To address today’s issues of climate change, environmental degradation, and inequality, we must construct more local and resilient economies, and take back ownership of our resources.
This is the key message in a ground breaking new book, The Resilience Imperative, by Michael Lewis and Pat Conaty. The authors provide examples of cooperative and inclusive ownership models for community control of energy, housing, food production, manufacturing, finance, and social services from many countries. People all over the world are trying to recover local control over their resources and productive assets, reacting to the growing ownership of these assets by international capital, and the trade deals that protect these investments.
This new "social economy" includes non-profit and co-operative enterprises, and corporations that have a legal responsibility to the community and environment – along with the financing vehicles to leverage community investment in these enterprises.
Lewis and Conaty show that only at the local level can social, economic and environmental needs be democratically and equitably met. Shared ownership and more participation leads to excellent economic results and more responsible management of resources.
The Canadian social economy is healthy, particularly in Quebec where there has been multi-party support for the sector for nearly 20 years. However, Canada’s fundamental economic development policy remains driven by fossil fuel development and continuous growth.
The current economy is driven principally by corporations that owe allegiance only to their shareholders. Wealth and ownership are often concentrated far from the local communities where this wealth is generated. At the same time inequality continues to grow.
Our non-renewable resources, though great generators of wealth for some, are largely privatized and used wastefully and irresponsibly without public input or control. Privatization of natural resources is a constant threat. Without definitive national policies to democratize the economy, along with incentives to increase local ownership and include local community stakeholders in corporate decisions that affect them, an equitable transition to a green economy seems remote.
Fortunately, there are a variety of more democratic corporate structures identified by Lewis and Conaty that are already making an impact. Building institutional support for these enterprises will be critical.
Most Non Profits provide community and social services and focus on local hiring and training. The enterprises are run by those who work for them, those receiving services, or by representatives of all stakeholders. Seed financing for these enterprises is often provided by community loan funds or full service Credit Unions, and revenue is generated from those receiving services or government programs delivered by the enterprise. Non-profits have also become the focus of the growing social impact investing movement.
Non-profit enterprises in the clean energy sector include home retrofit services, bike sharing enterprises, and efficient affordable housing corporations. Examples include BUILD in Winnipeg, Kirklees Energy Services in the United Kingdom, and Envirocentre in Ottawa.
The seven international co-op principals that all co-operatives abide by are: open membership, democratic control, member economic participation, autonomy, training, alliances, and concern for community (and environment). Co-ops are therefore very much a part of the social economy. Co-operative enterprises that produce goods and services on a for-profit basis include worker co-ops, equity investment coops, and multi-purpose co-ops that include membership from suppliers and consumers.
Capitalization for these co-ops comes from the members themselves in the form of equity and credit, with the revenue generated from goods and services being used to pay wages and provide a return on equity.
Socially Responsible and Beneficial Corporations
Several jurisdictions have enacted legislation that defines a new type of corporation that is beholden to all stakeholders in the community and environment rather than simply maximizing profit for their shareholders and owners. Legislation requires that these corporations be created to have a positive impact on society and the environment, consider non-financial interests, and report on their overall social and environmental performance. New enterprises may incorporate using this socially responsible structure or a conventional corporation may re-incorporate as a benefit corporation.
In the United States, where 20 states have enacted legislation, these corporations are known as Benefit Corporations. In British Columbia, they are called Community Contribution Companies, and in Nova Scotia and the United Kingdom, Community Interest Companies. Where no special legislation exists, conventional corporations may become certified as a Benefit Corporation by B Labs in the US and MaRS in Canada.
Examples in the clean energy sector include Bullfrog Power in Canada and SolEd and Co-op Power in the United States. Any manufacturing or service corporation in the energy sector could convert to this corporate structure, including appliance manufacturers, heating system contractors, and renewable energy suppliers.
The Need for Political Action
The common thread running through all of these corporate forms is economic democracy. The growth of the social economy shows that given the right opportunities, ordinary citizens would much rather invest their savings in local enterprises than in conventional financial markets. We therefore need economic policies that encourage this.
Lewis and Conaty show that governments should be “strategic enablers” and partners in building the social economy, treating the social economy as a key component of economic policy. The Government of Quebec has taken a major step in this direction with its support forLe Chantier de l’économie sociale, a multi-stakeholder body that coordinates strategic support services to social economy enterprises in Quebec.
Other policies that would encourage a transition to a social economy include:
- Changes to Ontario and Quebec co-operatives legislation to remove the requirement that at least 50% of services must be provided to members. This would allow any enterprise to be structured as a co-operative.
- National benefit or community interest corporation legislation similar those mentioned above, so that corporations anywhere could use this model. Tax and other incentives should be put in place to favour adoption of these structures.
- Support for training programs in community finance and co-op management similar to those provided by Le Chantier
- Loan guarantees and seed funding for community loan funds
- Requirements that social services and special programs like low income community retrofit programs be delivered only by non-profits enterprises.
- Feed-in tariffs and tax incentives to encourage local equity investment in clean energy co-operatives
- Requirements that all new clean energy production facilities – wind, solar, bi-energy, hydro-electric, combined heat and power – be community owned.
- Exemption of social economy enterprises from investment protection agreements
Above all we need political parties to take these policies, and the transformative power of the social economy sector, seriously.
Roger Peters is Past-President of the Ottawa Renewable Energy Co-operative. The opinions expressed herein are those of the author and not necessarily those of the Institute.