SOCIAL ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER 2013
SOCIAL ACCOUNTS for the year ended 30 September 2013
CONTACT Shared Interest 2 Cathedral Square Groat Market Newcastle upon Tyne NE1 1EH
Tel 0191 233 9100
socialaccounts@shared-interest.com www.shared-interest.com
www.sharedinterestfoundation.com
@SharedInterest
@SharedIntFdn
Shared Interest Society Limited an Industrial and Provident Society Registered Number 27093R
Shared Interest Foundation Registered Charity Number 1102375
ACKNOWLEDGEMENTS Shared Interest is very grateful for the help and advice received during the preparation of these accounts. We would like to thank everyone who has been involved, especially Alan Kay, Philip Angier, Judith Brown and Dr Matthew Anderson for taking part in the Social Audit Panel. The Social Audit Network has continued to be a useful source of guidance and training. These accounts have been independently audited and the full Social Audit Statement is on page 6. We would also like to thank David Parker for supporting the preparation of the report. Finally, we would like to thank all our stakeholders for their involvement, comments and survey responses. We are grateful to the staff team involved in the process of preparing this ninth set of social accounts, particularly Andrew Ridley, Kerrey Baker, Jo Hall, Louise Mounsey, Jo Tong, Denise Sumner, Stina Porter and Chris Pay as well as to other staff who contributed to specific areas.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
CONTENTS
Page
1 Welcome
5
2 Social Audit Statement
6
3 Summary
7
4 Why We Exist and What We Do
14
4.1 Vision, mission and values
14
4.2 Aims and activities
15
4.3 Where the funds are used to support fair trade
17
5 Our Performance against Aims and Activities
18
5.1 Aim 1: Provide financial services and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries
18
5.2 Aim 2: Provide members and supporters with a social return which attracts new share capital and retains existing investments
40
5.3 Aim 3: Provide business support and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries
56
5.4 Aim 4: Work in partnership with people who share our commitment to fair and just trade
66
5.5 Aim 5: Conduct our business in a manner which reflects the principles of stewardship and environmental sustainability
75
5.6 Aim 6: Encourage staff’s talent and commitment in an environment of mutual respect
84
6 Next Steps
100
7 About Shared Interest
101
History
101
Ownership and governance
103
Legal structure and reporting
104
Compliance with statutory and voluntary codes
105
8 About our Social Accounts
106
Stakeholders
106
Social Capital
109
Scope
110
Consultations
110
9 Glossary and Abbreviations
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SOCIAL ACCOUNTS for the year ended 30 September 2013
APPENDICES Appendices are available separately to cover the following areas: Appendix 1
to support Aim 1
Customer list
Appendix 2
to support Aim 1
Explanation of lending products
Appendix 3
to support Aim 1
Case studies of impact on producer groups
Appendix 4
to support Aim 1
Survey of South American producer customers
Appendix 5
to support Aim 1
Survey of recipient producers
Appendix 6
to support Aim 2
Membership survey
Appendix 7
to support Aim 4
List of partner organisations
Appendix 8
to support Aim 4
Key benefits of Level 1 partners
Appendix 9
to support Aim 4
Partnership survey
Appendix 10
to support Aim 5
Green policy and checklist
Appendix 11
to support Aim 5
Financial control procedures
Appendix 12
to support Aim 5
Procurement approach
Appendix 13
to support Aim 6
Staff list
Appendix 14
to support Compliance
Key aspects checklist
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SOCIAL ACCOUNTS for the year ended 30 September 2013
1
WELCOME
Welcome to Shared Interest’s ninth annual social accounts report, covering the 12 months to 30 September 2013. It brings me great pleasure to present our developments over the last financial year. There have been some significant successes in achieving the Queen’s Award for Enterprise in the category of Sustainable Development for the second time, and reaching the desired milestone of lending directly to more producers than buyers for the first time in Shared Interest history. Meanwhile, Shared Interest Foundation carried out a strategic review, the results of which include the number of staff trebling to three full time employees, and recognition of our skills and knowledge in accessing fair finance. Thanks to funding from Comic Relief, we have been able to put this experience into practice with an Access to Finance project, which will see us work across five African countries over two years. With regards to our UK operations, we continue to offer 0.5% interest on share accounts in our drive to retain our current membership and attract new members. A Secure Area has also been developed for investors to view their accounts online. We hope that these progressions help us to continue to diversify our membership as we approach our 25th anniversary in 2015. As always, I wish to thank everyone involved in the creation of this report and hope you enjoy reading what it has to offer. We welcome feedback you may have on our work included here and hope you will email us any comments at socialaccounts@shared-interest.com.
