April’s National Members’ Council

Spent Saturday at the Co-op Council meeting: where the main focus of discussion was the publication of our year-end results, which were published last week. You can see the full report at https://assets.ctfassets.net/5ywmq66472jr/4Xi9Pw36VOEkmE2yqZhCQT/4d716091dec9e6e8832a357c718ca47b/Co-op_Annual_Report_2018.pdf

Overall our underlying profit result was flat year on year.  But with strong growth in food sales and an increased Profit Before Tax line the reception in the financial press has been very positive.  Food’s performance was outstanding with like for like sales up 4.4% – well ahead of the market – and the addition of NISA taking the Co-op’s total turnover to over £10 billion for the first time since we disposed of the Co-operative Bank. Funeralcare results were a little disappointing, with a drop in market share and profitability impacted by our introduction of lower-cost funeral options.  However, we still have a very strong platform and many opportunities in that sector and I am confident that we will see that part of our business turn around.  

It was very pleasing that the press gave plenty of coverage to other aspects of our performance too, recognising in particular the work we are doing to address crime levels in local communities, the investment by our pension trustees in social housing and the expansion of our network of academies.  This year we published the Co-op Way report at the same time as our financial results – which is something I have pushed for over the last couple of years.  There’s lots more interesting and encouraging news to draw out from that report, which I will cover in a future blog post.

The Council session also spent a lot of time looking at our work on leadership and colleague culture as well as reviewing remuneration policies which are covered in huge detail in the Annual Report.

During the Directors Q&A sessions we were challenged on a number of areas, including:

  • Progress on our IT transformation programme in the Food division (slipping behind schedule which will increase cost and delay service improvements – but we need to take the time required to get it right).
  • Reactions to the Grocery Code Adjudicator’s report and whether we were confident that our house was being put in order now: as previously declared, we had got things wrong but were working hard to make sure we treated suppliers well.
  • Colleague security: a continuing area of concern, in which we continued to invest time and money. 
  • Whether it was easier to report to shareholders or to members: we find Council questioning ranges far wider than that of financially-focused shareholders, and appreciate the fact that members take a longer term and broader perspective 

Altogether a very positive day, and I very much hope that it does not prove to be my last Council meeting, as the next one will not be until after our AGM in May when I hope to be re-elected!

Global Impact Award

Excellent news last week that the Co-op won The Hermes Global Impact Award at the Retail Week Awards.

Championing Fairtrade products, contributing to local community, launching the Bright Future programme to help victims of Modern Slavery, recycling and the Future of Food strategy were all called out as examples of what puts Co-op ahead of most other businesses.

One of the judges said: “If it was about a single initiative or a campaign there were good entries, but in terms of multiple initiatives over time and the aggregate impact they have, the Co-op just stands out on its own. “The grocer shines a light on important issues like slavery and water – not always the ones that are popular. There’s a pure intent. Tackling modern slavery by offering a path back into employment is a great approach.”

Another judge commented: “The Co-op consistently delivers. It’s cultural across its business – the grocer doesn’t just talk about it, it lives and breathes it.  The Co-op has a strong, genuine sense of duty and community. It is properly entwined with every part of the organisation and it deserves to be properly recognised for that. The Co-op is staying true to its purpose of ‘championing a better way of doing business’, which makes it the worthy winner of this award.”

Reading these plaudits is most encouraging, and having just spent this morning reviewing the 2018 Co-op Way sustainability report at the Risk and Audit Committee, I know we have plenty more positive news to report on the sustainability front.  I was particularly pleased that the Committee met once again with our assurance providers, DNV, and that we considered their report at the same time as our draft financial accounts for the last year.  This to me symbolises the way that we give equal weight to our ethical and financial performance, recognising that the two can and should reinforce each other in a virtuous circle of creating a stronger Co-op the more we can be seen to be contributing to stronger communities and a more sustainable world.

