Sustainability Report 2009 - The Co-operative

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Public policy Customers Employees Economic impact Membership and co-operation Delivering value Membership and co-operation Indicators Member economic involvement: share of profits Member democratic participation Membership diversity Member training and development Member engagement Co-operation among co-operatives Targets 2009 Increase the number of members trading with more than one business by 10% in 2009 (page 89). Develop a consolidated Membership scheme for the expanded society, following the recent mergers and acquisition (page 88). target achieved on track Targets 2010 close to target behind schedule target not achieved • Increase number of members trading with more than one Co-operative Group business by 10% in 2010. • One million new Membership cards to be activated in the former Somerfield estate in 2010. • Complete development of a consolidated Membership scheme for the expanded business, following the recent mergers and acquisition. • Increase participation in regional members’ meetings by 5%. • Increase proportion of area committee elections that are contested 1 by 10%. • Engage with former Britannia members to encourage their participation in the 2010 area committee ballots. • Implement new Membership engagement strategy and develop an engagement index to measure progress. Background Against the backdrop of a challenging economy, the UK co-operative sector has continued to grow 2 . There are some 4,800 co-operatives nationwide − involved in everything from food retail, to housing, farming and education − creating and sustaining more than 200,000 jobs and contributing £28.9bn in turnover to the UK economy 3 . Worldwide, there are more than 800 million individual co-operators and the 300 most successful co-operatives have an aggregate turnover of equivalent size to the tenth largest economy in the world 4 . The values that are at the heart of co-operation (inside front cover) are highly relevant to present-day concerns about responsible business practice, and the belief that business has a purpose and responsibilities beyond the sole pursuit of profit. The Co-operative Group is registered under the Industrial and Provident Societies Acts 1965 to 1978, and is jointly owned and democratically controlled by its members. For just £1, anyone who is aged 16 or over 5 , lives in the UK and agrees to the co-operative Values and Principles (inside front cover) can become a member 6 . Through trade, members earn a share of the profits of the business and can exercise their democratic control, with equal rights and benefits. Unusually for a UK consumer co-operative, The Co-operative has both individual members and corporate members 7 ; the majority of the latter being drawn from the UK co-operative societies to whom it provides services. Materiality and strategy ‘Growing and engaging Membership’ is a key performance indicator for both the Trading Group and CFS (page 8), with growth in the cross-trade across the business a particular area of focus, along with more effective engagement with Membership. In line with the sixth co-operative principle, ‘Co-operation among co-operatives’ 8 , The Co-operative seeks to deliver value to the rest of the Co-operative Movement. In the latest Ethical Policy consultations undertaken by The Co-operative for banking and investments, members and customers indicated their wish for the business to pursue measures that support and promote co-operatives. Furthermore, during 2009, The Co-operative consulted members to better understand their expectations of how the business should engage with them, and a new Membership Engagement Strategy has been developed to reflect these priorities (page 91). Mergers, acquisitions and Membership In the course of 2009, The Co-operative’s Membership base grew significantly, from 3.5 million to 5.1 million 9 (65%). The increase, in the main, arose from the transfer of Britannia members into The Co-operative’s scheme. Additionally, following the acquisition of Somerfield, Co-operative Membership was introduced to stores as they became rebranded to The Co-operative, and then to all remaining Somerfield stores. As part of the merger between CFS and Britannia, an additional 1.4 million new members were added to The Co-operative Membership scheme. The existing Britannia membership reward scheme was brought to an end on 31 December 2009. In September 2009, Plymouth & South West Co-operative Society also transferred its engagements to The Co-operative, including its membership base of 165,000. A number of independent co-operative societies adopted The Co-operative’s Membership branding in 2009, but retain control of their respective membership schemes 10 . 88 The Co-operative Group Sustainability Report 2009
Member economic involvement Share of profits The Co-operative pays out a share of its profits to members twice a year, via a final dividend payment in June, and an interim dividend payment in November 11 . Members earn ‘points’ through transactions with the family of businesses; the more business they do with The Co-operative, the greater their share of the profits. Members can take their reward as vouchers, receive cash in store, have their reward paid directly into a bank account, or opt to donate their share of profits to The Community Fund (page 18). The option of a cash reward makes The Co-operative Membership scheme unique among major UK high-street retailers. Typically, members will receive one point for each pound they spend, as well as points for trade with The Co-operative Bank, The Co-operative Insurance, smile and Britannia. The total number of points earned across the family of businesses was 2,465 million in 2009 (2008: 1,912 million). The total dividend payment, and therefore the financial value of a Membership point, varies depending on financial performance. In 2010, payments in respect of profits earned during 2009 totalled £107.1m 12 , to be divided between individual members, a community dividend, and employees. The total amount paid out as dividend has increased some 390% since 2005, with the amount paid out to individual members and the community increasing more than five-fold and 10-fold, respectively, in this period. Profits for distribution Members earning a share of profits 15 Cross-trading 2005 (£m) 2006 (£m) in respect of 2007 (£m) In 2009, The Co-operative exceeded its target to increase by 10% the number of members trading with more than one business, achieving an increase of 43%. Since the relaunch of the Membership scheme in 2006, the number of members crosstrading has increased by almost half a million. Members trading with more than one business 2008 (£m) 2009 (£m) Individual members 13 9.9 18.9 44.9 50.3 54.5 Corporate members 15 15.1 24.9 19.5 19.6 Community 1 2.1 14 10.0 10.0 10.0 Employee members 1.7 6.3 19.9 23.1 23.0 Total 27.6 42.4 99.7 102.9 107.1 2006 2007 2008 2009 2.0m 2.2m 2.5m 3.3m 2006 2007 2008 2009 231,916 359,784 548,143 783,511 Democratic structure Changes to democratic structure Following the merger