Abstract
The chapter elaborates on the strategic role of performance indicators in support of transformation to sustainable socio-ecological-economic systems. Given the purpose and identity of cooperatives, their impact on fair income distribution, promotion of economic democracy, and de-commodification of necessities and fictitious commodities (Polanyi, K. (Polanyi, K. (1944 [2001]). The Great Transformation. Farrar & Rinehart [Beacon Press]. [2001]). The Great Transformation. Farrar & Rinehart [Beacon Press].), we consider their contributions to the requisite radical imagination and the different institutional logic needed for a transformative change of the system. The intersection between the cooperative model and the Economy for the Common Good (ECG) approach to measures of performance is examined as an example of values-based indicators. The chapter points out the need to use context-based indicators with thresholds and allocations (McElroy, M. (McElroy, M. (2015). Science- vs. Context-Based Metrics – What’s the Difference? Sustainable Brands. https://sustainablebrands.com/read/new-metrics/science-vs-context-based-metrics-what-s-the-difference). Science- vs. Context-Based Metrics – What’s the Difference? Sustainable Brands. https://sustainablebrands.com/read/new-metrics/science-vs-context-based-metrics-what-s-the-difference), in order to appropriately assess sustainability. It also proposes that cooperative goals and purpose can set the sustainability benchmarks for social indicators.
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1 Increasing Pressure to Measure Sustainability Performance
Governance of a democratic organization is a system which steers it in the direction set out by the purpose envisioned by its members. Performance indicators are often used as “traffic lights” guiding the enterprise leaders in the right direction, making sure they execute its strategy. A lot has been written in the last few decades about business performance indicators that go beyond the financial statements, especially as the sustainability agenda has come to the fore, and businesses have been identified as key stakeholders in securing sustainable economies and societies. External pressures to measure and report practices leading to sustainable business operations from the triple (economic, environmental, and social) perspective (Eklington, 2018) have led to an explosion of frameworks and metrics to deliver on the triple bottom line. Increasingly, sustainability is considered to be a sound business strategy (Whelan & Fink, 2016), with a massive drive for impact investingFootnote 1 adding pressure to measure and disclose the impact of business operations on the environment and society, quite aside from the financial outcomes.
Value creation, instead of value extraction, has become the mantra that shifts attention from shareholders to stakeholders as beneficiaries of business operations. Further, international accounting standards setting agencies, such as the ISSB (International Sustainability Standards Board, as a construct of IFRS—International Financial Reporting Standards) and EFRAG (European Financial Reporting Advisory Group, commissioned by the European Union) are creating sustainability standards and indicators for ESG (Environment, Social, Governance) reporting.
Social and solidarity economy (SSE) enterprises, including cooperatives, are not immune to these pressures, much as they seem not to need to prove anything to their members, as democratic, self-help organizations. Yet, partly due to isomorphism; partly regulation, standards setting agencies, and external societal pressures; and partly the distance of members from the operations, cooperatives are called upon to show what they are worth to their members and what they contribute to sustainable futures (see Herbert et al., 2016).
While democratic organizations in the social economy have always been recognized as “social” enterprises due to their associative nature, the new measurement wave has been fuelled externally by the rapid growth of interest in social entrepreneurship, social enterprise, and impact investing in recent years (Salathe Beaulieu, 2019). Cooperatives are not immune to such external pressures, particularly regulatory demands and the need to access social finance and patient capital. Further fuelled by the quest for legitimization of the cooperative model, as the leading model in a (ethical) values-driven economy contributing to the Sustainable Development Goals (SDGs), pushes cooperatives to report on their social and ecological impact.
For cooperatives, adherence to a well-defined Identity Statement (purpose, values, and principles) is claimed to be the driving force in achieving sustainable outcomes (Dale et al., 2013). Therefore, Key Performance Indicators (KPIs) and tools to assess adherence to the cooperative principles and values have also been developed (Brown et al., 2015).
Further, under the increasing pressure of climate change, government regulation, and consumer demands, businesses are either integrating sustainability into their business strategy or, in some cases, sustainability is becoming the strategy (Beishenaly & Eum, 2021; Whelan & Fink, 2016). The evidence suggests that many cooperatives do not produce sustainability reports; however, sustainable practices and contributions to SDGs are embedded in the purpose of cooperative businesses (Beishenaly & Eum, 2021).