Kate Priestley Chair of Shared Interest
Clarification of time periods References to ‘the year’ usually mean Shared Interest’s financial year: the 12-month period ended on 30 September. So ‘this year’ and ‘2013’ refer to the 12 months ended 30 September 2013.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
2
SOCIAL AUDIT STATEMENT
The Social Audit Panel has examined the draft social accounts submitted to us and discussed them in detail with Patricia Alexander (Managing Director), Tim Morgan (Finance Director), Chris Pay (Head of Foundation), Andrew Ridley, Kerrey Baker, Jo Hall, Louise Mounsey, Jo Tong and Denise Summer at the Social Audit Panel meeting held on 14 November 2013. I have examined the revised social accounts which were prepared following the Social Audit Panel meeting and which have taken into account various points identified in the notes* of the Social Audit Panel meeting. We also examined a sample of the data and the sources of information on which the social accounts have been based. We believe that the process outlined above has given us sufficient information on which to base our opinion. We are satisfied that, given the scope of the social accounting explained in the revised draft and given the limitations of time available to us, the social accounts are free from material mis-statement and present a fair and balanced view of the performance and impact of Shared Interest as measured against its stated values and objectives and the views of the stakeholders who were consulted. In the notes of the meeting the Social Audit Panel was unanimous in affirming that the accounts were clear, comprehensive and thorough, and that much progress had been made in responding to the Panel’s recommendations from prior years. We identified a number of important issues to be taken into consideration during the next social audit cycle. In particular we would refer to the following: i) Continue to research methods whereby Shared Interest can account for their direct impact on people and communities ii) Consider how case studies can be used more effectively in assessing impact iii) Consider including Key Performance Indicators and targets in future social accounts iv) Consider using ‘annexes’ and the Key Aspects checklist more effectively thus focusing more on the difference made to direct beneficiaries v) Consider applying a social capital approach in working with all stakeholders. The members of the Social Audit Panel were: Alan Kay (SAN Social Auditor, Chair) Philip Angier, Angier-Griffin Judith Brown, Co-operatives North East Matthew Anderson, Portsmouth Business School, University of Portsmouth
Signed:
Dated: 19 December 2013
Chair of the Social Audit Panel * the notes of the Social Audit Panel meeting form part of the social accounting and auditing process and may, by arrangement, be inspected along with the full social accounts at the offices of Shared Interest at 2 Cathedral Square, Groat Market, Newcastle upon Tyne NE1 1EH. Members of the Social Audit Panel have acted in an individual capacity.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
3
SUMMARY
SOCIAL ACCOUNTS As the world’s leading fair trade lender, Shared Interest Society forms a vital link between UK social investors and fair trade organisations needing finance to improve the livelihoods of producers. Shared Interest Foundation helps fair trade businesses to improve their financial management and other business skills. Through our social accounts, we demonstrate the difference our work is making across the globe. You can find out more about what we do in Section 7, and about our social accounts process in Section 8. In our social accounts we analyse the impact that our work has on our key stakeholders by closely aligning the aims and activities in this report with our vision, mission and values.
Mission Our mission is to provide financial services and business support to make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries. We work with people who share our commitment to fair and just trade. Together we take and share risk, because we value the difference that fair and sustainable trade makes. We seek to satisfy the needs of producers as they trade their way out of poverty and to meet the aspirations of our investors and donors to support them in achieving this aim.