Final Fairtrade Fortnight update

Coffee with Mike Gidney – CEO of the Fairtrade Foundation (pictured above) – was an excellent chance to catch up with an old colleague and to mull over possible future initiatives for Fairtrade. We met in Esquires cafe in Durham – which as you can see was appropriately merchandised to support the fortnight.

We were particularly interested to discuss how to make careers in ethical food more accessible to students – recognising that for many the first steps in a career path would be in larger company where they could learn skills, but that retaining a focus on ethics in their early careers could then sometimes be challenging. We generated ideas around co-ordination of internship placements by the Foundation, creating positive peer support groups and tying more ethical inputs into initiatives such as Grocery Girls being promoted by the Food CEO of the Co-op, Jo Whitfield.

We also spent time reflecting on the Grocery Code Adjudicator, whose establishment Mike and I both campaigned for when at Traidcraft, and the irony that she was currently investigating the Co-op’s buying practices when Co-op was probably amongst the most ethical of all retailers. Although we await the outcome of those investigations, we both agreed that the focus all retailers were now having to put on handling supplier relationships better was a major step forward. The improvements in god practice across the major retailers in the last two years have really been very marked. However, the scope of the Code was limited to UK suppliers at the moment, so did not really provide direct help to Fair-trade and other overseas producer groups – perhaps that’s a next stage to campaign for.

And then on Friday I was at the AGM of Shared Interest – an organisation that lends to fair trade producers who cannot access commercial finance, and on whose Board I have served for four years. It had been an encouraging year for Shared Interest, and it was inspiring to hear of the impact that well-judged lending could have in equipping small groups for expansion that could extend fair trade benefits to hundreds more workers. But chatting to other supporters – many also keen members of the Co-op – it was also clear that they remain disappointed by the degree to which our stores can get behind Fairtrade Fortnight. There are practical and logistical barriers to be overcome, but I think they are right that we need to try harder in future years.

Fairtrade Fortnight pledge

Take the Co-op Fairtrade Pledge and help some of the world’s poorest farmers

Fairtrade Fortnight is underway (25 Feb – 10 March) and I’m asking our Co-op members and customers to make a commitment to Fairtrade that will help some of the poorest farmers in the world get a fairer chance in life. 

All you have to do is take the ‘Co-op Fairtrade Pledge’ by swapping a regular product you buy for a Fairtrade alternative. 

It could be a chocolate bar, a bottle of wine, a jar of coffee or packet of biscuits. It’s a simple switch, but if all Co-op members and customers did this it would make a huge difference to people’s lives giving them greater financial security and the chance to improve education and healthcare for their communities.

Famous for Fairtrade

At the Co-op we’ve been famous for Fairtrade for decades. That’s because we believe it’s the ‘gold standard’ for an ethical trading relationship which addresses poverty and exploitation and gives the farmers themselves control and choice over how they use the money they earn.

The Fairtrade mark means farmers are guaranteed a fair price for their goods and are cushioned against dramatic changes in world markets – like the crash in cocoa prices that took place in 2016. In West Africa, where 60% of cocoa beans are grown, that price crash means families are struggling to survive. 

I’m pleased to say that all the cocoa we use in our Co-op chocolate and as an ingredient in any Co-op product is 100% Fairtrade. That means our cocoa farmers have been able to maintain their livelihoods. 

And our commitment goes well beyond cocoa.    

While other retailers are stepping back from Fairtrade and introducing alternative ethical schemes that cause shoppers confusion, at the Co-op we’re staying true to the values the Fairtrade mark stands for. 

Women leaders

But we always want to do more. So over the last year we’ve increased our commitment to women cocoa farmers in West Africa. We’re funding the Fairtrade Africa’s Womens’ leadership school projects, which are working with women in Côte d’Ivoire to empower them as future leaders. 

The projects train them in business skills such as decision making, resource management and leadership. We’re also working with Kuapa Kokoo, a cocoa growing co-op in Ghana, to give their women workers access to training.

Take the pledge

By taking the Co-op Fairtrade Pledge you’ll be playing your part to make trade fairer for some of the most disadvantaged communities in the world. And you’ll discover how fantastic Fairtrade products taste. If you’re planning any Fairtrade events where you live Tweet @coopuk so we can spread the word. 