We conjecture that cooperatives can be agents for socially just and equitable transformation toward sustainability, by means of their very structure and purpose. Cooperative governance is the key component in materializing this transformational role. To fulfill this role, what cooperatives measure and report will make a difference in their strategic direction.
In what follows we first address what is meant by “transformation” in the literature, followed by transformational characteristics of the cooperative model of enterprise. Environmental and social indicators fit for a transformation agenda are discussed in the next section, and some frameworks and examples conclude.
2 Transformation Toward Sustainability
Patterson et al. (2017) outline four complementary conceptual approaches to transformations to sustainability in the literature. They differentiate between: (i) the transitions approaches (socio-technical and transitions management perspectives); (ii) social-ecological transformations; (iii) sustainability pathways; and (iv) transformative adaptation approaches.
The socio-technical transitions perspective explores societal changes as a multi-level process of disruptions forming multiple paths of change, while the transitions management perspective draws on systems thinking and the complex adaptive systemsFootnote 2 nature of transition. The social-ecological systems approaches are also based on complex adaptive systems theory, but they highlight transformability as a key property of social-ecological systems, alongside resilience and adaptability (Patterson et al., 2017; also see Miner, Chapter 13 in this volume). Transformability implies the ability of the system to create a “fundamentally new system” when the existing one becomes unsustainable (Patterson et al., 2017, p. 6). Sustainability pathways, the third approach to transformation in the literature, is about the diversity of interests and challenges involved in the transformation. According to Patterson et al. (2017), this approach has been broadened by the “insights from social-ecological resilience thinking on planetary boundaries,” which frames transformations toward sustainability as navigating between the two thresholds: the minimum social foundations on the one hand, and the upper limit of planetary boundaries on the other (Raworth, 2017; Rockstrom et al., 2009; Steffen et al., 2015). Lastly, the transformative adaptation approaches advocate fundamental structural and paradigm changes to remove the root causes of unsustainable socio-ecological systems. Systemic causes of social vulnerabilities need to be addressed by social action for change (Patterson et al., 2017). To the latter point, it is increasingly being recognized that sustainability and social equity are not separable (Leach et al., 2018).
Of interest from the governance dynamics perspective we discuss in this chapter, Scoones et al. (2020) focus on the processes that drive transformation, and differentiate between exogenous drivers and deliberate social action. The latter approaches recognize social agency in three specifically diverse, but overlapping and complementary, ways: from instigating structural change, to systemic approaches, and the enabling approaches to transformation. Table 14.1 (Scoones et al., 2020, p. 68) describes these different and complementary lenses.
The applicability to the cooperative model of diverse ways to express deliberate social action spans the three interrelated areas (Table 14.1), in our view. As agents in the social economy, cooperatives often organize in order to affect the distribution channels and the supply chains, as well as address social and economic inequities. Their democratic character speaks to the deliberation processes in both their strategy and operations. Cooperatives are embedded in local communities, and aimed at empowering their members, by definition. Regarding systemic changes, we explore the effect of choosing the appropriate types of measures of success as a mechanism to instigate transformation.
3 Transformative Nature of the Cooperative Enterprise Model
Businesses are seen as key actors and necessary partners on the path to sustainability since they have been the main contributors to environmental degradation and social inequity. Transforming the purpose and modus operandi of business operations is therefore an integral, if monumental task on the road to “more sustainable and equitable global futures” (Patterson et al., 2017, p. 2). Underscoring that sustainability is a macro-level global issue in need of policy changes, coordination, and partnerships, we take a look at the cooperative model of enterprise and its broader networks (micro and meso levels) as a building block of sustainability from different interconnected perspectives (Scoones et al., 2020, Table 14.1 above). As an enterprise form with a radically different logic compared to an investor-owned corporation, cooperatives offer a transformative perspective on economic activity (see Novkovic, 2021).
