Announcing the publication of Strengthening the Cooperative Community

The Cooperative Society Newsletter
March 2021, Issue 27
by E.G. Nadeau
, Ph.D.

How can we reduce inequality, combat global warming, and become more democratic?

One answer is through cooperatives. The one billion leaders and members of these member-owned and democratically controlled businesses throughout the world can be part of the solution to creating a better, fairer society.

From my 50 years of experience spent researching, developing, teaching, and writing about cooperative businesses, I describe in my new book, Strengthening the Cooperative Community, why and how co-ops succeed or fail. I also propose 16 specific, practical recommendations on how co-ops can become an even more dynamic force for positive change that benefits people and the environment in the 21st century.

The book first presents a historical review of a variety of cooperative sectors including insurance cooperatives that emerged around 1700; grocery, financial, and agricultural co-ops that originated in the 1800s; and electricity, employee-owned, and social services co-ops that began in the 20th century.

The book then focuses on examples of, and lessons from, my experience as a researcher and developer of dozens of cooperative projects in North America, Europe, Africa, and Asia.

The third section of the book describes six “building blocks” of cooperative development that have proven to be key factors in creating successful co-ops and a thriving International co-op industry. The final section presents opportunities for cooperative development in the 21st century that have the potential to generate jobs and services for hundreds of millions of new co-op members and employees.

Readers will discover that we, especially when acting cooperatively with others, really CAN make a difference. Strengthening the Cooperative Community can be ordered for $10 through local bookstores and, Amazon, or download the PDF at Book: Strengthening the Cooperative Community – The Cooperative Society

Liberty Mutual, get your head out of the tar sands!

The Cooperative Society Newsletter
November 2020, Issue 25
by E.G. Nadeau
, Ph.D.

Those of you who live in the U.S. are probably familiar with a series of inane TV ads featuring an emu and his intellectually challenged human partner. The ads are for Liberty Mutual, a Boston-based insurance company that is one of the largest in the world.

It turns out that the company not only insures coal, tar sands, and other fossil fuel projects. It also owns at least one coal company in Australia. Among environmentalists, Liberty Mutual is considered both a bad actor and a sleazy one. Bad because for years it has contributed to worldwide carbon emissions, and sleazy because it pretends to be “sustainable” while continuing major involvement in fossil fuel projects.

As many of you know, I am a big proponent of cooperatives. Mutual insurance companies are close cousins of co-ops because they are (in theory) democratically controlled by their policyholders, very much like the one-member, one-vote control that cooperators have over their cooperatives. Thus, I am reluctant to badmouth members of the co-op family.

But, Liberty Mutual is no longer a mutual, and hasn’t been since 2001. At that time it changed its corporate status to a mutual insurance holding company. Without going into the down-and-dirty details, the company is no longer controlled by its policyholders but rather, primarily, by corporate executives and stockholders.

Mutual insurance companies can’t own non-insurance businesses, but mutual insurance holding companies can. Thus Liberty’s ownership of the Mount Ramsay Coal Company in Australia, which is drawing major criticism from local community residents for its environmental irresponsibility.

Closer to home, Liberty is also under fire for insuring Keystone XL, Trans Mountain, and other tar sands pipelines. In both the Australian and the North American projects, Liberty is not only a climate change villain, it is also harming indigenous people through its fossil fuel projects.

While a number of other major financial institutions and insurance companies have made commitments to cease their support for fossil fuel projects, Liberty continues to engage in greenwashing rather than meaningful action.

So, until Liberty’s egregious behavior ceases, I recommend that we all ignore the entreaties of the emu and his partner and buy our auto, home, and other insurance products elsewhere.

Developing Strategies for U.S. and Global Green New Deals

The Cooperative Society Newsletter
January 2019, Issue 13
by E.G. Nadeau, Ph.D.

We’ve written two books about the societal transformation that we believe is taking place. Our hypotheses are based on our research of seven broad sets of variables such as economic power, the environment, quality of life, and more. If this is of interest to you – and it quite possibly is because you’re here at our website – we invite you to download a free PDF of our book, The Cooperative Society: The Next Stage of Human History, Second Edition, or find information on buying the book here. Thank you.

