Social Performance

As noted in the introduction, a vast literature has documented that local ownership of business contributes to community well being in multiple ways. Much of it, however, is theoretical. While our case studies contain numerous stories of CFE initiatives actually benefiting a community, we did not have the resources to perform special surveys or empirical studies to quantify the impacts. Indeed, except in very small communities where there are only a few businesses, the impact of any one business on the community is almost always too small to measure, even in theory. Even where its impacts seem significant, there are so many other factors at play history, politics, culture, the global economy, even the weather that a serious social scientist should question whether a strong correlation between a business’s performance and the community’s welfare reveals very much about causality.

But we also know that business behavior matters to a community, even if it’s hard to measure. If nothing else, it sets a model for other businesses in the community to follow. We consequently sought to measure what we could of the social performance of each CFE through a common set of metrics. A condition of a company qualifying as a case study was its willingness to take the B Survey online.

For some of the non-U.S. companies surveyed, we worked closely with the businesses to help them understand terms in the survey that might not easily translate into their own language or business culture.

The “B” in B Corp stands for “beneficial,” and the mission of B Lab (the instrument’s nonprofit architect) is to help businesses benchmark their “socially responsible” performance and steadily improve it. The survey takes a comprehensive look at products, practices, and profits, as well as indicators of leadership, employees, consumers, community, and environmental practices. There are 200 points available in the B Ratings System, and a company must achieve a score of at least 80 points to be eligible for certification. Thus, the evaluation extends beyond just the company’s product or isolated practices, and helps illuminate the full impact of the company and set a standard for what is good enough to be a “good company.” (A longer description of the B Ratings System can be found in Appendix 1.)

The B Survey measures eight different areas of performance: products/consumers, practices, profit sharing, leadership and governance, labor, community, consumers, and environment. Below we briefly describe these criteria, and give examples of exemplary performance from our case studies:

Products: Are the goods and services genuinely useful for the public, or are they addictive (like tobacco) or dangerous (like guns)? Do they promote economic equality, environmental protection, or knowledge or arts industries? Are the production methods safe and pollution free? Are the goods and services reaching poor or otherwise distressed communities, including women, ethnic minorities, and people with disabilities? Most foodstuffs, and all the foodstuffs studied here, score reasonably well on these criteria. Two CFEs in the United States that scored highly are the Oklahoma Food Coop and Greenmarket, both of which emphasize delivering affordable fresh food to low-income consumers. The CFEs that adhere to high standards of organic growing and natural foods also performed well, such as Akiwenzie’s Fish (which naturally smokes fresh fish) and the Panchakanya Agriculture Cooperative (which produces organic fruits and vegetables). Fundación Paraguaya’s Self-Sufficient Organic Farm School and Sylva’s Professional Catering Services scored well because they are not only producing salable products but also training a new generation of CFE entrepreneurs.

Practices: Is the enterprise engaging in business practices that are humane and responsible? Is the firm taking strong affirmative steps not only to minimize pollution and energy use but to restore ecosystems? Does it have a written environmental policy, with annual reviews of progress? Is it providing opportunities to the poor? Particularly high scores here were registered by enterprises that organized and empowered low-income farmers like the National Onion Growers’ Cooperative Marketing Association in the Philippines, the Panchakanya Agriculture Cooperative in Nepal, Cargills in India, and the Oklahoma Food Cooperative.

Profits: Does the enterprise compensate employees fairly? Does it distribute wealth through broad ownership? Does it support the community through significant charitable giving? Strong performances came from Weaver Street Market, Zingerman’s Community of Businesses, and the Greenmarket in the United States, and from Cabbages & Condoms in Thailand and Fundación Paraguaya in Paraguay. All of these enterprises have multiple kinds of businesses, and reach out to their communities in multiple ways, including education, advocacy, training, and events. Weaver Street is partially owned by its workers, and Zingerman’s provides exceptional compensation, benefits, and ownership opportunities.

