Co-operatives key to achieving UN’s sustainability targets

Co-operatives key to achieving UN’s sustainability targets

Sudanese refugees in Iridimi Camp in Chad, whom Secretary-General Kofi Annan visited today.

In this comprehensive report, Cooperative Business NZ Chief Executive Craig Presland outlines how co-operatives are pivotal to achieving the United Nations’ Sustainable Development Goals (SDG’s) by 2030. He concludes by sharing three recommendations to sustain the positive momentum.

Introduction

The Sustainable Development Goals (SDG’s) were set by the UN in 2015 and are the blueprint to achieve a better and more sustainable future for all. They address the global challenges that we face, including those related to poverty, inequality, climate, environmental degradation, prosperity, peace and justice.

The Goals interconnect and in order to leave no one behind, it is important that we achieve each Goal and its respective targets and milestones by 2030.

It is widely recognized that the co-operative business model, with its underlying strengths of endurance and economic, environmental and social sustainability, is the most closely aligned towards supporting the UN in achieving these Goals.

“We are now just over a decade away from reaching the set date for the targets and milestones to be met and I thought I would research some the progress and contributions that co-ops have made globally. I focus on the first eight of the 17 SDG’s while also providing some brief notes on sustainable natural resource management. I then conclude by providing some recommendations.”

As background, over one billion people are involved in co-operatives in some way, either as members/ customers, as employees/participants, or as both. That’s 12% of the world’s population. Co-ops employ at least 280 million people worldwide – that’s 10% of the employed population.

The livelihoods of nearly half the world’s population have been estimated as being made secure by co-operative enterprise. The world’s largest 300 co-operatives currently have collective annual revenues of just over USD 2.0 trillion.

As value-based and principle-driven organizations, co-operative enterprises are by nature a sustainable and participatory form of business. They place emphasis on job security and improved working conditions, paying competitive wages, promoting additional income through profit-sharing and distribution of dividends, and supporting community facilities and services.

Co-ops foster democratic knowledge and practices, as well as social inclusion, making them well-placed to support the achievement of sustainable development.

Co-operatives have also shown resilience in the face of the economic crises.

“Co-operatives are well-placed to contribute to sustainable development’s triple bottom line of economic, social and environmental objectives, not least because they are enterprises that seek to meet the economic progress of members while satisfying their socio-cultural interests along with protecting the environment. They offer an alternative model for enterprise, with contributions to sustainable development well beyond job creation.”

A co-operative is defined as ‘an autonomous association of people united voluntarily to meet their common economic, social and cultural needs and aspirations through jointly-owned and democratically-controlled enterprises’.

Goal 1, No poverty

There is a widely held consensus, including among the United Nations, the International Labour Organization, and the International Co-operative Alliance, that the co-operative enterprise is the type of organization that is most suited to addressing all dimensions of reducing poverty and exclusion.

“The way co-ops help reduce poverty is important – they identify economic opportunities for their members; empower the disadvantaged to defend their interests; provide security to the poor by allowing them to convert individual risks into collective risks; and mediate member access to assets that they utilize to earn a living.”

For instance, while savings and credit co-operatives (SACCOs) facilitate their members’ access to financial capital, agricultural co-ops help farmers access the inputs required to grow crops and keep livestock, and help them process, transport and market their produce.

Similarly, consumer co-operatives make it possible for their members, and society at large, to access good quality household supplies such as food, clothing, and other products at affordable prices. Such services help pull members out of poverty.

Agricultural co-operatives are well recognized for their poverty reduction efforts:

  • In Tanzania, improved co-operative marketing of agricultural products such as milk and coffee has meant that co-operative members can afford fees for education of their children;
  • In Egypt, four million farmers derive income from selling agricultural produce through agricultural marketing co-operatives; and
  • In Ethiopia, 900,000 people working within the agricultural sector are estimated to generate most of their income through their co-operatives.

SACCOs also contribute to poverty reduction:

  • In Kenya, development loans have been used to buy land, build houses, invest in businesses and farming, and buy household furniture;
  • In Ghana, members frequently obtain loans from the University of Ghana Co-operative Credit Union to support informal businesses that supplement their wage income;
  • In Rwanda, members of a co-operative and trade union for motorcycle taxi drivers used loans to buy their own motorcycles, instead of paying extortionate daily rental fees; and
  • In Tanzania and Sri Lanka, multi-purpose and SACCOs enable members to receive small loans to support their own self-employment through retail shop-keeping, farming or keeping livestock, and provide working capital and loans to grow small businesses.