What is a Green New Deal?
There has been a lot of buzz recently about launching a Green New Deal in the United States, with Alexandria Ocasio-Cortez (often referred to as AOC), the new congresswoman from New York, playing a lead role in championing this initiative.[1]

However, questions abound. What is a Green New Deal? Can this catchy title be turned into a pragmatic set of new policies? Can there be a global counterpart to this progressive American idea?

What a Green New Deal is depends on whom you ask. In a comprehensive article that appeared in early January in Vox magazine, David Roberts defined it this way:

“It refers, in the loosest sense, to a massive program of investments in clean-energy jobs and infrastructure, meant to transform not just the energy sector, but the entire economy. It is meant both to decarbonize the economy and to make it fairer and more just.”[2]

green new deal

To elaborate, Roberts’ definition would combine a variety of initiatives to reduce global warming, decrease poverty, create jobs, and effectively implement a green paradigm for the American economy. This new economic model would prioritize human and environmental needs, reduce the economic influence of large corporations, and reduce economic inequality.

Some question the overarching and complicated nature of such a transformation in American energy and economic policy. Some see it as a threat to fossil-fuel-based corporations, and to an entire society that has been dependent on fossil fuels almost since capitalism began. Others worry about the difficulty of implementing such a wide array of changes at the same time. By taking on too much at once, they fear that we may end up with nothing or very little. Effective climate action could get lost in the shuffle.[3]

green new deal

The same kinds of comments can be made about an international version of a Green New Deal. Some observers laud such a possibility, while others worry about losing a worldwide consensus (we’ve already lost the Trump administration) on the urgent need for climate reform by the addition of too much additional baggage. 

When was it first proposed?
The “New Deal” part of the phrase originated with the presidency of Franklin Roosevelt, whose administration used this catchphrase to encompass an array of programs intended to pull the United States out of the Great Depression of the 1930s. It was not one massive reform, but a series of separate programs and regulations that together constituted major changes in the federal government’s role in creating jobs and increasing economic and social security.[4]

The New York Times columnist and author, Thomas Friedman, is credited with first using the phrase “Green New Deal” in 2007. In early January 2019, Friedman wrote another op-ed, “The Green New Deal Rises Again,” in which he expressed support for the renewed sense of urgency in addressing climate-change problems.[5]

Presidential candidate Barack Obama included the phrase Green New Deal in his platform in 2008. [6] And in 2009, the United Nations produced a report entitled “Global Green New Deal.”[7] But then, domestic and international concerns shifted to addressing problems created by the Great Recession, and the momentum for a comprehensive approach to climate change temporarily hit the skids.[8]

cooperative green society

The phrase Green New Deal reemerged during the 2018 midterm election campaigns of several progressive, Democratic candidates for Congress. This time around, the concept has received a lot of attention – both positive and negative – in the press and among politicians and environmental and social activists. It is too soon to tell whether or not the momentum toward implementing some version of a Green New Deal – at the national and international levels – will stick this time or fade into the background again.

A survey conducted by the Yale Program on Climate Change Communication in mid-December shows “overwhelming support for the Green New Deal, with 81% of registered voters saying they either ‘strongly support’ (40%) or ‘somewhat support’ (41%) this plan.”[9] 

What might a pragmatic version of this idea look like in the United States?
The young progressives in Congress who are championing a Green New Deal for the United States (and for the world) are already being “put in their place” by their congressional elders. For example, AOC and her fellow insurgent colleagues have already lost the fight to have a special committee established to focus on preparing the way for the implementation of Green New Deal legislation.[10]

But that doesn’t mean they have lost the war. They and other advocates are already gearing up for the 2020 presidential and congressional elections. They plan to keep pushing their message for the urgent need to link climate change and positive economic change in order to simultaneously reduce the risk of catastrophic global warming and create an economy that provides well-paying jobs and economic security.[11]

I have one piece of advice for these Green New Deal advocates: Just as the Roosevelt administration did so successfully with the New Deal, think in terms of a set of reforms rather than one massive program. These reforms could include increased federal and state incentives for conversion to solar, wind, and other renewable sources of energy, for electric vehicles, and for energy-efficient buildings. They also could include job training and job creation for a green economy; increased taxes on the wealthy and/or taxes on carbon-dioxide emissions; and economic benefits for the poor tied to climate change, renewable energy, and energy efficiency.

electric vehicles

As a global initiative?
The reemergent Global Green New Deal has not yet been articulated in any detail, although it is considered by proponents to be an extension of the reform program being articulated for the United States.

