Co-op: A century of values

By Matt Henkes, staff writer

Reputation is critical in today’s ethically sensitive commercial environment. But for some firms, it has always been a priority.

Co-op has traded under the ethos of ethical operation since its inception over 100 years ago. It stated aims include “to be open, responsible and rewarding, putting co-operative values & principles into everyday practice” and “to enhance the lives of our people, members, customers and the communities in which we trade.” Of course, maintaining these goals is an ongoing project, and operational changes within the company demand special care and attention.

Its business is multifaceted, including 1,713 retail food stores, 372 pharmacy outlets, a range of internet travel services, a farming division and a funeral service; not to mention Co-op Financial Services (CFS), an the array of insurance, financial and investment companies.

Until recently the retail and financial arms of the business had their own, separate sustainability teams, with the financial team having achieved particular recognition from the United Nations Environment Programme for its high quality sustainability reporting. However, six months ago the teams merged.

This raised the challenge of ensuring that Co-op’s comprehensive social responsibility strategy would be maintained at all levels of the diverse range of group businesses. As sustainability reporting manager for the group, Jayne Beer has been wrestling to ensure that the social ethic continues to be consistently deployed in the new structure.

“The challenge that we’ve had is looking at things from a different perspective. Rather than taking each business by itself, we’ve had to look at it overall,” she says. “We needed to set an overarching social goal strategy for the group as a whole. That’s what will provide the focus for our activity.”

Sound sourcing

She admits that the majority of Co-op’s focus, in terms of sustainability, is on its food retail business. “That’s not to say that we’ve ignored our specialist retailers. They all have their own issues. It’s just that food retail makes up the vast proportion of the challenges we face in terms of sustainability. So in these early days, that’s where our main focus is.”

The retail division sources its products from locations around the world, and puts itself under pressure to deal only with “ethical” companies. It undertakes site assessments on partner premises around the world, checking on the practices of the organisations it works with and making sure they are in compliance with the group’s “sound sourcing code of conduct”.

However, non-compliance does not automatically mean that a company is de-listed. Co-op says that when problems are found, it is much better for the business concerned, not to mention its employees, if the supplier is retained, but its behaviour improved.

“An audit can identify a number of required corrective actions,” says Beer. “These could be anything from making sure health and safety displays are written in the local language, to ensuring that individuals working in a specific factory are of a certain age and above.”

“A list of necessary actions will come out of an audit, and the idea is that we then continue to investigate them. What we’re reporting on currently is how many of those non-compliances occur, and then what we’re actually doing in terms of following them up.”

“We’ve learned that it can be very difficult to influence manufacturers,” she says. “If you, as an organisation, only take a small proportion of a particular supplier’s goods, it’s actually quite difficult to influence what they’re doing on the ground. The fact that you’ve identified a problem may not be an issue to them.”

Co-op is now one of the 6,000 companies around the world using the Supplier Ethical Data Exchange (SEDEX), which allows firms to share data on labour practices at production sites in order to drive improvement in their working practices.

“In this respect, we’ve found that working collaboratively with other companies can be very useful. That’s one of the reasons why we participate in the SEDEX; so there can be some shared learning, bringing shared pressure on suppliers to influence the way they operate.”

Balancing the cost of ethics

Elsewhere, the financial side of the business works under a policy not to invest in companies which are in conflict with its ethical policy. For instance, it would not invest in a business involved in the production of fossil fuels.

“Co-op Bank has a customer led ethical investment policy which dictates who it will and will not accept investment from,” says Beer. “We publish each year how much investment has been declined as a result of this. The headline figure is quite large, somewhere around £10m that we’ve turned away.”

However, she argues that this makes sense in business terms. “On the other side, around a third of our private and corporate customers are attracted to the bank because of the ethical policies,” she says. “So if you look at the business equation, the amount of business gained outweighs the cost of money declined.”

Co-op claims to prioritise and report on issues of climate change, waste, packaging and biodiversity. It says it aims to maintain its UK leadership in terms of climate change, and has its sights set on the top spot in the area of waste.

Following the merging the Co-op’s two sustainability teams, the group took on CFS’ environmental approach, known as “The Natural Step”, a Swedish school of thought aimed at improving the way individuals and organisations move towards ecological and social sustainability.

“In simple terms this means recognising that there are limits beyond which you can’t operate,” explains Beer. “Climate change has been one of our key focuses in terms of social strategy. We have done an awful lot already.”

Embedded values

In 2005, the company claimed to have sourced 98 percent of its energy needs from “good quality renewable sources”, saving 292,578 tonnes of carbon from being released into the atmosphere. “The challenge here will be retaining this level,” says Beer. “With more and more companies buying up renewable energy, there is only a finite supply of green electricity, so competition for purchase is growing.”

“One of things that we’ve looked at is to ensure that we’ve made progress in creating renewable sources of energy ourselves.” The company has invested in solar power schemes at its CIS tower in London, and is in the process of creating a wind farm on a section of its farmland. “This is a very public way of demonstrating to people that we can produce our own electricity,” adds Beer.

The history of Co-op seems to have lent itself to the creation of a successful CSR strategy. “It goes right through,” says Beer. “If you think of the way Co-op is structured, we are completely different from our competitors. I think our ethos pervades working life on a daily basis. Completely different, I would imagine, from our competitors.”

“We’ve always had something,” she adds. “It’s just not necessarily always been called CSR. If you look at the Co-operative values and principals, that’s very much what modern day CSR is. So in many respects we’ve been doing this for over a century, it’s just that while the name-tag may have changed, the emphasis hasn’t.”

She agrees that this may be the reason for some of the recognition the company has enjoyed as a result of its sustainability reporting. “The reality for many other companies is that CSR is still a bolt-on,” she says, “a veneer. Whereas the nature of our company means it is truly embedded in our day-to-day operations.”