Structurally, capital is not the controlling input, nor the residual claimant.Footnote 3 Enterprise ownership is in the hands of the members who use the enterprise for work, or as consumers and/or producers (see Novkovic & McMahon, & Novkovic et al., Chapters 2 and 4 in this volume, respectively). They depend on usus-fructus property rights with collective rights of disposal shared by the members through democratic control (ICA Guidance Notes, p. 39). The cooperative enterprise is therefore people-centered, jointly owned, and democratically controlled (Novkovic & Miner, 2015, 2019; Novkovic, 2021). Income distribution is linked to the contribution to operations of the enterprise, whose purpose is a broader provision of the common good and shared prosperity. Cooperatives often transform the distribution channels by staying local, using cooperative networks and supply chains, purchasing products at fair trade prices, and striking direct relationships with the suppliers and consumers. This relational logic deploys trust and reciprocity as key mechanisms of exchange (Zamagni, 2014).
From the “enabling” perspective (Scoones et al., 2020), cooperatives are grassroots organizations which often serve as tools for social movements to organize economic activity (Novkovic & Golja, 2015; Vieta, 2020). Collective action and democratic governance of cooperatives speak to the enabling structure of this enterprise form. Cooperatives are associations of people who engage in collective entrepreneurship to address their common needs, and, as such, enable individuals to address social and other injustices they face. They may also proactively seek to address ecological and climate injustice.
At the microeconomic level, then, cooperatives can contribute radical imagination and a different institutional logic to the transformation agenda, particularly as transformation includes “structural, functional, relational, and cognitive aspects of socio-technical-ecological systems” (Patterson et al., 2017, as cited in Scoones et al., 2020, p. 65), of which economic systems are a component part. Co-ops are perceived to be a multigenerational asset, rather than a profit-making commodity, turning the purpose of an enterprise on its head. Arguably, then, the indicators used to measure performance can serve as the “nudge” to steer the complex system toward normative goals.
4 What Do Cooperatives Need to Measure?
To achieve the humanitarian, ecological and technological visions encapsulated in the SDGs, transformation will be required at multiple scales and organizational levels, and with deliberate normative steering. (Scoones et al., 2020, p. 66)
The humanistic economics and governance approach extended in this volume suggests that the purpose of cooperative enterprises is distinctly driven by their mission to advance human progress by meeting collective needs, instead of pecuniary incentives. Although financial capital is typically necessary to achieve this mission, it is not the strategic driver for cooperatives. Therefore, cooperatives (and social economy organizations more broadly) have the cognitive tools necessary to influence the functional, structural, and emancipatory transformation that is required in the global quest for “more sustainable and equitable global futures” (Patterson et al., 2017, p. 2).
A plethora of methods and models have been developed to direct businesses toward SDGs, including the adoption of sustainability as a strategy and the accompanying indicators to track progress. Among the first and more elaborate ones is the Global Reporting Initiative (GRI), whose founders imagined that measurement and reporting would have a significant transformative impact. However, it has become apparent that transformative change has not accompanied the increase in sustainability reporting (Bernard et al., 2015); on the contrary, inequalities and crises have expanded in recent decades. While the reasons for these disappointing results vary, they may include greenwashing, i.e. cherry-picking indicators to report on positive impacts while ignoring the negative; but, importantly, the incremental (rather than transformative) nature of the indicators predominates (Baue, 2019; Utting & O’Neill, 2020). Cooperatives need to be aware of these issues when designing the indicators to guide their sustainability strategy.
The question of measurement and KPIs is typically related to assessing progress toward delivering on a strategy, and changing behavior in the process. Cooperatives contributing to an agenda for transformation toward sustainability need to develop context-based indicators (Baue, 2019; McElroy, 2015) in their sphere of influence. Due to the mounting pressures, cooperative legitimacy may be called into question unless they can demonstrate that they deliver on their values; therefore, appropriate indicators and measures can also assess “cooperative health” (Cook, 2018) and serve as tools for congruent isomorphism (Bager, 1994).
Besides measures of financial viability, sustainability indicators fall into two main categories—environmental and socio-economic—in order to select a pathway to sustainability which navigates between the planetary boundaries on the one hand, and meeting minimum social foundations on the other (Raworth, 2017). For cooperatives, sustainability indicators will address their structure and purpose, as well as account for the use of natural resources within the appropriate threshold.