What would the global version entail? The United Nations has already established a Green Climate Fund, the primary purpose of which is to assist poorer countries to implement carbon-reducing initiatives, and to adapt to the problems created by global warming – for example, protection against rising sea levels and agricultural practices that are more resilient to droughts and floods.[12]

bio farming

A key problem is, however, that there is not nearly enough money in this Fund to address the magnitude of the problems. It is not clear at this time how the size of the Fund could be rapidly and massively expanded.

There are also other bilateral, multilateral, and private-sector aid and economic assistance programs to accelerate climate reforms in developing countries. But, again, they do not match the urgency of the problem.

From my own research and my review of the literature, I am aware of a number of initiatives that could provide tens of millions of jobs in developing countries in the fight against global warming. They include forest-based carbon sequestration;[13] installation of solar-panel microgrids;[14] the rapid deployment of low-cost, electric vehicles; accelerated increases in the energy efficiency of buildings; and financial assistance in weaning countries off of dependency on fossil fuels and transitioning to renewable energy.[15]

Conclusion
The most recent studies are projecting that we have a little over 10 years to radically reduce greenhouse-gas emissions before the world will be subjected to major increases in climate-related disasters.[16] The proponents of domestic and international Green New Deals recognize the sense of urgency with which we need to mobilize our resources to counter this worldwide threat.

My primary caution is to follow the same type of multi-pronged strategy of the original “New Deal.” Let’s not try to do everything at once in one massive package. We can simultaneously benefit the planet and the economic circumstances of the people who inhabit it by introducing a broad set of reforms that vary by community and by country, rather than by striving for a holy grail, mega-reform that is likely to get snarled in its own complexity.

[1] Hand, Mark, December 4, 2018, “Ocasio-Cortez wants to unite generations of climate action efforts under the Green New Deal,” ThinkProgress.
https://thinkprogress.org/ocasio-cortez-green-new-deal-30fee25982b4/

[2] Roberts, David, January 7, 2019, “The Green New Deal, explained,” Vox Magazine.
https://www.vox.com/energy-and-environment/2018/12/21/18144138/green-new-deal-alexandria-ocasio-cortez

[3] Gulker, Max, December 4, 2018, “The Inconvenient Truth About the Green New Deal,” American Institute for Economic Research.
https://www.aier.org/article/inconvenient-truth-about-green-new-deal

[4] Wikipedia, January 8, 2019, “New Deal.”
https://en.wikipedia.org/wiki/New_Deal

[5] Friedman, Thomas, January 8, 2019, “The Green New Deal Rises Again,” New York Times.
https://www.nytimes.com/2019/01/08/opinion/green-new-deal.html

[6] Kaufman, Alexander C., June 27, 2018, “The Surprising Origins of What Could Be The ‘Medicare For All’ Of Climate Change,” Huffington Post.
https://www.huffingtonpost.com/entry/green-new-deal_us_5b3146c3e4b0b5e692f0912e

[7] Barbier, Edward, 2009, “A Global Green New Deal,” Report prepared for the Green Economy Initiative of UNEP.
https://sustainabledevelopment.un.org/index.php?page=view&type=400&nr=670&menu=1515

[8] Ibid., Roberts.

[9] Gustafson, Abel et al, December 14, 2018, “The Green New Deal has Strong Bipartisan Support,” Yale Project on Climate Communication.
http://climatecommunication.yale.edu/publications/the-green-new-deal-has-strong-bipartisan-support/

[10] Cama, Timothy, January 2, 2019, “House Dems formalize climate committee plans without Green New Deal language,” The Hill.
https://thehill.com/policy/energy-environment/423492-house-dems-formalize-climate-committee-plans-without-green-new-deal

[11] Krieg, Gregory, January 8, 2019, “Alexandria Ocasio-Cortez, activist groups map out next steps in Green New Deal fight,” CNN.
https://www.cnn.com/2019/01/08/politics/ocasio-cortez-sunrise-justice-democrats-green-new-deal-next-steps/index.html

[12] Green Climate Fund, accessed January 9, 2019. https://www.greenclimate.fund/home

[13] Forestry paper.

