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Resource website of social and solidarity economy

New business models

Case study of the book Social and environmental responsibility, 2006

Vincent Commenne, 2006

Under this heading we intend to offer details of a handful of businesses that can be classified as being at the integrated mission and responsibility level31. At this level we find businesses that have been created specially for the purpose of exercising social responsibility.

Patagonia (USA): from eco-design to political engagement

This Californian company specializes in high quality outdoors sports clothing. Currently, it generates annual sales of 182 million dollars and employs 900 people worldwide. Patagonia is run by its founder Yvon Chouinard, a committed climber and ecologist. The company asserts its desire to use its economic muscle to “imagine and implement solutions to the economic crisis”, unlike the traditionally heavily polluting clothing industry (Laville, 2002).

Some time in the mid 1980s, Patagonia began to restructure its activities in order to minimize their environmental impact: cutting the number of lines, voluntarily limiting growth and committing to the enterprise’s long-term sustainability, an environmental policy for all its sites, products with designed-in ecological awareness, and environmentally sensitive production processes (Laville, 2002).

The company uses organically grown cotton to make its products. Patagonia sources its cotton via Beneficial T’s, North America’s largest distributor of organic cotton. Patagonia is active in programs to support environmental NGOs and has gone so far as to adopt a voluntary Earth levy: it donates 10% of its annual sales to environmental associations. The company is also active in preserving the Patagonian landscape. It provides significant backing to Californian NGO

Patagonia Land Trust as well as to the Fundacion Vida Silvestre. The company’s approach is coupled with an ongoing commitment to sharing its vision and spreading information about its commitments amongst its staff, partners and customers.

Triodos Bank (Netherlands): a benchmark in ethical banking

There is a major move underway at present in the European banking sector to incorporate ethical funds into their product line-ups. In addition to such funds, which are being adopted by more and more major banks, a small number of specialist ethical banks also exist. Of all these emerging ethical banks, Triodos is undoubtedly the most representative and the most important. Triodos is a Dutch bank that now also operates in the UK, Spain, Germany and Belgium.

Triodos is an independent, international bank that specializes in funding the cultural, social, environmental and development sectors. The bank was founded in 1980 as a mechanism for meeting the need for financial instruments capable of contributing to the development of high quality social and environmental businesses and initiatives.

Triodos applies two-tier criteria to projects submitted to it for funding: it looks for both financial viability and ethical addedvalue. This “different” bank can be seen as an ethical alternative for responsible depositors and investors, in that they can be certain that their money will be used in a positive way, according to their moral criteria. Triodos is also concerned by what we term solidarity, in that Triodos clients are able to assign all or part or their investment income to an organization of their choice. Triodos has also concluded partnership agreements with many NGOs in the countries where it is active.

A typical Triodos customer is certainly somebody who is already committed, be they responsible consumers who buy organic from small specialist stores, or simply citizens, economic actors whose idea of what makes good sense leads them to make the responsible choice. The fact that the bank is developing in several countries is a sign that cultural diversity does not alter what its customers consider to be their common interests. Taken as a whole, Triodos’s activities are growing all the time, with year-on-year average growth of approximately 20%. Including various dedicated funds, such as Green Funds and Microcredit for the Third World, it manages funds worth 2.3 billion euros, on behalf of 100,000 clients and invested in some 4,000 projects and businesses offering added social value. Triodos employs 300 people.

The Guild for Sustainable and Solidarity Development in the Liege region (Belgium): a local small business network

This initiative aims to bring about the emergence of a new business concept: a group of SMEs from various sectors (fair trade, organic food, local social economy, etc..) joined together to form a business guild united by a set of common values. The initiative features three notable innovations: the fact that it is a consumer-initiated process, that SMEs are involved in the CSR process, and that a network has been formed. Each partner commits to making significant progress in one of three domains (social economy, fair trade, environmental sensitivity). Furthermore, each member of the network shares the same view of the fundamentals of their socially responsible engagement:

  • solidarity and proximity in the service of a people-sized business;

  • transparency and trust between producers, retailers and consumers;

  • problem prevention and awareness of the long-term;

  • return work and money to their roles as development tools not ends in themselves;

  • return the economy to its role of serving humanity.

Each Guild member encourages its customers to opt for other members when making their purchases.

Tiger Brand: a social economy company from Canada

Tiger Brand offers a complete range of casual wear made in Canada by unionized workers who enjoy decent working conditions. The company operates as a cooperative and its workers are participatory stakeholders who are fully integrated into decision- making structures.

Tiger Brand is a North American pioneer in terms of social responsibility. Many major clothing manufacturers claim to operate socially responsible policies, i.e. they assert that they do not deal with sweatshops. There are, however, few independent bodies capable of validating such policies. Tiger Brand works with the Maquila Solidarity Network to lobby for the enactment of legislation to allow independent certification of such companies.

Oil Partner: CSR in operation at an Eastern European SME

Seen from one perspective, Oil Partner is an SME trading in the automobile maintenance sector that has found a way to develop a previously unexploited niche in Eastern Europe: it provides basic maintenance to motorists in a hurry, quickly and without an appointment. From another standpoint, Oil Partner is a truly innovative initiative in terms of SME social responsibility.

The company was founded in 2000 in Bratislava, Slovakia, as the result of a joint initiative by three investors from three different countries. This was an unusual group of investors33 in that they were as concerned by the social profit of their investment as by the financial profit. This meant that they came together with two separate gifts: capital to invest in the creation or development of an SME, and the requirement that the company in question would have to grow in accordance with a range of ethical criteria. Special attention was paid to the company’s vision and mission. Four stakeholder groups were defined as priorities: customers, staff, the community, and investors. Values and objectives were identified for each group. Indicators were also defined in order for successes or failures in the company’s stakeholder relations to be measurable. The result was customers who were assured of being served as rapidly as possible, without an appointment, who could watch everything done to their vehicles (including underneath) via a TV hookup, who were offered a choice of replacement part brands, and who were asked to express their opinions about their satisfaction and impressions of the work carried out. The major input to the local community was both social, through hiring young people returning to the labor market after undergoing a drug treatment program, and ecological, through use of the latest waste treatment protocols, and (where possible), the use of recycled materials. The company also returns 5% of its profits to the Integra Foundation34 so that it in turn is able to contribute to new projects. For its staff35, the CSR program results in the young people obtaining long-terms employment contracts, a transparent and incentivizing payment structure, regular training and team gettogethers. As for the investors, not only do they enjoy such rates of return as an SME is capable of offering, but they also have the opportunity to actively participate in the management of the company.

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