Profile

What makes a co-operative unique is its relationship with its customer. "A co-operative society is a business that is owned entirely by the people it serves," says Chris Smith, head of community and campaigns at the Co-operative Group.

"It is one member one vote, so decisions are made democratically." He explains that becoming a member of the Co-operative Society costs £1 and that this creates a sense of ownership. With a pre-tax profit of £365.9m in 2005, the business gave £10.8m of that to the community, or 3% of its pre-tax profit. As any other business, the company still aims to make a profit but, according to Smith, what sets it apart from other businesses is what is does with the profit.

The Co-operative Group includes food stores, travel agencies, pharmacies and funeral branches as well as a bank and an insurance business. It has 50 area committees around the country and 8 regional boards. Any member can be elected to their area committee and through this the local people have a say in how the business is run. Members can also have a national impact on decision-making regarding the business by putting themselves forward to be elected to their regional board and eventually the national board.

Community investment

Each member is issued with a membership card. Every time a member makes a purchase – be it a food item, an insurance policy, or a holiday – a dividend is saved on the card. At the end of the year this dividend is paid back to the customer, or the customer can choose to have the dividend donated to the community. This Community Dividend is distributed to the area committees and they decide on how the money is spent in their communities.

Socially responsible behaviour and corporate community involvement is not new to the company. "This is not some sort of marketing thing for us. We've been doing this for coming up to two centuries now," says Smith. "The company’s remit has always been to be part of the community," he adds. He explains that the company's brand of citizenship starts with who owns them and since the premise is that it is owned by a group of people in the community, the company has to "act in a responsible way and be part of that community".

CR management and governance

The stakeholders have a major say. So, Smith asserts, "governance is very important". The corporate affairs and social goals team consists of 12 people. This team runs all the Co-op's community campaigns and reports to a values and principles committee four times a year. The values and principles committee is made up of central board members and it, in turn, reports to the central group board of directors.

The values and principles committee has the main say in how much money is allocated to the community affairs team and allocates it in chunks as the year progresses. For 2007, the team have put forward a proposal asking for £2.7m. This amount, and the money created by the community dividend scheme, makes up the total amount of money invested in the community in a given year.
To use the money most effectively, the team is concentrating on a set of social goals – climate change, social inclusion, tackling crime, food integrity and modern co-operation – for the next three years. They do this through partnerships and a number of community programmes.

Partnerships

The Co-op partners in two ways. Firstly, the Co-operative Bank offers banking to many charities that use the Co-op because of its ethical policies. "We tell them what we do with their money and we will certainly tell them what we are not doing with their money, which is what they want to hear," says Smith. The second way in which the Co-op partners with charities is to achieve specific objectives – either in training or research.

One such partnership is with Victim Support, the charity that provides free and confidential support to people affected by crime. Staff working for the insurance arm of the Co-operative Group – Co-operative Insurance (CIS) – receive calls from people who have been victims of burglary and need information on insurance claims. Victim Support is training CIS staff on how to handle these calls and to not only offer insurance advice but also support. "Insurers are often dealing with stressed out people and people that are feeling very victimised. It is important for our staff to be able to deal with people who may be quite traumatised," explains Smith.

The Co-op has taken this partnership with Victim Support further and also collaborated on a research project about hate crime in the UK. "We get involved in tough issues that some other corporate businesses might not get involved in," Smith says.

Community programmes and volunteering

In addition to partnerships with NGOs, the Co-op is also running innovative community programmes. Climate change is the priority goal for the company and it is embarking on a schools renewable energy project, which will involve the use of renewable energy technology at local schools. The scheme will be piloted at one school in each of the Co-op's eight regions and it will involve installing wind turbines or solar panels – depending on the school's location.

Smith hopes that this will enable "the children to relate to the wind turbine and a read-out on the wall will show how much energy is put into the school's system". He goes on to say: "It becomes very tangible for the children to understand how it is working and it influences their lifestyle from a young age." The eventual aim is to roll the project out across the UK. At £1m this is the Co-op’s flagship project for 2007.

Continuing with its environmental agenda, the company is developing an initiative called Park & Stride. The objective is to allocate a drop-off point on a school bus route where parents can drop their children. The children will then walk to school along the bus route accompanied by a group of volunteers. The aim is to reduce congestion and to promote a healthy and active lifestyle.

To make the partnerships and projects work, employee volunteering is a vital. "There’s no problem getting junior staff to volunteer. They’ll dig gardens, paint churches, but quite often management and senior management don’t get involved," says Smith. To combat this, they plan to set up a "volunteering dating agency". This is a listing of available volunteer positions for senior management staff – for example, carrying out the role of treasurer on a charity board for a year. The manager will sit on the NGO board as a private individual – he or she will not represent the Co-op – however, the manager will receive acknowledgement and the Co-op could provide a budget for the charity work. This idea is in development and still needs to be approved by the values and principles committee.

According to Smith, a further challenge for the company is to develop a uniform volunteering process for its 68,112 employees. This is important because the intention is to involve all employees in community work. He says: "It is tough because if you are working in a retail shop far away from a large town or city, and there are only two or three staff employed then giving a person a day off is very difficult. So, we’ve got to find innovative ways to do it."