[14] Nadeau, E.G., September 2018, “Can we Electrify the World by 2030?” The Cooperative Society Newsletter.
http://www.thecooperativesociety.org/2018/09/18/can-we-electrify-the-world-by-2030/

[15] Cimons, Marlene, December 29, 2018, “24 Million Jobs Could Be Created from Meeting Paris Climate Agreement Targets,” Clean Technica, originally published by Nexus Media.
https://cleantechnica.com/2018/12/29/24-million-jobs-could-be-created-from-meeting-paris-climate-agreement-targets/

[16] World Energy Outlook 2018, International Energy Agency, November 2018. https://www.iea.org/weo2018/

small-scale solar energy

 

Can We Electrify the World by 2030?

The Cooperative Society Newsletter
September 2018, Issue 11
by E.G. Nadeau, Ph.D.

small scale solarA little over a billion people have no access to electricity. That’s 1/7th of the world’s population. There are hundreds of millions more whose energy is unreliable, dirty, unhealthy, inadequate, unsustainable, and/or expensive – for example, kerosene, diesel, wood, and candles.[1]

At the same time, almost every country in the world has made a commitment through the United Nations Paris Agreement to significantly cut back by 2030 on their use of energy sources that emit carbon dioxide into the atmosphere.[2] (Note that the Trump administration is planning to withdraw the United States from the agreement in January 2020.)[3]

On top of all that, these same countries have made commitments through the UN’s Sustainable Development Program to dramatically improve the quality of life around the world by 2030. One of the Program’s goals is to, “Ensure access to affordable, reliable, sustainable and modern energy for all.”[4]

There are many ways in which universal access to electricity will improve the quality of people’s lives; for example, creating job opportunities, reducing the workload of women by saving on average an hour a day that is currently spent searching for firewood, and preventing almost 2-million premature deaths per year from household air pollution. There would also be a net reduction in greenhouse-gas emissions because of lower use of biomass fuel for cooking, and the virtual elimination of kerosene and other dirty fuels as sources of heat and light.[5]

How can these divergent problems and goals be reconciled?

The broad answer is to dramatically increase the use of renewable energy to meet the world’s unmet and under-met needs for electricity. This article provides a brief overview of recent changes in electrical access and outlines a path toward universal electrification by 2030 with a focus on community-based solar energy.

Recent and projected progress in electrification
There has been a pattern since 2000 of accelerating access to electricity for unserved and underserved populations. Data from the World Energy Outlook 2017 Special Report[6] indicate that in 2000, there were about 1.7 billion people without access to electricity. This number dropped to 1.1 billion in 2016. The “vast majority (97%) of new electricity connections” has been provided through primarily fossil-fuel-based grid extensions. Less than 1% of new electricity access has been via decentralized systems.[7]

The report goes on to say that between now and 2030, fossil fuels will largely be replaced by renewable energy – especially solar energy – as the primary source for new electricity connections. “The rapidly declining costs of solar PV [photovoltaics], battery technologies, and energy-efficient appliances (especially light-emitting diode [LED] lighting) are making decentralized renewable energy systems more affordable. This is particularly the case for rural and dispersed communities not served by a main grid and where it may take years for one to arrive. Decentralized systems can also be attractive in areas with grid access but an unreliable power supply.”[8]

Growth of solar and other renewable sources of electrification
There are a number of exciting, renewable-energy options that are beginning to electrify the world. For example, large solar arrays are being developed across northern Africa that could eventually replace much of the fossil-fuel energy of Europe. One analyst estimates that putting solar panels on 2% of the Sahara Desert could meet all of the world’s electricity needs.[9]

Building underwater transmission cables from the Sahara to Europe is quite feasible. The same is not true for transmission to the Americas. There are other examples of desert-based large-scale solar projects in Saudi Arabia, China, the Navajo reservation in the United States, and elsewhere. Together, these systems are likely to provide a huge addition to affordable, renewable energy by 2030.

And, we can’t forget about wind. Wind turbines are still cheaper than solar panels in many situations and will continue to be a critical part of any future mix of renewable-energy sources.

Both solar and wind must be supplemented by other sources of energy and energy storage systems. Lithium ion batteries and other means of storage are an important and increasingly cost-effective way to expand the use of renewable energy at every level, from individual buildings to large power plants.