“Co-operatives also contribute to poverty reduction by providing employment (10% of world employment), livelihoods and wide variety of services.”

Goal 2, Zero hunger

“Food security and good nutrition are key drivers in reducing hunger. Co-operatives contribute to food security by helping small farmers, fishers and other producers to solve many challenges that confront them in their endeavours to produce food. Farming and agriculture are where the co-operative business model is most widely utilised. Co-operatives together have an estimated 32 per cent of the global market share in this sector.”

Challenges faced by small agricultural producers often include remoteness and lack of access to information about food prices on national and international markets; access to high-quality inputs and variable costs of buying seeds and fertilizer; access to loans to buy these inputs; and lack of transport and other infrastructure in rural areas.

Agricultural co-operatives help farmers overcome these obstacles by offering their members a variety of services such as group purchasing and marketing, input shops for collective purchases, warehouse receipt systems for collective access to credit and market outlet.

Co-operatives build small producers’ skills, provide them with knowledge and information, and help them to innovate and adapt to changing markets. Importantly, they facilitate farmers’ participation in decision-making processes and help small producers voice their concerns and interests. They also increase their negotiating power to influence the policy-making processes.

“For their part, consumer co-operatives facilitate access to safe food. Diversification of household food supply, for example by dairy co-operatives, has improved nutrition as well as incomes.”

Goal 3, Good health and well-being

Co-operatives ensure healthy lives by creating the infrastructure for delivering healthcare services; financing healthcare and providing home-based healthcare services to people living with HIV/AIDS, among others.

“Healthcare co-operatives include worker co-operatives that provide health services, patient or community co-operatives that are user-owned, and hybrid multi-stakeholder co-operatives. They can provide anything from homecare to full-scale hospitals.”

The International Health Co-operative Alliance estimates that there are more than 100 million households worldwide that are served by health co-operatives.

  • Across Canada, there are more than 100 healthcare co-operatives providing mainly home care to more than a million people spanning its eight provinces.
  • In Japan, more than 125 medical co-operatives serve nearly three million patients.
  • In Sri Lanka, health co-operatives are often spin-offs to provide healthcare and hospitals to members of consumer and agricultural co-operatives.
  • In the United States, health care co-operatives operate hospitals and clinics, such as the Group Health Co-operative of Puget Sound with 650,000 members, 30 medical facilities, and 9,500 employees including 1,000 physicians.
  • In Nepal, co-operatives offer members primary health care services at a low annual family fee.
  • Pharmacy co-operatives in Turkey give members access to genuine and affordable medicines.

Financing healthcare is an important role of co-operatives:

  • In the US, healthcare co-operatives are among the most popular types of healthcare insurance, owned by the policyholders.
  • Co-operatives that do business under the fair trade label in Africa, such as the Oromia Coffee Farmers Co-operative Union in Ethiopia, often use fair trade rebates to provide public health and healthcare services in remote areas.
  • HIV/AIDS home-based care services are provided by co-operatives in Kenya, South Africa, Tanzania, Lesotho and Swaziland, as well as parts of Asia.

Goal 4, Quality education

Co-operatives support access to quality education and lifelong learning opportunities by providing the means for financing education; supporting teachers and schools; establishing their own schools to provide quality education to both youth and adults; and by serving as centres for lifelong learning.

“Co-operatives play a significant role in facilitating access to education by increasing household incomes, which translates into the ability to meet educational costs.”

Cooperatives can also be a direct source of educational finance:

  • In Kenya, the main type of back office loan offered by most SACCOs is for paying school fees, and
  • This trend has been documented similarly in other African countries such as Ghana, Nigeria, Cape Verde, and Uganda.

Where local governments have been unable to provide school infrastructure, co-operatives have often filled the gap to build and support local schools.

In Ghana and Ethiopia, rebates from fair trade have been used by multi-purpose co-operatives to finance social projects, including construction of classrooms and improving infrastructure in primary schools.