Future of Food

 

Reflecting on the past year, one of things of which I am most proud is the Co-op’s development of our “Future of Food” strategy.  Building on many years of pioneering ethical and responsible sourcing of products, we have been working hard to revitalise our commitments for the next decade and beyond.  In a world where we are all challenged by issues of environmental sustainability, its great to see us setting ambitious targets to build on our existing strengths in conjunction with our partners, taking action on what matters most.

Our goals revolve around three areas:

  • Sourcing products that are created with respect for people and planet – sustainability, health, reduced waste, reduced use of plastics, agricultural innovation.
  • Treating people fairly – working for justice in supply chains through more Fairtrade, empowering vulnerable workers and women, tackling water poverty, supporting British farmers and ensuring that all our suppliers get a fair deal.
  • Learning and celebrating together – educating and empowering future generations to make informed choices, working with partners and sharing good practice, helping everyone understand the true value of food.

Our programmes and plans have been developed after a lot of consultation with our supply partners, NGOs and academic experts as well as colleagues in all parts of our business. Having attended several workshops around this process as well as the launch event, I have been impressed by the hugely positive feedback they have given about the Co-op difference they can already see and our qualitatively stronger commitment to partnership.

You can read about our plans in much more detail on our website:  https://food.coop.co.uk/food-ethics/future-of-food

2017 AGM

Just back from the Co-op AGM in Manchester.  This was an inspiring event, with a good turnout of members, impressive debut speech from our new Chief Executive Steve Murrells and a great sense of an organisation now back in a stable position and beginning to think more about areas in which we can challenge the status quo as well as extend our trading.

  For me there were four particular highlights:

1. Modern Slavery

We gave great attention to our new commitment to leading work on Modern Slavery.  It was horrific to learn that there are thought to be 21 million victims of slavery worldwide – more than at any other time in history.  And it is estimated that there are 10,000 slaves in the UK today.  We are committed at the Co-op not only to working hard to ensure that our supply chains are free of this scourge, but to providing survivors with paid employment to help restore their dignity and sense of self worth.  There was a powerful and emotional video sharing the story of one of the three former slaves who have been given permanent employment by Co-op, together with a commitment to taking on 30 more this year working with two charities (City Hearts and Snowdrop) in our Bright Future initiative.  It was great to get an endorsement from members of our plans to campaign to encourage other companies to do likewise.

2. Fairtrade

This is a picture of me with Brad Hill, who heads up the Co-op’s Fairtrade work.

More good news on the Co-op’s commitment to Fairtrade, with our volumes of FT sales (18.5% up on last year) now over-taking Tesco’s to make us the second largest Fairtrade retailer in the UK.  Only Sainsbury’s sells more, and with their momentum appearing to wane it is clear that our support for the movement is increasingly crucial.  Our focus on maximising impact for producers is driving our new initiatives.  Having taken all the cocoa in own brand products Fairtrade this year, we are now going to do the same with tea, coffee and bananas.  So not only will these product categories continue to be 100% Fairtrade, but we will always source them on fair trade terms when they are used as ingredients in other products too.

It was also great to hear that because of our work with One Foundation (donating 3 pence per litre on sales of our bottled waters to water projects in Kenya and Malawi) we are the only UK retailer to be invited to join a new UN backed initiative (the Global Investment Fund for Water) to promote clean water.

3. Waste and recycling

New commitments on making all our food packaging recyclable by 2023 (though there is perhaps still more to do on reducing packaging).  We will also be working with FareShare to redistribute the food for 20 million meals.  These are great initiatives – although in my view we still need to do more to tackle the root problems behind food waste.

It was also great to see the Co-op’s first hybrid diesel/electric powered lorry outside the conference centre!  It is the only 26 tonne lorry of this type in the UK, and we are trialling it as a way of improving fuel efficiency and reducing noise.

