons who have created a business in order to
provide each other services and be stronger together in the market, with respect to
competitors and to organise their purchases better. Over time, two main types of
cooperatives have evolved: first, those which are primarily a technical instrument for pooling
resources in the interests of members, and second, cooperatives which draw on a project for
human emancipation which goes beyond their immediate technical functions, and so follows
the ambitions of the pioneers of the cooperative movement.
With respect to members, a cooperative is undoubtedly socially responsible, as it organises
its business according to democratic governance based on equity and sharing between
members. For the last 30 years, the overall operating environment for cooperatives has been
characterised by unemployment, exclusion and deindustrialisation. Cooperatives have also
shown themselves through their governance and by their model in which capital is a means
and not an end, to be socially responsible enterprises in their territories and towards society:
the decision-making centre of cooperatives is usually based on their territory, as is their
capital, the beneficiaries of the cooperative are the decision-makers and actors from the
territory itself in which the cooperative is situated. Profits are essentially redistributed to
members and reinvested in the company. Profits kept in reserve remain the collective
property of the enterprise, thus ensuring the constitution of solid equity and the permanency
of the company. Cooperatives are all the more socially responsible with respect to their
territory, given the way profits are distributed and through the consolidation of equity aimed
at providing services to future members of the cooperative and not only for the founding
generation. Cooperatives therefore act in line with sustainable development. Moreover since
1995, the responsibility of cooperatives towards future generations, towards other
cooperatives and towards the territorial communities have been written into the seven
universal principles which guide all cooperatives.
Apart from these responsibilities towards its members and territory, cooperatives do not have
any natural vocation to be socially responsible to other stakeholders. Only work cooperatives
can claim a social responsibility towards their employees by definition, as these are also
associate members of the cooperative. Similarly only consumer cooperatives actually have a
distinctive advantage relative to clients: in fact the whole point of their existence is to bring
together consumers in a common project in which they have power to express themselves
and influence the development of the company. In terms of suppliers, cooperatives are
similar to other companies. As for the environment and ecology, cooperatives face strictly the
same imperatives as other companies and must meet the same challenges.
A summary table of the social and environmental responsibility of cooperatives
according to stakeholders and the central questions of the ISO 26000 standard
Stakeholders
Shareholders
Society, citizens
Employees
Cooperative
Yes
No
No
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SCOPs
Yes
No
Yes
SCICs
Yes
Yes
Yes
Environment
Suppliers
Clients, consumers
Community, territory
Central questions
Organisation governance
Human rights
Labour relations and working
conditions
Environment
Fair practices
Questions relating to consumers
Community and local development
No
No
Yes (coop
consumption)
Yes
No
No
No
no
no
Yes
Yes
Yes
Cooperative
Yes
No
No
SCOPs
Yes
No
Yes employees
SCICs
Yes
No
Yes employees
No
No
coop consumers
Yes
No
No
No
Yes
no
no
Yes and no
Yes
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