Leadership: Is there a strong system of checks and balances overseeing managers? Is there frequent and open reporting of operations to the public? Does the company adhere to a strong code of conduct, such as fair trade rules? The top performers here are all cooperatives and nonprofits: the Intervale Center and Greenmarket in the United States, both nonprofit; and the Panchakanya Agriculture Cooperative and Kuapo Kokoo internationally. One explanation of the high scores of the international enterprises is their efforts to obtain international certifications for fair trade and organics, both of which provide farmers with market rewards for social or environmental performance.

Employees: Does the firm give good compensation, including living wages, health care, family leave, and maternity leave? Does it foster employee ownership, profit sharing, and employee participation? Is the spread between the highest and lowest paid employee not too wide? Is the work environment positive? Are there regular performance reviews of employees, an employee handbook, and a workplace code of ethics? The top U.S. scorers were Zingerman’s and Weaver Street, both of which incorporate worker ownership and have achieved a scale where they can reliably provide their employees with excellent compensation. Internationally, most of the firms scored moderately well, though the highest score came from the National Onion Growers’ Cooperative Marketing Association in the Philippines.

Consumers: In the current B Survey, the questions and score in this category are identical to those under “Products.”

Community: Does the company contribute to the community by buying and banking locally? Does it contribute to local charities? Does the firm support community service and allow employees to take time off to contribute to such service? Is ownership truly rooted in the community? Is the customer base primarily local? All the CFEs studied were locally owned and committed to the local economy, so the main difference was their involvement in charity, with especially high performance by Greenmarket and Cabbages & Condoms, both nonprofits whose missions are to generate funds for broader social change programs.

Environment: Is the corporate office green? Is the transportation used highly efficient and using renewable liquid fuels? How environmentally benign is the manufacturing equipment? Are facilities LEED certified and using recycled materials? Are there practices that minimize transportation, energy, and carbon emissions? The strongest performance here was from CROPP in the United States and the Mavrovic Companies in Croatia.

Four of our enterprises Anna Marie Seafood, Indian Springs, Cabbages & Condoms, and Sunstar Overseas Limited did not receive a high enough total score to qualify as a B Corporation. In our view, however, this did not mean that these companies were poor social performers, since each actually scored high grades in many social performance categories that made up the total score.

Our own reflection on the B Survey instrument is that it is most useful as a benchmark for a CFE to measure its own progress on triple bottom line indicators, and that comparing companies across industries is not as useful. This is exactly why the survey was created: as a tool to help enterprises develop better social and environmental performance. There are so many differences between types of business between food manufacturers and restaurants, for example that it’s like comparing apples to cherry pies.

What is illuminating is reviewing the many real world ways our CFEs achieve social goals beyond private profit. Below we summarize seven particularly compelling kinds of community impact:

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Greater Income

CFEs’ embrace of labor rights has brought greater income to its workers. NOGROCOMA’s 206 farmer members receive, for every kilo of onions the cooperative buys for resale, an immediate cash “patronage” of 1 2 pesos (US $0.02 $0.04) over the market price. Incomes for the women in the Panchakanya Agriculture Cooperative also are up, which is striking since many are not yet receiving the full premiums they ultimately will get from organic production.

Several CFEs have relied on fair trade to boost the incomes of their farmers. Premiums from fair trade allow Cargills to guarantee prices to 10,000 farmers in Sri Lanka that are 20% above costs. Kuapa Kokoo has used fair trade premiums to raise the incomes for 45,000 cocoa growers in Ghana.

Kasinthula Cane Growers Limited in Malawi developed a comprehensive plan that allocates its fair trade premiums to building materials for its 282 farmers, infrastructure for the company, and investment in the farmers’ communities. In the third category, the company has thus far built wells for safe drinking water, allowing local families to avoid crocodile infested rivers as their primary water source. It has also brought electricity to small villages, expanded a medical clinic at Kasinthula, made essential drugs available through the clinic to members of the community, provided HIV/AIDS education and treatments, and offered emergency aid during natural disasters.