4. Community engagement

The launch of our Member Pioneer scheme, which over time will lead to 1500 activists working in the localities we serve to mobilise our members behind improving the well-being of their communities.  About 60 Pioneers have been recruited so far (from 450 applicants) and we have started to train and resource them.

Lemn Sissay, the poet and Chancellor of Manchester University, has agreed to be Ambassador for the scheme, and gave a rousing speech on the importance of communities and also on our embracing migrants and refugees (recognising that migration is part of all our stories and integral to being human).  This initiative promises to make our community support even more meaningful than the money given to good causes:  £9 million distributed just last month as a result of our 5+1 membership scheme, and a further £6 million raised to fight against loneliness with the Red Cross (nearly double our target figure).  I hope tackling loneliness will become a big feature of our local work going forward – with hard evidence that nothing does this better than encouraging people to volunteer and become engaged with local initiatives.

Re-elected!

Oh, and then there was the good news that I have been re-elected for a second term as Member Nominated Director!  Although the voting numbers weren’t announced formally at the meeting I am told that I received over 40,000 of the first preference votes, with the other two candidates being on just under 20,000 each.  I am humbled and delighted by this endorsement, and look forward to the next two years of serving the Society.

Sustainability reporting

In Manchester yesterday to meet with DNV GL – the assurance firm that works with the Co-op Group on our annual Sustainability report.

Social reporting at Traidcraft

I am a fan of such reports as a way of encouraging companies to take more action about their impacts on society and the environment and as an important form of transparency.  At Traidcraft we were an early pioneer of social reporting and won many prizes for initiatives in this area.  I found producing social accounts a really effective way of keeping the organisation focused on our wider mission goals and non-financial impacts. I learned that social and sustainability reports need to be set up in a way that will be effective as a real business tool and a force for change and improvement – rather than being seen as a public relations vehicle addressed largely to an audience of sustainability experts as is too often the case.

Co-op sustainability reports

Co-op’s reports have over the years been seen as leading the way in good practice reporting, and they certainly make very interesting reading (see https://www.co-operative.coop/ethics/sustainability-report to read the 2015 report, published in the autumn of 2016).

2015 Co-op Sustainability report

Lots of evidence in here of the Co-op putting its ethical principles into practice across our engagement with supply chains, local communities, environmental impact and colleagues/members.  Really encouraging to see the data set out clearly, some really impressive examples of what we have been delivering, and it’s good to be able to identify areas where we could still do better too.

Revitalising the Co-op Way

However, even at the Co-op there is scope to make improvements to our approach, if we want sustainability targets and reporting to be truly as embedded in the organisation as our financial and commercial goals. And although we have continued to place a lot of emphasis on sustaining our ethical trading principles, as you would expect, we have to recognise that improving our reporting and systems has not been a major focus of attention during the Rescue and Rebuild phases of the Co-op’s turnaround, when we have (rightly) had to focus on restoring our basic viability as a business that can serve its members well.

But we are now in a position to move on from that stage. So it is great that we have been putting a lot of effort over the past year into revitalising our ethical principles through the work of the Coop Way Policy working groups, where senior colleagues and Council members have worked together to review and update our ethical policies across the board.  We have also identified the key strategic areas on which the Group Board needs to be held to account by the Members’ Council in the work on setting a “Co-op Compass”, and these include demonstrating leadership in delivering social impact.  These welcome initiatives now need to be worked through into our business planning prepare for our Renewal phase from 2018-2020.

Sustainability reports and targets

As a member of the Board’s Risk and Audit Committee I am encouraging work to improve the profile of our Sustainability Report and ensure it gets the in-depth attention it deserves.  I would like to see us setting a smaller number of longer-term (say 3 to 5 year) targets focusing on those areas where we think we can make a big difference and that are core to the nature of our work.  Of course we would still need to monitor, track and improve many other social and environmental indicators as well, to ensure we are delivering good practice across the board in line with our values and principles.  But by setting longer-term plans and targets in a number of key areas we are more likely to be able to integrate our aspirations more fully into our resource allocation and planning. And that will be the key to making real change happen.