of The Co-operative and United Co-operatives in 2007, a Constitutional Review took place in 2008, to identify an appropriate governance structure for the new Society. A three-tier structure of area committees, regional boards and a Group Board was confirmed, and the number of regions reduced from nine to seven, with 45 area committees, and a members’ council for Northern Ireland 16 . The Board was reduced in size, and given the potential to appoint up to three independent professional, non-executive directors. Two new subsidiary Boards were established for Food and Specialist Businesses, in addition to that already existing for CFS. In order to accommodate the 2008 and 2009 mergers of the Lothian Borders & Angus Society and Plymouth & South West Society, two additional area committees were created as a transitional arrangement in these areas. The transition to the new governance structure progressed in early 2009. As a result of the changes to The Co-operative’s democratic structures and practices, all members of The Co-operative’s elected bodies were required to seek re-election if they wished to continue to represent members. Further to the merger with Britannia, seven members of the former Britannia members’ council (page 111) were selected to serve on the regional board and area committee covering their place of residence 17 . 2009 Membership elections As a result of the unprecedented number of members standing down from committees following the Constitutional Review, the 2009 elections registered a record number of voters, and a record number of new members were elected to area committees. Of the 46 area elections 18 , 26 (57%) were contested, with 638 members standing for a total of 566 vacancies. Of the 1.2 million ballot papers distributed to members, 130,000 (10.8%) were returned. Rather than being sitting candidates, 54% of the successful candidates at area committee, and 59% of the successful candidates at regional board, were newly elected. Regional boards and area committees Regional boards have a broad remit 19 , which extends across The Co-operative’s regional commercial interests. This includes: reviewing management proposals in respect of regional revenue and capital expenditure budgets; receiving and monitoring the sales and profitability of the region’s core trading operations; making recommendations concerning the development of the region in line with core Co-operative Group Board objectives and strategies; and approving regional capital expenditure proposals. Additionally, the regional boards have a number of key responsibilities in respect of constitutional arrangements and membership. Each regional board has a Values & Principles subcommittee, which is tasked with ensuring that The Co-operative’s principles and social goals are pursued at a local level. Regional board members have the opportunity to seek election to The Co-operative Group Board and, to this end, it is possible to progress from being a customer of The Co-operative to a Board director through established, democratic channels. Delivering value Membership and co-operation Economic impact Employees Customers Public policy The Co-operative Group Sustainability Report 2009 89
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Sustainability Report 2009 Focus on
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The Co-operative Group Sustainabili
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prioritising community investment a
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“There is a tide in the affairs o
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About this Report Target attainment
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Mechanisms that influence materiali
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distinct team within The Co-operati
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• the organisation includes the p
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Community investment Indicators Com
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Employee volunteering 14 Number of
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International development and human
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000 400000 500000 The Co-operative
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Completion of improvement actions i
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One Big Idea competition In Novembe
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employed from the local population.
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Read more in this Report • The Co
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Independent third-party auditors ar
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Beef production All own-brand fresh
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The Co-operative Asset Management o
Page 39 and 40: Achievements 1986 In the absence of
Page 41 and 42: Community involvement Food educatio
Page 43 and 44: to be considered in the provision o
Page 45 and 46: Ethical and sustainability engageme
Page 47 and 48: Ethics and sustainability overseas
Page 49 and 50: Social inclusion Indicators Access
Page 51 and 52: intended to enable UK consumers to
Page 53 and 54: Diversity Indicators Gender Ethnici
Page 55 and 56: The Trading Group and CFS are holde
Page 57 and 58: The Co-operative Asset Management -
Page 59 and 60: Climate change Indicators Energy: c
Page 61 and 62: Total net CO 2 emissions from energ
Page 63 and 64: Decrease 2006-2009: 40% Decrease Th
Page 65 and 66: Carbon footprinting In 2007/08, The
Page 67 and 68: Bank finance for renewable energy I
Page 69 and 70: Oil sands consist of oil trapped in
Page 71 and 72: Waste and packaging Indicators Wast
Page 73 and 74: 2007 2008 2009 140,766 r 134,798 r
Page 75 and 76: • 212 tonnes of tyres, oil and pa
Page 77 and 78: Biodiversity Indicators MSC-certifi
Page 79 and 80: Total percentage of own-brand fores
Page 81 and 82: Tillington Hills apple crush, part
Page 83 and 84: Yes 88% No 12% InSight customer fee
Page 85 and 86: Examples of decisions taken on chem
Page 87 and 88: The Co-operative Farms’ use of ch
Page 89: Focus on delivering value Contents
Page 93 and 94: Activism Democratically active memb
Page 95 and 96: The Co-operative Enterprise Hub: fi
Page 97 and 98: 2,057.3 2,057.3 1,271.5 1,271.5 57.
Page 99 and 100: British sourced, traditional Hampsh
Page 101 and 102: Employees Indicators Employee engag
Page 103 and 104: were in perceptions that: colleague
Page 105 and 106: CFS has developed, delivered or sup
Page 107 and 108: esult of greater awareness of the e
Page 109 and 110: 8 2006 figure comprises The Co-oper
Page 111 and 112: A range of drivers impact on custom
Page 113 and 114: Complaints received by other custom
Page 115 and 116: Public policy ‘influence and acti
Page 117 and 118: Trade and business association memb
Page 119 and 120: Independent assurance statement Sco
Page 121 and 122: Reporting in accordance with the GR
Page 123 and 124: Recognition Social responsibility
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