Sunstar’s fair trade practices have clearly benefited its participating farmers, who receive hands on training in organic production techniques, soil protection and improvement, proper production and use of organic manure, and sustainable use of local resources. They also get access to improved inputs like certified seeds and biofertilizers, all through interest free loans. As product quality has improved, so has grower income. Farmer Palla Singh reports, “Now I make sixty or seventy thousand rupees (U.S. $1500 $1750) annually; earlier it was twenty or thirty thousand rupees (U.S. $500 $750 annually). With the extra income we have built our house.” His wife adds, “We have been able to send our children to school, added rooms to our house, even married off our children.”

Training

CFEs enrich their communities’ entrepreneurial base through workforce training. With 80% of its employees in their 20s, Cargills in Sri Lanka has devised several programs to engage and “skill up” young workers. Its human resources department is called “Human Capital.” Every employee goes through the Albert A. Page Institute of Food Business, an in house certificate program that offers free classes to employees at all levels. The recruitment process is all about finding young people committed to lifelong learning and serving.

Kuapa Kokoo’s technical training educates members about how to employ more efficient and sustainable agricultural practices, and how to decipher trends in the global cocoa market. Over 10,000 Kuapa Kokoo members have taken advantage of these programs.

Training actually is the business for several CFEs. Fundación Paraguaya’s Financially Self-Sufficient Organic Farm School graduates 50 high school students a year after their “experiential education” running 16 different kinds of food businesses. The Intervale in Burlington, Vermont, has a Farm Incubator Program that has supported emerging and small organic farmers since 1995. A new Intervale program, Success on Farms, provides free, customized business planning and technical support services for farms throughout northern Vermont.

Cabbages & Condoms hires Thais who are HIV-positive, which encourages other employers to do likewise. Similarly, Zeljko Mavrovic in Croatia has also developed a strong community partnership with Pet Plus, a local nongovernmental organization providing therapeutic support to drug addicts in the region. The business cluster directly donates funds to Pet Plus, and also provides employment opportunities, training, and other services to Pet Plus clients.

Ecology

The local nature of CFEs enhances their stewardship of natural resources. Unlike global companies that often exploit, exhaust, and then abandon a resource base, a CFE is tethered to the community’s assets in perpetuity. Consequently, the Ajddigue Women’s Argan Cooperative is trying to replenish the fast disappearing argan trees by replanting depleted forests. Andrew Akiwenzie distinguishes himself from what he regards as the irresponsible practices of big, commercial fishing operations at Cape Crocker and in the Georgian Bay, and he sets limits on his own fish catch to allow local stocks to replenish themselves.

By the late 1990s and early 2000s, the lands of NOGROCOMA farmers became acidic due to overharvesting, requiring expensive fertilizers and pesticides. The cooperative responded by facilitating technical assistance in integrated pest management (IPM) from the U.S. Agency for International Development (USAID), local and foreign universities, and myriad other international development and agriculture organizations. Now NOGROCOMA is working to spread these IPM techniques to non-members.

Keenly aware of the adverse public health consequences of relying on chemicals, the Panchakanya Agriculture Cooperative in Nepal has spread organic growing methods. The region where it operates now sees lower health care costs as a result of reduced pesticide use.

Plus, reports Nirmala Adhikari, the leader of Panchakanya, “the incidence of diarrhea and dysentery in our village is much less than the nearby villages because of increased awareness of proper sanitation and the consumption of fresh organic vegetables.” Villagers also are eating food that is less contaminated and enjoying a higher standard of living, which has resulted in improved sanitation measures such as home toilets and improvements in the community’s water supply.

Local Economy

As elaborated in the Introduction, CFEs pump up their surrounding economies by hiring locally, buying local inputs, and engaging in (or contracting for) local value-added production. Some, like Zingerman’s Community of Businesses, deliberately do all three. So does Cabbages & Condoms in Thailand, the farms of which grow many of the vegetables and spices used in its restaurants. Fundación Paraguaya’s Farm School hires all its instructors locally, purchases all its supplies (except durable goods like vehicles and computers) within an hour’s drive, and teaches its students how best to use local resources. Cargills has recently set up an Agri-business Center to supply more local seeds, agrochemicals, and farm machinery to its farmers. The Panchakanya Agriculture Cooperative in Nepal is helping its female farmers buy inputs locally.