Support in other cases has included developing financial skills of youth and encouraging saving habits, scholarships to members’ children to attend school and higher education, organizing educational competitions, funding equipment and stationery, and maintaining libraries.

“Co-ops are increasingly getting involved in direct provision of quality education by setting up their own schools, enabling students to access secondary education in remote areas of Tanzania, for example.”

In the UK, the Manchester-based Co-operative College has established democratically driven co-operative trust schools, with a strong commitment to social justice and moral purpose.

Lifelong learning is provided to members through skills training and knowledge development by many co-operatives, as well as literacy and numeracy for never-schooled members.

Goal 5, Gender equality

“Co-operatives are contributing towards gender equality, by expanding women’s opportunities to participate in local economies and societies in many parts of the world.”

In consumer co-operatives, most members are women, e.g. in Japan, women represent 95 per cent of membership and have gained a place in the governance structure of their co-operatives.

Women are also showing a strong presence in worker co-operatives.

  • In the Spanish Confederation of Worker Co-operatives (COCETA), 49 per cent of members are women, with 39 per cent having directorial positions, compared with six per cent in non-worker owned enterprises.
  • In Italy, 95 per cent of members in the workers’ co-operatives in the fashion industry are women.

Women also form their own co-operatives:

  • For example, the agri-tourism women’s co-operative To Kastri in Greece, and
  • The Benkadi women’s co-operative in Mali, formed in response to difficulties in getting good prices for their produce and access to capital.
  • In India, women’s co-operatives offer self-employment opportunities that can contribute to women’s social inclusion and empowerment, and
  • In the Arab states, they expand women’s access to economic opportunities and public life.
  • Women have been empowered to take up leadership roles, set up their own management committees and organize welfare activities through co-operatives in both Tanzania and Sri Lanka.

Challenges do exist nonetheless: women tend to be marginally represented in traditional cash/export crop-related co-operatives e.g. coffee, cocoa, cotton, tobacco, in which crop ownership is mostly male.

“Women are more numerous and rising in sub-sectors such as fruits, spices, cereals and dairy, where land ownership is less critical and capital requirements lower.”

In larger financial co-operatives, women tend to be in the minority, while in smaller saving and credit co-operatives with micro-finance schemes, such as Bangladesh or Philippines, women are more likely to be in the majority.

Goal 6, Clean water and sanitation

“Co-operatives are increasingly involved in facilitating access to clean water and sanitation services to make up for the failures of both the public and private sectors.”

Co-operatives have provided alternative ways for urban communities to get clean water and safe sewerage services.

  • SAGUAPAC in the Bolivian city of Santa Cruz, for example, is the largest urban water co-operative in the world, with 183,000 water connections serving 1.2 million people, three-quarters of the city’s population, with one of the purest water quality measures in Latin America.
  • In the Philippines, water shortages due to El Niño, managerial problems and financial losses due to corruption and politicking led the Municipal Council of Binangonan city to allow co-operatives to provide water services. Water co-operatives set up water delivery systems in their neighbourhoods.

Water cooperatives also provide remote locations that would otherwise have no service.

  • In the panchayat of Olavanna in India, acute drinking water shortages in the 1990s led to 70 drinking water co-operative societies by 2012, providing water to more than 14,000 households in the region.
  • In Africa, co-operatives in Ghana, Ethiopia and South Africa have used fair trade rebates to drill boreholes and establish local groups for maintenance.
  • In the US, co-operatives are the most common organizational form of water provision in small suburban and rural communities, formed to provide safe, reliable, and sustainable water service at reasonable cost. There are about 3,300 water co-operatives in the US, providing water for drinking, fire protection and landscaping irrigation, and often wastewater services.

Sanitation has also been addressed by co-operatives, as part of providing shelter and upgrading slums.

  • In India, the National Co-operative Housing Federation (NCHF) has mobilised the urban poor in more than 92,000 housing co-operatives, with a membership of over 6.5 million people, constructing and financing 2.5 million housing units, 75 per cent of which for low income families.
  • In Ankara, Turkey, an alliance between the municipality and the union of housing construction co-operatives has supplied housing for 200,000 low and middle income people, and kept down selling and rental prices in the Ankara housing market.

In Africa, too, the National Housing Co-operative Union (NACHU) in Kenya has been at the core of the Slum Up-grading Programme, organizing slum dwellers into co-operatives and helping them acquire decent houses.