4.1 Environmental Indicators
Ecological sustainability does not come naturally to any business, including cooperatives who are designed to address their members’ needs. Ecology therefore has to be a science-led global project, which would be integrated into all domains of human activity and impact. However, understood as a matter of ecological justice, sustainability is an integral part of cooperative values and principles. The cooperative advantage in the struggle to mitigate climate change may be the lack of pressure to treat sustainability as an externality and perceive it purely from the risk perspective. Rather, for cooperatives, environmental sustainability is a “values project.”
As for all enterprises, cooperatives need to address context-based sustainability within appropriate thresholds and allocations (Baue, 2019; Baue & Thurm, 2021; McElroy, 2015). In other words, thresholds are measures that “indicate availability of a resource, while allocations define ‘fair shares’ for individual players in any given local, regional, or global context” (Baue & Thurm, 2021, p. 245). The context—thresholds and allocations help to “navigate us back into the safe and just operating space between the thresholds of overshooting ecological ceilings and shortfalling social foundations” (ibid.).
Context-based environmental accounting seems to provide a tool for all sustainable businesses to follow (McElroy, 2015). What specific environmental indicators to use will depend on the nature of the business—an agricultural producer cooperative will have a very different impact on the environment than a worker cooperative daycare, for example. But each needs to understand what impact they do have, and draw a path to sustainable use of natural resources, or their regeneration.
4.2 Socio-Economic Indicators
While natural resource thresholds (maximum limits for environmental indicators) are a matter of scientific determination of the planetary boundaries (Rockstrom et al., 2009; Steffen et al., 2015), the thresholds of socio-economic foundations (the inner circle in Raworth’s “doughnut model”; see Raworth, 2017) are often a matter of values. In this sphere, cooperatives can define the benchmarks (i.e. minimum values for social thresholds) to set the economy on the path to sustainability—they can serve the “yardstick” role in the space of safe and just socio-economic foundations (Novkovic, 2021).
For this role to materialize, the purpose of a cooperative needs to be better understood from the perspective of change and transformation. With respect to the social foundations, cooperatives contribute to income equality and distributional equity; decommodification of labor, money, and land (fictitious commodities, according to Polanyi 1944), but also basic necessities such as housing, knowledge, and healthcare, for example (Novkovic, 2021). With democratic ownership and governance cooperatives distribute power, although they may be prone to isomorphism and oligarchic tendencies, and therefore need to measure and report their “democratic health.” Further, cooperatives promote human dignity, given their humanistic roots (Lutz, 1999; Pirson, 2017), and engage in the intergenerational transfer of wealth: a critical contributing factor for community development.
5 Measuring Transformational Impact
Tracing a path to sustainability ought to include thresholds to secure the provision of the common good. The carrying capacity of the planet is the outer bound of sustainable operating space (Raworth, 2017). Baue (2019, p. 19) credits Donella (Dana) Meadows with the insight that environmental indicators become sustainability indicators when they have a target, a timeline, or a limit. Reporting just a nominal value (quantity of water used; carbon footprint, etc.) does not provide context.
How much of the natural resource is allocated to each agent in the economy is a matter of context-based sustainability accounting (Baue, 2019; McElroy, 2015). The sustainability quotient (McElroy, 2008, as cited in Baue, 2019, p. 8) provides a way to assess sustainability by dividing the actual impact (e.g. carbon emissions) by a normative figure (a share of carbon budget allocated to a specific entity). The r3.0 Platform (r3-0.org) for accounting and reporting methods for sustainability formed a Global Thresholds & Allocations Council (GTAC) “to establish an authoritative approach to reporting economic, environmental and social performance in relation to generally accepted boundaries and limits.” Science-based limits to natural capital have been widely publicized, but allocations are a work in progress. At a minimum then, cooperatives as values-based businesses need to set targets to reduce harm to the environment, as well as engage in regenerative practices, as the context allows (for example, in agriculture).
On the socio-economic indicators side, cooperatives have a transformative role to play given their different purpose, structure, and governance. The implications of a cooperative people-centered structure, with joint ownership and democratic control, include comparatively better performance regarding longevity; employment stability; income equality; and productivity (Navarra, 2016; Perotin, 2016; Smith & Rothboum, 2014).