Community-based solar energy
Many of the billion-plus people who don’t have access to electricity live in fairly remote areas that are not easily connected to major power grids. As a result, large-scale renewable options don’t apply to them and are not likely to in the near future because of the high cost of transmission lines.

Households and businesses, and clusters of electrical consumers at the village level, can be most economically and efficiently served by electricity generated right at the community level.

In projecting future expansion of access to electricity, the World Energy Outlook Report lays out an “energy-for-all” scenario, which is based on the goal of universal electrification by 2030.[10]

Figuring in population growth, this would mean expanding electrical coverage to 1.3 billion additional people at an approximate cost of almost $800 billion. The report concludes that over 50% of this electricity would be powered by solar energy, and less than 25% by fossil fuels. Furthermore, more than 60% of new electrical energy will be generated by mini-grid and off-grid systems. (For the most part, “off-grid” systems power individual homes and other buildings.)[11]

Below are four examples that include community-based solar components, followed by a discussion of how community solar could be expanded and made more efficient so that many millions more people around the world could benefit from renewable, reliable, and locally controlled electricity.

Liberia
The newly formed Totota Co-op in rural Liberia has just begun operating a community solar co-op. The National Rural Electric Cooperative Association (NRECA) and Bandera Electric Co-op, one of NRECA’s member cooperatives in the United States, assisted the village to organize the co-op and install solar panels, a battery-storage unit, and other equipment.[12] NRECA is working with 12 Liberian coastal villages to expand the community solar model to them.

Rural India
When Narendra Modi became Prime Minister of India in 2014, 300 million households were without electricity. Every village in India now has electricity, but there are still 30 million households without it. President Modi promises to electrify all of these remaining households by April 2019 through a combination of hooking them up to the national grid and through mini-grid and off-grid installations.[13] Many communities have formed Village Electric Committees to oversee the operation of their solar facilities. According to one observer, “most Indian solar microgrids are democratic, with power controlled by village committees.”[14]

The Caribbean
Islands, big and small, face special challenges in meeting their electrical service needs.  Most don’t have local sources of energy, although some use wood, other kinds of biomass, hydroelectric, and geothermal energy. Importing fuel, such as diesel, is expensive and polluting. Many islands are also vulnerable to tropical storms and hurricanes that play havoc with transmission lines and other components of the electrical system. Consider the damage that Hurricane Maria caused in Puerto Rico last year, including the estimated loss of about 3,000 lives, and from which the island is still recovering.

Forty island countries and other territories in the Caribbean formed the $1-billion Caribbean Climate-Smart Accelerator in August 2018 to create more self-sufficient and resilient energy systems.[15]

The Sahel Region of Africa
Along the southern edge of the Sahara Desert is a huge savanna region called the Sahel. At over 1,000,000 mi.², it is one-third the size of the Sahara.

“The Desert to Power Program . . . seeks to make use of this massive swathe of territory to develop 10,000 megawatts (MW) worth of solar energy to provide electricity to 250 million people — including for 90 million off-grid.”[16]

Here are some strengths of the community-based solar model:

      • Relatively inexpensive
      • Can have its own microgrid, independent of a large-scale transmission grid
      • Easy to transport, install, and maintain
      • Costs can be based on usage
      • Decision-making can be through cooperative or other locally elected boards
      • Can generate jobs and new business activity
      • Can improve the quality of everyday life and health

And here are some of the challenges to expanding the model so that it reaches as many communities as possible:

      • Start-up capital
      • Expertise to source materials and set up local systems
      • Ongoing monitoring and support

There are a number of international and national programs, both public and private, that are expanding their involvement in the creation of community solar programs. There is still a long way to go to provide renewable energy to the billion-plus people who have little or no access to it now. However, based on the analysis of the World Energy Outlook Report, “energy for all” by 2030 is an achievable goal.

small-scale solar energy

 

[1] World Energy Outlook 2017: From Poverty to Prosperity, International, International Energy Agency.   https://www.iea.org/publications/freepublications/publication/WEO2017SpecialReport_EnergyAccessOutlook.pdf

[2] The Paris Agreement, United Nations Climate Change, 2018.
https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement

[3] Plumer, Brad, Trump Will Withdraw U.S. From Paris Climate Agreement, New York Times, June 1, 2017.
https://www.nytimes.com/2017/06/01/climate/trump-paris-climate-agreement.html

[4] Sustainable Development Goal 7, United Nations, 2017.
https://sustainabledevelopment.un.org/sdg7

[5] Universal energy access by 2030 is now within reach thanks to growing political will and falling costs, International Energy Agency, 19 October 2017 https://www.iea.org/newsroom/news/2017/october/universal-energy-access-by-2030-is-now-within-reach-thanks-to-growing-political-w.html

[6] World Energy Outlook, op. cit.