While the exact economic impact of these initiatives is hard to measure, two facts are indisputable. The jobs created and money spent by these businesses are real and add to the local economy. And these direct impacts, by stimulating a local economic multiplier, reverberate indirectly into still more income, wealth, and jobs for each CFE community.

Charitable Contributions

One study from the National Federation of Independent Businesses in the United States found that small businesses give more than twice as much to charity (per employee) than larger businesses do.[19] This is unsurprising. Local business, deeply nested in its community, has an enormous stake in all aspects of the community’s success. Some of the most successful CFEs in the United States—White Dog, Zingerman’s, and Weaver Street— actually have started their own foundations to funnel profits toward their favorite community causes.

Internationally, CFEs have developed other techniques to accomplish charitable purposes. The entire structure of Cabbages & Condoms is to pump millions of dollars each year into the Population and Community Development Association in Thailand. Zahra Kenabou, general manager of the Ajddigue Women’s Argan Cooperative, says that her literacy programs “contribute to the economic and social improvement of the community and the cohesion of the family.”

The CFEs promoting fair trade relationships have set up programs to invest their sales premiums into participating communities. Sunstar Overseas Limited in India, for example, has prioritized using its fair trade premiums for infrastructure improvement. The monsoon season used to mean that tractors and bullet carts could not get through to the fields, and at times, even walking to farms was impossible. Now many of the participating villages have roads, bridges, drainage ditches, and bus shelters. One of Sunstar’s farmers reports, “Since 2001, we have no problem reaching our fields. We can bring back the paddy to our village by tractors or carts.” Children who once fell sick from their waterlogged journeys can now walk to school. New fences around their schools protect them from stray cattle and garbage that used to be tossed onto the playgrounds.”

Women’s Empowerment

Almost all of our CFE examples are empowering women. Some do it directly. The leaders and members of the Ajddigue Women’s Argan Cooperative in Morocco and Panchakanya in Nepal are all women.

Part of Ajddigue’s program is to teach its members how to read and write and how to run a business. The consequences are huge. Madame Zahra Kenabou, Ajddigue’s general manager, elaborates, “Traditionally the women would do all the work of collecting the fruits and extracting oils and other products and the men would sell the products and, since it is a patriarchal society, keep all the money and spend it at their discretion. The cooperative culture is changing that. Women in the Ajddigue cooperative are not mere workers, or housewives doing what they have traditionally done for free. They are full members who collectively own the cooperative and share in its profits. That gives them a strong sense of ownership of their labor, of the products of their labor, and of the income this generates.”

Other CFEs reach out to women. Cabbages & Condoms preferentially hires women, and boasts that 60% of the staff at its Bangkok restaurant are women. Kasinthula Cane Growers Limited in Malawi has brought women into its governance committees. Dulce Gozon has become a powerful female leaders of NOGROCOMA in the Philippines. While onion farming is still dominated by men, Dulce says that “women are better at handling the product with TLC, good at selling, and are better marketers than men.” Dulce actively encourages women’s participation in farming and cooperative management, and promotes women’s development through her advocacy. For over two decades she has been a member of Soroptimist, an NGO that works to improve the lives of women and girls throughout the world.

Global CFE Solidarity

One of the precepts of cooperatives is solidarity that is, to assist other cooperatives worldwide. This kind of behavior, which defies the traditional economic logic that predicts that businesses only will maximize their own self interest, actually can be seen in all our CFEs. Indeed, their very participation in our study, which involved dozens of hours of unpaid work, can be understood as a contribution to a global movement of CFEs.

The White Dog Café and Cabbages & Condoms are part of a global sister restaurant network. The African American farmers of Indian Springs Cooperative in Mississippi have reached out to producer cooperatives in Africa. The Intervale Center in Burlington, Vermont, has programs to educate the public, including foreign visitors, about its activities.

Cargills finds its international collaborations mutually beneficial. It has brought industry leaders to Sri Lanka from competitor countries like India to help learn about their innovations. Cargills’ “graduates” are now in high demand in other food companies, particularly in the developing world. Ranjit Page, the company’s president, is not content to see his model stay in Sri Lanka. Increasingly he is speaking at international conferences and hosting international research delegations.

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