But besides the indicators uncovering cooperative structural characteristics,Footnote 4 the foundational purpose of a cooperative form of organizing, which addresses the unsustainable practices in the specific socio-economic context, needs to be reported in order to “nudge” the system toward sustainable spaces. This foundational purpose is often rooted in social justice, and includes decommodification (of labor, land, money; food, shelter, knowledge); income equality and distributional equity; and promoting human dignity (Novkovic, 2021). Indicators which disclose the essence of cooperative purpose may provide the yardstick—a norm, or benchmark—for the social sustainability quotient. It is not just about what is measured, but what target is considered fair, just, and sustainable from the cooperative values-based perspective.
To highlight some indicators cooperatives can use—adjusting for their context—we take a look next at the Economy for the Common Good indicators. Many of those indicators are a good fit, since they consider the impact on multiple stakeholders and human dignity, with the common good as the overarching goal. The targets, however, are values-based, and vary with context (the industry; type of cooperative; geographical location; etc.).
6 The Economy for the Common Good (ECG) Indicators in Practice
The Economy for the Common Good and its measuring tool ECG Matrix 5.0 (see Fig. 14.1) is a relatively new approach to indicate transformational potentials in any enterprise. It rests on incentivizing the delivery of the common good, instead of financial gain to shareholders, and therefore on “repurposing” the economy. ECG was introduced after the latest global economic financial crisis at the end of the first decade of the twenty-first century, rising on the wave of criticism toward the neoliberal financialization of the economy. It was imagined not just as a metric tool, but as a new social movement that will offer a better economic model of development through the use of a more ethical and responsible approach and metrics (Felber & Hagelberg, 2017). Very often it was labeled as a system of cooperation, respect, and care for the environment and future—a holistic new system of contribution to the common good that should change the existing system based on greed and irresponsibility (Felber, 2015). The underlying purpose of economic activity is to create the common good, i.e. prosperity on a healthy planet.
ECG has been designed to act as a comprehensive and holistic measurement tool to test real contributions to the common good within the enterprise, but also in relation to the local community and more broadly to the society and the global level. Any enterprise that wants to pass through an ECG evaluation has to complete the Common Good Balance Sheet with the central synthesis point in their matrix: a table of the most important areas that are measured.
ECG Matrix 5.0 monitors the interrelated position of the most important stakeholders for an enterprise: suppliers, owners/financial support, employees, consumers/users, and business partners, and the social environment in relation to the four most important general values: human dignity, solidarity and social justice, environmental sustainability, and transparency and co-determination. It is important to emphasize that negative points can also be assigned for damaging practices, so an enterprise being evaluated might get a negative score if it violated workers’ or human rights, acted in hostile ways in the market, had a detrimental effect on resources and ecosystems, or any other unsustainable behavior with negative outcomes. With this as its base, the ECG framework is quite suitable for the cooperative sector (Novkovic, 2018; Šimleša, 2015, 2020) and other values-aligned entities.
There is a clear overlap between the ECG values and the cooperative organizational values—self-help and self-responsibility; equality and equity; democracy and solidarity. While cooperative organizational values do not specify environmental sustainability, this is captured in personal ethical values and cooperative principles.Footnote 5 We, therefore, take a look at some of the pertinent indicators in the ECG framework as an illustration of the types of transformative measures of strategic importance to cooperatives.
At a first glance, it seems like ECG’s four general values defining their relations with the most important social actors within and outside of the enterprise are directly connected to the seven cooperative principles. Cooperative principles highly emphasize internal democratic processes and rights, responsibilities, and participation, which we can correlate with the ECG Matrix under the values of Human Dignity (C1 Human dignity in the workplace and working environment) and Solidarity and Social Justice (A2 Solidarity and social justice in supply chain or C2 Self-determined working agreements). For Employees as a stakeholder group human dignity in the workplace translates into measuring the achievement of “employee-focused organisational culture that is built on respect, appreciation and trust. People are considered to be the focus, and not a factor of production” (ECG Matrix 5.0 2022). Justice and equity as an integral part of cooperative values will show in the ECG’s framework in the stakeholder group Owners and finance partners (for example B4 Ownership and co-determination); so, for many (worker) cooperatives, results for this section will be similar to those related to employees.Footnote 6
The cooperative approach for the group Employees is even more evident under the value of Solidarity and Social Justice, where the focus is on self-determined working agreements, which means that an enterprise should strive for motivation, sense of security and wellbeing of the employees, and their participation in all important decisions, especially ones that are affecting them. The importance of participation and workers’ inclusion in all information decision-making processes is even more pronounced under the value of Transparency and Co-determination.