Financial services Broadly speaking, our lending falls into two categories: funds lent directly to fair trade producer groups in developing countries, and funds lent to fair trade wholesale or retail businesses in developed countries. For a number of years, we have been following a strategy to increase the proportion of our direct lending to producers, recognising the value of this in supporting their business growth. From May to September 2013 for the first time in our history we had more money out on loan to producers than to buyers. Increasing the number of producer groups we lend to by 18 during the year, we now lend directly to 97 producer groups in 24 countries. There was a growth of 11% on the average amount of drawn lending by producers during the year. Unfortunately, lending to buyer organisations declined by 17% during the year so that our total average lending decreased by 7% overall. During 2012/13, our finance reached 375 fair trade organisations globally and we made payments of ÂŁ46.8m to producers and buyers across the world. We continued to maintain offices in Kenya, Peru and Ghana, as well as our head office in the UK. Staffed fully by local people with familiarity and knowledge within the region, we find that this local presence helps us reach prospective customers. This year, for the first time since 2011, we also employed a representative in Costa Rica.
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Historically, we have focused our marketing activity on gaining investors here in the UK. In order to promote our lending to producers, we have begun to develop our overseas marketing this year. In comparison with our lending to other regions worldwide, we believe we are currently under-lent in Africa. Lending in the whole of the African continent represents 8% of our total lending by number of transactions. Consequently we commissioned a report this year to understand the changing demand and supply factors relating to social finance in Africa and how Shared Interest might respond to these challenges. This year, we recruited a Monitoring and Evaluation Officer (MEO) based in our East Africa office. This post will be responsible for both collecting monitoring data on individual African producers, and developing the framework used to capture social impact data. We have also become an active member of a social impact committee, which has identified eight core social metrics to be used by all social lenders. We have been able to report on seven out of the eight metrics this year. While we have continued to approve new coffee facilities, proportionately we have approved more lending in foods, particularly pineapples, cashews and bananas. Regional producer committees were set up in 2010 in order to get more direct customer feedback. Meetings were held in Kenya and Peru in August 2013, and a meeting is planned to take place in Ghana early next year. All producers expressed concern in discussions about the environment. In South and Central America, the biggest challenge currently facing the coffee producers is a disease called ‘roya’ or leaf-rust. This year we consulted with our producer customers from South America as well as the producer organisations who receive money from us on behalf of a buyer customer. All respondents felt that we are achieving our mission which is very encouraging to hear.
Membership and share capital Shared Interest Society is a community benefit society and a member of Co-operatives UK. It is owned and controlled by its 8,805 members, who are spread across the UK. This geographical spread includes a number of areas of concentration around Glasgow, Edinburgh, Newcastle, Leeds, Manchester, London, Bristol, Oxford and Brighton. Our membership, predominantly individuals with an average age of 68, continues to diversify and includes faith groups, fair trade partnerships, small businesses, schools and community organisations. We also have a range of other volunteers and supporters, not all of whom are members. We currently have 138 volunteers. This year they attended 85 events across the country and contributed 265 hours to support Shared Interest. We will continue to monitor our volunteer activity and are currently investigating ways to encourage ambassadors to provide more information to enable us to carry out further monitoring and evaluation. This year, 1,993 members completed our biennial membership survey (a response rate of 27%). For 42% of respondents it was the first member survey they had completed. As 85% of respondents said they rarely contact the membership team, it is important that we therefore engage with members proactively to understand their views. In addition to our Annual General Meeting (AGM) we hold a series of member events in different locations.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
These events have been structured to facilitate an open debate on topics suggested by members. Venues and topics have included an ethical investment debate in Oxford, and a celebration of World Fair Trade Day in Brighton. In response to demand from our last membership survey, we launched a Secure Area on our website in July 2012. This provides a portal for members to view their share account statements, balance and personal details as well as accessing messages and resources. This year’s membership survey shows that 81% of respondents have internet access. At the end of the year 2,076 members (24% of our overall membership) were registered to use the Secure Area. Of those responding to the survey, 69% of members said they would like to have the facility to make transfers and withdrawals in the future. Members’ share capital is not protected by the FCA Compensation Scheme. Despite this, when members were asked about their perception of risk, 62% of respondents saw their investment as low risk due to our strong track record and relationship with producers. In the last decade there has been an increase in the percentage of members wanting us to take more risk. In 2001, 12% of respondents wanted less risk and 1% more risk, in comparison to the recent survey results which indicated 61% of respondents saying they would be prepared to take a little more risk and 12% indicated much more risk. Only two respondents said they wanted less risk to be taken. The main driver for most of our members is the social return offered by our lending activity rather than the interest received on investments. We currently offer 0.5% interest in order to retain members and attract new investors and 82% of the members responding to the survey strongly agreed or agreed with this policy. This year the number of accounts valuing less than £5,000 has reduced by 39 and the number of accounts valuing £10,000 or more has increased by 42. We identified in Shared Interest’s business plan that faith groups are a key area for development. The membership survey confirmed that a significant proportion of our existing members are Christians. This leads us to believe that there must be scope to pursue new members in this area. We have made a start in this by establishing a good working with the Church of Scotland, Church in Wales and the Ecumenical Council for Corporate Responsibility.