Goal 7, Affordable and clean energy

Energy co-operatives are contributing to the achievement of the sustainable energy goals of energy access, energy efficiency, and reduced emissions.

“Co-operatives are visible in facilitating access to sustainable energy, where they are playing a significant role in generating electricity and distributing it to consumers. They are also leading the way to the adoption of new and renewable energies like solar and wind power in many parts of the world.”

Best known are the rural electrification co-operatives that have provided electricity to rural populations in many countries, both developing and developed.

In the US, these consumer-owned utilities purchase electric power at wholesale prices and deliver it directly to the consumer. There are 864 distribution co-operatives delivering 10 per cent of the nation’s total kilowatt-hours of electricity and serving 12 per cent of electricity consumers, 42 million people – mainly in rural areas where the return on expensive infrastructure investment was not high enough to attract investor-owned utilities. For this reason, they own and maintain 42 per cent of the nation’s electric distribution lines, covering 75 per cent of the land mass.

Generation of renewable energies has also been taken up by co-operatives.

  • In the UK, a co-operative is selling charcoal and briquettes made from recycled materials, using an anaerobic digester to power the factory. More than 30 renewable energy co-ops were registered in the UK between 2008 and 2012, including solar power co-ops in London and Bristol.
  • According to the German Co-operative and Raiffeisen Confederation (DGRV), 158 out of 250 new co-operatives formed in 2011 in the energy sector operate in renewable energy, and between 2006 and 2011, 430 new energy co-operatives were formed.
  • Co-operatives Europe has set up a working group on energy and environment to promote the role of co-operatives in renewable energy.
  • In developing countries, success stories include a biomass-based power co-operative in Karnataka, India.

A major challenge facing energy co-operatives is the high capital outlay required, so public-private partnerships could be explored.

Goal 8, Decent work and economic growth

Co-operatives play a significant role in employment creation and income generation with more than 280 million jobs existing in co-operatives globally – 10% of world employment. Co-operatives are able to impact on employment as follows:

  • They employ people directly;
  • Indirectly, they promote employment and self-employment through creating marketing and supplier opportunities while improving economic conditions;
  • As a spillover effect to non-members whose professional activities are closely related to transactions with co-operatives (such as tradesmen or input suppliers).

“Recent evidence has found that employment in employee-owned enterprises, such as worker-owned co-ops, is less likely to be negatively affected by cyclical downturns and that these enterprises had greater levels of employment continuity during difficult training conditions.”

A recent UNRISD study examined four case studies that showed that enterprises organized and behaved according to co-operative principles – by which democratic control goes together with joint ownership – are better able to weather the brunt of a crisis and even increase employment over such periods. This study suggests some reasons for this success:

  • In the short term, co-operatives are member-based so rather than shedding labour, they think of new activities (productivity, exports, restructuring).
  • Members are aware of an imminent crisis and can prepare for it, due to democratic structures and information-sharing in real time.
  • Since decision-making is participatory and income gaps smaller among members, worker co-operatives are more able to take hard decisions that are seen as legitimate.
  • In the long term, co-operatives build pension and education mechanisms for members and target community needs with a long-term vision.

“An increasing body of evidence suggests that employee-owned businesses also outperform economically in normal times compared with non-worker-owned enterprises, with higher financial returns and greater productivity.”

Research in the US has found a consistent positive relationship between employee-ownership and labour productivity. Past research across a number of countries within a range of different sectors suggests that employee-owned businesses provide higher financial returns, greater productivity levels, and higher levels of employment stability.

Other contributions to livelihoods and equitable growth documented for co-ops include income security, jobs for rural communities, strengthening farmers’ position in the value chain, employment in diverse sectors of the economy, spillover effects on employment, provision of infrastructure and other services, and social inclusion.

“Evidence from around the world shows the contributions co-ops have made in promoting decent work and providing income security, especially among those previously excluded.”

Sustainable natural resource management

Co-operatives contribute to the sustainable management of natural resources in a variety of ways, including providing forums for local people to find solutions to environmental change by defining their property and user rights, managing natural resources, and diversifying their economic activities to embrace green economic ventures.