Cooperative Principle 6—Cooperation among Cooperatives can be partlyFootnote 7 identified in the ECG approach through the stakeholder groups Suppliers and Customers and Other Companies, especially under the value Solidarity and Social Justice, where this box is presenting enterprise contributions in the fields A2 Solidarity and social justice in the supply chain and D2 Cooperation and solidarity with other companies. Cooperative Principle 7—Concern for Community, which validates cooperative behavior toward the external environment, is present in the stakeholder group Social Environment.
The ECG matrix is designed to test the contribution of any enterprise to the common good, through measures of impact on its external as well as internal stakeholders. It can therefore be seen not to align with the primary concern of cooperatives to meet the needs of their members. However, as people-centered enterprises, cooperatives cannot afford not to take care of the non-member suppliers, employees, or consumers; cooperatives which engage in solidarity with other cooperatives and SSE enterprises will achieve a higher score on the ECG evaluation. Sanchis et al. (2019) capture the closeness of the cooperative values and principles to the ECG framework, when they rightly note how ECG was designed from the start as a tool “whose purpose is to achieve full respect for human rights principles within companies worldwide and, thus, a more human [operation] of firms based on cooperation and the [pursuit] of general interest” (2019, p. 5–6).
How this looks in practice can be seen in the report entitled, Businesses act for the Common Good and the SDGs (Kasper & Hofielen, 2019). The authors present the correlation between ECG and 17 UN SDGs. Each intersection of a stakeholder group and general values is mapped onto the specific SDGs an indicator addresses. The following examples illustrate some ECG indicator applications.
As a first example of the application of ECG measuring and reporting, Fairmondo eG consumer cooperative is promoting fair trade products. Fairmondo eG operates as an online platform and helps consumers to find ethical products that may be fair-trade labeled, environmentally friendly, or reused (second-hand). The platform serves customer education purposes as well. Fairmondo directly supports the SDG Goal 12—Responsible Consumption and Production, the goal supported by the ECG indicators in the following boxes of the ECG matrix:
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D3 Impact on the environmentFootnote 8 of the use and disposal of products and services
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D4 Customer participation and product transparency
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E1 The purpose of products and services and their effect on society
Fairmondo eG’s Common Good Balance Sheet shows a high score in both the stakeholder Employees group, and the targeted Customers and Other Companies group.
Another example is a publishing cooperative Taz founded in 1978 in Berlin as a media voice of a progressive and politically active movement. Their work contributes to the achievement of the SDG Goal 13—Climate Action, because of their persistent and dedicated work on using recycled paper in the newspaper production, general use of climate-neutral printing materials, and a lower price of subscription for the online ePaper version. Their contribution to CO2 saving was especially noticed from ECG matrix in the boxes:
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A3 Environmental sustainability in the supply chain
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B3 Use of funds in relation to social and environmental impacts
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D3 Impact on the environment of the use and disposal of products and services
On a general level, cooperatives were mentioned in the report (Kasper & Hofielen, 2019) as one of the best cases for supporting the SDG Goal 17—Partnership for the Goals, because cooperatives are entities that respect equal participation and inclusion of all relevant actors around common issues, a goal that SDGs still seek to achieve.
ECG indicators and the matrix itself are deeply transformative tools, as they are measuring real business entities’ contribution to a more just and fair, sustainable solidarity economy and society. These two examples illustrate the real ECG contribution to measurement of transformative potentials in the cooperative sector. It is a tool able to validate the manifestation of those potentials.