Business support Through Shared Interest Foundation, we provide business support to the fair trade movement around the world. This takes the form of training in business skills, the development of fair trade business support networks, and occasional grants for emergency assistance when fair trade businesses face a threat to their existence due to natural disaster. This year we worked in eight countries to provide support to 137 businesses. Through our in-country delivery partner, SWIFT, we are currently working with 43 businesses at three different levels of development in Swaziland. Since the project began in 2010, 182 jobs have been created and the incomes of 2,553 producers have been raised by over 10%. The development of SWIFT as a local business support organisation is also integral to the sustainability of our work in Swaziland.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
In December 2012 we concluded our strategic review of the Foundation, a six month process involving a range of stakeholders, which confirmed that focusing on access to finance would make good use of our knowledge, expertise and links. In April Comic Relief granted us new funds to work on a project across five countries in East and West Africa, our first significant step forward under the new strategy. Our Access to Finance project examines what barriers prevent access to fair finance and what type of support co-operatives need. Working with Fairtrade Africa we aim to train 150 businesses from Kenya, Tanzania, Uganda, Ghana and Ivory Coast over two years. Forty-five will then receive comprehensive mentoring to facilitate loan applications worth over £1m in total. We have trained 94 businesses, are now mentoring 30 of them, and are on track to have 20 loan applications in by March 2014. We have begun putting in place an action plan to support our Rwandan partners garnered from our three-year project there in 2008-11. We have won an external grant from the Commonwealth Foundation which will allow us to take the first step in providing ongoing support in Rwanda. This year we appointed a new Development Officer to drive forward our fundraising work. We have since trialled campaigns with new target audiences and seen an increase of 23% on our annual target. Our donations from individuals increased slightly and remain significant, at 41% of our overall income. A quarterly newsletter has been established, and overall we have attracted 50 new or returning supporters. Our legacies campaign recruited 100 new pledges, which are worth over £250,000 in future income. We continue to seek support from trusts and foundations, in particular for smaller, specific projects and have been supported by six trusts again this year.
Partnership Our relationships with partners represent a key element of Shared Interest’s social capital, which is a concept we introduced in our 2011 social accounts. Last year we developed a ‘social capital map’. This year we have focused on understanding better the nature of the social capital generated through our key partnerships. One description of social capital is the collective or economic benefits derived from the cooperation between individuals and groups. We carried out an evaluation exercise this year to identify the key benefits from all of our Level 1 partners (ie, those with whom we have the closest working relationships). Some of the main benefits were that through the donation of staff time on various boards of directors we are able to have input into the decisions of key players within the UK and global fair trade movements. We are also able to build the profile of Shared Interest to both potential investors and customers through collaborations with our partners. We have identified 54 organisations that fit our description of a partner. This list included a wide range of different types of organisation and we were able to categorise them in terms of the level of benefits we receive from each relationship. In order to understand the nature of the social capital generated from these relationships we carried out a survey on the top 10 organisations. Through the survey we confirmed that we have strong mutual bonds of trust with our partners and that they also greatly value their relationship with Shared Interest.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
We described in last year’s social accounts how we planned to assess the current and potential connections achieved through our Board and Council. This work is on-going and will be completed in the next 12 months.