Many co-operatives encourage more responsible patterns of consumption along with social and economic accountability values as normative practices in the co-operative model of doing business.

“Sustainable agricultural co-operatives diversify their activities to include water management, tourism, production of quality regional foods and organic farming. They respond to the pressures of high-tech agriculture and environmental regulation concurrently.”

In Italy, “social co-operatives” provide maintenance of public green spaces, urban waste collection, urban sanitation, installation of solar panels, waste prevention and re-use of packaging materials.

In developing countries, thousands of waste-pickers work in poor conditions and contribute significantly to cleaning up the environment but lose profit to middlemen who sell recyclables to industry. Waste-pickers have now developed co-ops in over 10 countries to increase incomes and help clean up the environment.

The Netherlands has more than 125 environmental agricultural co-operatives. They allow Dutch conservation agencies to develop environmental management contracts with groups of land managers, so that landscapes can be worked whole instead of piecemeal.

In the Fryslan Woodlands in the early 1990s, for example, farmers were concerned that small-scale farming could not remain viable with pressure to lower production costs while increasing environmental rules and regulations on soil pollution were in place. Environmental co-operatives became a means for farmers to self-regulate and develop locally effective means to realize environmental objectives in their farming.

Summary

Co-operatives are central to the realization of sustainable development around the world. There is a widely held consensus among many, including the United Nations, the International Labour Organization, and the International Co-operative Alliance, that the cooperative enterprise is the type of organization that best meets all dimensions of reducing poverty and exclusion.

“This is because the way co-operatives help to reduce poverty is important – they identify economic opportunities for their members; empower the disadvantaged to defend their interests; provide security to the poor by allowing them to convert individual risks into collective risks; and mediate member access to assets that they utilize to earn a living.”

Co-operatives are contributing towards gender equality, not just by increasing female membership, but by expanding opportunities for women in local economies and societies in many parts of the world.

They support access to quality education and lifelong learning opportunities by providing the means for financing education; supporting schools; establishing their own co-op schools to provide quality education to both the youth and adults; and by serving as centres for lifelong learning.

Co-operatives ensure healthy lives by creating the infrastructure for delivering healthcare services; financing healthcare and providing home-based healthcare services to people living with HIV/AIDS, among others.

Co-operatives contribute to food security by helping farmers, fishers and other agri-producers to solve numerous challenges that confront them in their endeavours to produce food.

Co-operatives are increasingly involved in facilitating access to clean water and sanitation services to make up for the failures of both the public and private sectors.

Energy co-operatives are contributing to the achievement of the sustainable energy goals of energy access, energy efficiency, and reduced emissions.

Co-operatives play a significant role in employment creation and income generation, with more than 280 million jobs worldwide.

Recent evidence has found that co-operatives are more resilient and perform better during financial and economic crises.

Whereas environmental co-operatives are spearheading the sustainable management of natural resources for posterity, the co-operative business model can easily provide the framework for equitable participatory processes that guarantee transparency and accountability in co-operation with communities, governments, businesses and other stakeholders to realize sustainable development.

“In the aftermath of violent conflict in many places around the world, co-operatives have often emerged as sources of ‘positive social capital’, fostering a strong sense of community, participation, empowerment and inclusion among its members and restoring inter-personal relationships and peace. Women’s co-operatives have been especially active as brokers of peace and development.”

Finally, co-operatives also contribute to the creation of a global enabling environment to chaperone sustainable development by bridging the trading divide between the developed and developing world; stabilizing financial systems during crises; and providing the base for financial deepening globally.

RECOMMENDATIONS

For all these reasons, co-operatives can be seen as an inherently sustainable business model, with their “triple bottom line” of social, economic and environmental sustainability. To this end I recommend the following leading up to 2030:

  • The United Nations should continue to recognize the important role of co-operatives in the realization of sustainable development by including co-operatives in the indicators, targets and funding mechanisms for the UN’s 17 SDG’s.
  • Co-operatives should be proactive by getting involved in discussions at all levels (local, national and international) on the UN’s 17 SDG development agenda in order to secure the opportunity to share their experiences on the realization of sustainable development, NZ included.
  • National, regional and international co-operative organizations should enhance their representation and advocacy roles to improve the presence and voice of co-operatives within the UN’s 17 SDG agenda, NZ included.