At the time of writing (2022), several thousand enterprises, mostly from Europe, completed their Common Good Balance Sheet in different sectors: financial institutions, food producers, housing associations, hotels, cultural institutions, etc.; among them, many are cooperatives. Sanchis et al. (2019) examined the impact of the ECG reporting framework on a sample of 200 European enterprises who used it over an extended period of time, concluding that the exercise was beneficial for market differentiation and competitive advantage of the companies in the sample. More research is needed to fully understand whether this exercise is helping enterprises to achieve a just transition to a sustainable and fair system (changing behavior), or simply helping them to report what they already do anyway. In that sense, cooperatives may be able to show that adhering to the cooperative identity (values and principles) leads to sustainability (Beishenaly & Eum, 2021).
7 Discussion and Concluding Remarks
Many tools have been proposed and developed specifically to assess adherence to cooperative principles and values (Co-ops UK 2018; and the Co-op Index for worker cooperatives—Stocki et al., 2012—are examples). These are important tools that show the cooperative (structural) difference, address democratic governance, and identify a different socio-economic purpose of enterprise. On the other hand, there are many frameworks offering sustainability indicators, but not all of them are transformative, i.e. not all speak to the “structural, functional, relational, and cognitive aspects of socio-technical-ecological systems” (Scoones et al., 2020, p. 65). The usual measurement limitations and issues aside, transformative indicators ought to highlight the gaps and blind spots in corporate reporting (Utting & O’Neail, 2020); but they also need to push the boundaries and thresholds regarding what is “just” and what is “fair” and “equitable” when it comes to socio-economic indicators.
We highlighted the ECG framework because, while not completely overlapping, it is largely aligned with the cooperative point of view and values. It is the only framework to date to propose a shift in policy and the incentive structures from profits to the common good. That is the key element for transformation to sustainability, in our view. However, when it comes to indicators, the thresholds and allocations approach in the context-based accounting (Baue, 2019; McElroy, 2008) ought to be explored together with the elements of the ECG framework if we want to capture real change.
We conjecture that the cooperative model is a transformative model of enterprise due to its radical structure and purpose. Assessing the ways in which cooperatives contribute to the SDGs and the Agenda 2030, Beishenaly and Eum (2021) include the cooperative nature as an enabling factor and a driver of sustainability. They highlight that the external environment also needs to be in place, from enabling policies to supporting networks and partnerships. Cooperatives then contribute significantly to the SDGs in all facets of their core activities (ibid.; Table 14.1).
But, can reporting on the right kind of measures and indicators speed up the process of transformation toward sustainability? In the sea of options, cooperative leaders need to be aware of their enterprise’s areas of impact that contribute to transforming some of the “structural, functional, relational, or cognitive aspects” of the current systems. To influence a change of course toward sustainability, performance indicators ought to be used strategically to showcase performance, uncover isomorphism, and put a spotlight on unsustainable practices in particular contexts. Cooperative leaders also need to be aware of the developments in the field of measurement to adopt indicators that align with cooperative values and purpose and uncover transformative practices.
Notes
- 1.
- 2.
This approach calls for collaborative visioning and a safe space for experimentation in order to shape transition processes (‘Patterson et al., 2017, p. 6).
- 3.
This structural characteristic addresses the unsustainability of the corporate model with absentee investors whose sole pursuit is the highest return on their investment, and which is at the heart of most corporate unsustainable practices. Attempts to shift to “stakeholder capitalism” to address this pervasive issue have been more prevalent in recent years, with limited success at best (see Johnson, 2021, for example).
- 4.
Cooperatives are encouraged to assess their adherence to cooperative principles and values. A number of indicators and tools have been developed for that purpose (for a review, see Salathe Beulieu, 2019).
- 5.
Honesty, openness, social responsibility, and caring of others are cooperative ethical values, coupled with the Principle 7—Concern for Community, which refers to sustainable development (see ICA, 2015).
- 6.
Although we do note the worker membership logic that extends beyond ownership and into participation via the employment relationship (or “usership” in different types of cooperatives).
- 7.
Partly, because Principle 6—Cooperation among Cooperatives includes creating associations and contributing to the cooperative movement; not just cooperative supply chains.
- 8.
Note that ECG does not use context-based accounting (Baue, 2019), which we believe should be the next stage of development for environmental indicators.
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Novković, S., Šimleša, D. (2023). Measuring Transformational Impact of Cooperatives. In: Novković, S., Miner, K., McMahon, C. (eds) Humanistic Governance in Democratic Organizations. Humanism in Business Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-17403-2_14
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