I am encouraged that the Co-op’s team is also beginning to develop new systems to measure our impact as well as our activity, which is an area in which most sustainability reports are relatively weak: if we get this right we will reinforce our reputation as a trail blazer in sustainability reporting.

Tackling loneliness together

The Co-op Group and British Red Cross have formed a partnership to tackle the issue of loneliness in the UK, and launched a research report on the subject yesterday.  This has highlighted that loneliness is not just an issue for older people, but can affect people of all age and backgrounds. The media have particularly picked up the fact that new mums are especially vulnerable to feeling isolated while looking after their young children – but there are many other affected groups.

loneliness-report            loneliness-presentation

For the Co-op loneliness is an issue of relevance to many parts of our family of businesses.  Our food stores provide a vital social lifeline for people who otherwise have little contact with others – and we know many stories of our colleagues who have gone out of their way to look after regular customers whom they suspect to be isolated and who fail to turn up when expected at that store.  Our FuneralCare business is also at the front line in providing help to people at a time when they are particularly likely to fall into a cycle of loneliness and depression following the death of a loved one.

So it is no surprise that over the last 15 months our colleagues have really thrown themselves behind fund-raising efforts for the British Red Cross as our chosen charity partner.  We set a target of raising £3.5 million over two years, but have already exceeded £4 million and are still going strong.

But what is really exciting is that we are not planning just to hand over a cheque and let the Red Cross get on with things.  We announced yesterday that Co-op intends to really get behind the challenge of tackling loneliness in an active way:

  • Encouraging members and colleagues to volunteer for the new centres being set up by the British Red Cross across the country to reach out to people experiencing loneliness and help them to reconnect with their communities.
  • Building up local voluntary organisations in the 1500 communities around the country where Co-op has a presence, through distributing of 1% of the value of member purchases of own brand purchases.  The research indicates that getting involved in volunteering is one of the best ways of overcoming loneliness and restoring one’s sense of identity and purpose.  My hope is that we can also harness the energies of some of our 50,000 pensioners behind such groups.
  • Setting up more bereavement clubs in our funeral homes, a proven way of helping people at a key trigger point in their lives.
  • Our Insurance business is aiming to help set up 30,000 further Neighbourhood Watch groups – and encourage them not only to look out for each other’s property, but to look out for those suffering loneliness and other issues in their own communities.
  • Increasing awareness of loneliness issues among our own 70,000 colleagues.  The research ages it clear that many people in the workplace are experiencing loneliness, and that employers can do more to help. There is also a key role for us as a business to help our own colleagues prepare well for retirement – another of the key transition points that people can find difficult.

crofts-loneliness-2So this initiative is going well beyond the normal Corporate Social Responsibility raising money for good causes. It is about getting the organisation as fully behind tackling loneliness as we can. It is a great example of a full collaboration between a business and a major charity. And it is another good reason to feel proud and excited about being Co-op and the way Co-op is really re-engaging with making our communities better places for everyone.

You can find the full and summary report at: coop.co.uk/loneliness

Water for Africa

At the Co-op support centre in Manchester again this week, and attended a moving presentation and video about the work Co-op is supporting to bring clean water to communities  in Africa.

Every litre of our own brand “Fairbourne Springs”water raises 3p for OneFoundation’s work – and over the ten years we have had this link we have raised over £7 million.  And now we are extending the scheme to our own-brand flavoured waters too, which should increase donations by 30% a year.

fairbourne-water

The video showed examples of the work carried out in Malawi.  this brought back memories for me of visits there with Traidcraft, and especially of one village where our fair trade premiums had been used for a bore hole.  When I asked one of the village women about the benefits I was told “now we have safe water”.  I assumed this meant it was a clean and healthy source rather than a potentially polluted river.  But no.  It was safe because they no longer had to risk going past the crocodiles to get to the river – with villagers regularly being attacked and one or two deaths each year.

ellisie

Makes you realise just how lucky we are in this country to have clean water literally on tap.   Another great example of what makes me proud to be part of the Co-op – and why would you choose any other water when you are in one of our shops?