[7] Ibid., p. 44.

[8] Ibid., p. 44.

[9] Michelsen, Charis, Solar Energy From the Sahara Desert Could Power the World – But Will It? December 14th, 2011.
https://cleantechnica.com/2011/12/14/solar-energy-from-the-sahara-desert-could-power-the-world-but-will-it/

[10] Ibid., pp. 53-55.

[11] Ibid.

[12] Chapa, Sergio, Solar microgrid designed in Texas Hill Country deployed in West Africa, San Antonio Business Journal, June 27, 2018.
https://www.bizjournals.com/sanantonio/news/2018/06/27/solar-microgrid-designed-in-texas-hill-country.html

[13]  Doshi, Vidhi, Every village in India now has electricity. But millions still live in darkness, Washington Post, April 30, 2018.
https://www.washingtonpost.com/world/asia_pacific/every-village-in-india-now-has-electricity-but-millions-still-live-in-darkness/2018/04/30/367c1e08-4b1f-11e8-8082-105a446d19b8_story.html?utm_term=.e1f55633bf13

[14] Pearce, Fred, In Rural India, Solar-Powered Microgrids Show Mixed Success, Yale Environment 360, January 14, 2016.
https://e360.yale.edu/features/in_rural_india_solar-powered_microgrids_show_mixed_success

[15] Hill, Joshua S., Caribbean Nations Partner With Global Superstars & Corporate Giants For $1 Billion Climate Accelerator, August 14th, 2018.
https://cleantechnica.com/2018/08/14/caribbean-nations-partner-with-global-superstars-corporate-giants-for-1-billion-climate-accelerator/

[16] Hutchins Mark, African development bank launches ‘Desert to Power’ program, targeting 10 GW of solar, PV Magazine, May 30, 2018.
https://www.pv-magazine.com/2018/05/30/african-development-bank-launches-desert-to-power-program-targeting-10-gw-of-solar/

 

Businesses With A Heart

The Cooperative Society Newsletter
January 2018, Issue 7
E.G. Nadeau

The Cooperative SocietyThe underlying theme of the first Cooperative Society newsletter article of 2018 is that private-sector organizations can do good and do well at the same time. Companies in the Forbes Global 2000 can create social and environmental benefits as well as provide financial returns to their investors. Small businesses can play a positive role in their local communities and thrive economically. And social enterprises – businesses that put service before profit – have become far more numerous and visible in the past three decades.

A growing number of cooperatives and mutual insurance companies as well as non-profit and for-profit businesses meet the definition of social enterprises. Foundations, that are not engaged directly in business activities, can also have huge positive impacts.

For the purposes of this article, let’s call these varied private-sector approaches to doing good “the social economy.”[1]

Why is the rapid increase in the social and environmental commitments of these organizations during the past two or three decades such a big deal? Because they can be a means for improving the quality of life for billions of people around the world and for addressing a wide variety of community and environmental problems. Rather than analyze the broad socio-economic movement, the purpose of this brief essay is to provide an introduction to the fastest-growing part of this phenomenon – social enterprises – and to their contribution to the development of a more cooperative society. The article also raises some concerns about this expanding business form, and makes a few recommendations for improvements.

Let’s start with a few examples.

Goodwill Industries International
Goodwill, a nonprofit organization operating in the United States and Canada, is an example of a social enterprise that has been around for 115 years. It receives free donations of used clothing, furniture and other items, refurbishes them, and sells them through retail and wholesale outlets (and, more recently, online). The company also employs and trains people who have had difficulties in finding regular employment due to disabilities, a lack of skills and other factors. For many, the organization serves as a steppingstone into or back into the workforce.