Taking on the challenge of employee volunteering

The company is planning to introduce an electronic mechanism that will allow staff to go online and look at volunteering opportunities in their local areas. The system will also allow the impact of the community work to be measured and recorded. It will tell the employee how much time he or she is allocated off for the volunteer work and the staff member will also be able to apply for grants from the main fund. Through this, Smith hopes, the company will encourage its staff to "do things a bit more edgy" and have "more of a legacy and a relationship" with the charity of their choice.

Ethical investment and campaigning

A further priority for the Co-op is ethical investment. In 2005, the Co-operative Bank turned away £10m worth of business for ethical reasons.

The bank has an ethical policy, which is reviewed every three years. The ethical policy stipulates who the bank will and will not finance. It is unique in the UK's retail banking sector because it contains clauses that restrict investment in certain sectors and activities. For example, in 2005, the bank denied money to 127 applications with regard to human rights and development. An issue that stands out with regard to human rights is Burma. The bank classifies Burma as an "oppressive regime" and does not provide financial services to any company with a significant presence in the country. In 2005, the CFS supported The Burma Campaign UK in producing a report, Totalitarian Oil Total Oil: Fuelling the Oppression in Burma, which argued for Total's withdrawal. The CIS has successfully convinced Deutsche Post (DHL’s parent company) to withdraw from Burma.

Elsewhere, the Co-operative Bank campaigned, in partnership with Christian Aid, for trade justice in the world's poorest countries. The bank called on the government to develop policies that would allow poor countries to choose the best solutions to end poverty; to halt the flow of subsidised exports to developing countries; and to introduce legislation that would curb corporate profiteering.

To support the campaign, the bank funded a campaigner at Christian Aid with £25,000, an international website with £13,000, and a partner campaign in the Caribbean and Africa with £11,000. It also ran an awareness-raising campaign and funded a number of lobbying and debating events, such as the Wake Up To Trade Justice vigil in Westminster. The bank's campaign reached an estimated one in three people in the UK and helped to raise customer awareness to the concept of trade justice. Other issues that the Co-op feels strongly about are animal welfare, ecological impact (such as fossil fuel extraction), and diversity (incitement of hatred and the protection of women and children).

Reporting

In a co-operative, communication with stakeholders is crucial, including the reporting of governance, NGO partnerships and community work as well as employee achievements and campaigns.

The Co-operative Group considers itself a world leader in reporting and believes that "if a report is going to be credible it can’t all be polish, spin and shine – it has to include the things that we didn’t do or the things that we are doing but have not completed yet". They have their auditing verified and then verified again. "The rigour by which we audit what we do is probably one of the best in the world," Smith adds.

This claim is backed up by the recent Global Reports 2006 Index, published by SustainAbility on November 9, in which the Co-operative Group came second. "There’s a big culture in the team that 'if you can’t measure it, don’t do it'. We are interested in measurable outcomes – what good did the money do? What got better?"

Case study - what got better?

The Co-op partnered with a Manchester-based organisation called Disabled Living. The charity supplies equipment, such as beds and baths, to people with disabilities. The charity banks with the Co-operative Bank and a partnership was formed.

The organisation told the company that there was a gap between what local authorities and social services can afford to give people and what people need. An example is of a young child who was severely disabled and qualified for a special bed. The bed arrived but without a mattress because the grant could only pay for the bed. So, the child had to continue to sleep in his old bed.

The Co-op created a fund of £25,000 to cover these extra costs but decided to measure what was happening with the grants given out. The purpose of the research was to produce an authoritative document that would indicate how the money had been used and whether lives had been made easier. This research has continued for 5 years and is a valuable way of assessing how the system and services can be improved upon.

One of the Co-op directors now sits on the board of the charity and the Co-op also looks after the organisation's PR. The Co-operative Bank still takes care of Disabled Living's banking.

The Co-op measures its support for the community by using the best practice standard London Benchmarking Group (LBG) model. This allows for the measurement of not only cash but also in-kind donations.

Conclusion

Smith believes that is the "all-embracing support for a business, which is not quantifiable in terms of costs" that makes the Co-operative Group's work in the community special and different. And 'focus' is the central ingredient. "It's more of a rifle shot in terms of our aims than a scattergun. It's not that in the past it was all scattergun but I think if you are not clear and focused about what you are about to achieve there is a risk that you won't achieve it or you won't be able to measure your impact."
So, the Co-operative Group is different because of its focused, all-embracing and impact-related approach to corporate community investment.

Biography

Chris Smith has worked for the Co-op in a variety of roles for over 27 years. He has been head of community & campaigns since 2005 and is responsible for the development of the social goals strategy in the areas of community and campaigns. Previously, Chris was involved in the application of ethical policies within The Co-operative Group and the development of the CFS Community Investment Strategy. He is chairman for The Co-operative Family Credit Union and is also the director of The Community Foundation for Greater Manchester, entirely as a volunteer. He has also led Co-operative Bank research projects, most recently Would You Credit It?