Goodwill was founded in 1902 in Boston, Massachusetts, with the mission of “enhancing the dignity and quality of life of individuals and families by strengthening communities, eliminating barriers to opportunity, and helping people in need reach their full potential through learning and the power of work.” In 2016, Goodwill had more than 3,200 retail stores, generated $5.7 billion in revenue and assisted more than 300,000 people to find jobs.[2] Goodwill has come under criticism in recent years, in particular for overpaying its top executives and underpaying some of its rank-and-file employees.[3]

Italian social cooperatives
The earliest social co-ops in Italy were formed in the late 1970s. In 1991, the Italian government established an official status for these cooperatives, divided into two main categories: “Co-ops that carry out activities in the area of health, social or educational services; and co-ops that act as agencies for integrating disadvantaged people in the labor market.”[4]

In 2017, there were an estimated 60,000 cooperatives in these two categories. In many communities, these co-ops are an important part of the service network. For example, the city of Bologna contracts for about 85% of its social services through these co-ops, including childcare, eldercare and a wide range of other services.[5]

Social enterprises in other European countries
Since the official recognition of the Italian social cooperatives, six other European countries – Belgium, France, Ireland, Poland, Slovakia and Spain – have established statutes for social enterprises. There are approximately 230,000 social enterprises in these six countries with an estimated 1.5 million employees.[6]

Microfinance institutions around the world
Access to small-scale loans, savings accounts and insurance programs for low- income people has increased dramatically since Mohammad Yunus formed the Grameen Bank in Bangladesh in 1983. According to Convergence, an international organization that researches and facilitates microfinance institutions, “Global figures testify to significant levels of development, with a portfolio of USD87 billion and 111 million clients in 2014, and an estimated growth of 10% in outstanding portfolio and 15.8% in borrowers in 2015.”[7]

 It is important to keep in mind a couple of things about microfinance institutions. Not all meet the definition of social enterprises – putting social services before profit. Some have come under criticism during the past decade for charging exorbitant rates, for corrupt or greedy practices by lenders, and for ineffectiveness at assisting people out of poverty. If well organized and managed, however, they have proven to be a very useful means to provide loans, savings accounts and insurance for the poor.

co2online
co2online is a German nonprofit enterprise that assists private households to decrease their consumption of energy and to lower their CO2 emissions. Their service provides a double win – for the environment and for consumers who lower their energy costs.[8] There are not yet many social enterprises addressing environmental goals, but their potential for solving problems related to climate change and other environmental issues is significant.

The five examples of social enterprises, cited above, have greatly expanded a business model that puts social, community and environmental services above profits.

Growing pains
Despite the rapid growth of social enterprises in the past couple of decades, we are still at an early stage in the development of this business model. For example:

  • There is not yet one agreed-upon definition of “social enterprise.”
  • There has been very limited analysis of the effectiveness of various approaches within the model.
  • There is no consistent certification system identifying which enterprises are truly putting social and environmental services before profits, and how effectively they are doing so.

Three of the most important steps in furthering this model will be: to define what is, and what is not, a social enterprise; to establish clear, consistent legislation for social enterprises in developing and developed countries; and to create transparent means to measure and report on their performance in achieving social, community and environmental objectives.

Despite these growing pains and the need for greater consistency and accountability, there is a tremendous upside for the growth and diversification of social enterprises.

 

[1] For further reading on this topic, see, for example: European Commission, Directorate-General for Employment, Social Affairs and Inclusion (2016): Social Enterprises and their Eco-systems: Developments in Europe. Authors: Carlo Borzaga and Giulia Galera.

[2] http://www.goodwill.org/about-us/

[3] https://www.huffingtonpost.com/john-hrabe/the-worst-corporation-in-_b_1876905.html

[4] Borzaga, Carlo and Jacques Defourny (eds., 2004), The Emergence of Social Enterprise, p. 171.

[5] http://www.yesmagazine.org/new-economy/the-italian-place-where-co-ops-drive-the-economy-and-most-people-are-members-20160705

[6] Estimates derived from Social Enterprises and their Eco-systems (op. cit.), p. 41.

[7] http://www.convergences.org/wp-content/uploads/2016/09/BMF-EN-FINAL-2016-Version-web.pdf

[8] http://www.seforis.eu/news/2015/12/27/discover-17-social-enterprises-that-fight-climate-change