Stewardship and sustainability For Shared Interest, stewardship is about doing the best we can with the resources that are entrusted to us. This includes both financial and environmental aspects. Following on from previous years, we continued to explore our options and the appetite for developing a more strategic approach to environmental and sustainability issues. We completed a piece of work commissioned last year that looked at environmental issues faced by customers. The report also analysed which commodities and geographical areas are most at risk. We presented the results at a workshop for members at our AGM, where we also asked members where they stand personally from an environmental perspective. We also rolled this out via our membership survey and found that 60% of respondents are deeply interested in environmental issues. There is also strong support for lending to customers who aim to improve management of environmental issues or generate alternate sources of income; 88% agree or strongly agree with this. We found that members are keen to learn more about environmental issues faced by customers as well as being eager to reduce their own environmental footprint. The strongest support (72%) is for investing in products specifically designed to manage or adapt to environmental issues. Through this year’s partner survey, we asked for external views on our organisational approach to environmental concerns. 56% of respondents felt that it was very important (and 33% quite important) that Shared Interest develops further in this area. Shared Interest has pledged to share more information and seek wider debate with members and partners as we develop our thinking in this area. Our financial results for the year were positive and are detailed in our financial accounts. Consolidated income for the year was £2.92m. Profit after tax and share interest was £216,000, which is an increase of 38% on last year. Consideration of ethical issues features prominently throughout our decision making processes, especially with investment and procurement decisions. During 2013 the Co-op Bank has had widely publicised problems leading to a need to raise extra capital to satisfy the Regulator that it is financially sound. We are considering ways to manage the potential risk to the Society and have commenced a process of ensuring that a proportion of our capital is deposited outside of the Co-operative Bank. This diversifies the risk but cannot be achieved very quickly as a proportion of our funds are tied up on fixed-term deposits. The latest statements from the press and the Co-operative Group (as of end of October 2013) leads us to believe that any risk to the survival of the Co-operative Bank and the safety of our deposits at this point is much reduced. However, we are currently reviewing whether
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the Co-operative Bank remains the optimal main banking partner for Shared Interest. This will look at the same major aspects we considered in 2011 when we last formally reviewed our banking arrangement - the ethics of the organisation, security and pricing as well as the technical capability to provide the service we require. This year saw substantial review and development of the Green Policy and Green Checklist. Where possible, we aim to procure our goods and services from local suppliers, both to minimise environmental impact and to support the sustainability of local businesses. As a matter of good practice, we periodically review the provision of the key services we purchase. This year this involved the review of our payroll provider, the result of which was to remain with our current provider. We have also recently put in place additional financial controls in this area regarding the security of funds and the transmission of data.
Staff talent and commitment On 30 September 2013, Shared Interest was employing 31 members of staff, working for Shared Interest Society and Shared Interest Foundation. The majority of these posts are based in the UK. We also have staff based in Africa, South America and Central America. This year, as in previous years, we sought the views of staff as expressed through an anonymous online survey. This was fully completed by 26 staff members, which represents a 79% response rate. Staff were asked about the things they most liked about working for Shared Interest. Common reasons can be grouped into the following categories: the mission and impact of the organisation, the type and variety of work they do, the people or team they work with, the sector in which we work, the benefits of the organisation. Staff were also asked what they least liked about Shared Interest. The common responses can be grouped into the following categories: poor communication, the office atmosphere/politics, the consistency of decisions and time taken to make them, and salary levels. The staff survey included a number of comments indicating a feeling of divide between staff and the Management Team. A restructure and three subsequent redundancies within the Supporter Relations Team had an impact on the whole organisation. Despite successfully defending an unfair dismissal claim at an Employment Tribunal, the process was difficult and time consuming for all those involved and affected relationships within the organisation. We are keen to consider and address the issues highlighted by the survey and will be carrying out further staff focus groups to aid in this process. Providing staff with the opportunity to visit our customers overseas is seen as a benefit by most staff and is also one way that the Shared Interest tries to promote a greater understanding of different cultures. This year, 10 UK-based staff travelled to various countries including Benin, Brazil, Kenya, Rwanda, Swaziland, USA, Netherlands and France. The overseas teams have also travelled widely in their own regions seeking new customers and visiting existing ones. We continue to work with the staff forum to try and resolve issues and improve communication generally. The forum is made up of volunteers from each department who represent the staff group as a whole and liaise directly with the Management Team. The
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forum asks staff for their ideas, suggestions and recommendations and puts any relevant ones before the Management Team for consideration. The forum members report back the outcomes to their own teams. Their feedback has been sought by the Management Team in a number of areas including changes to the holiday year. In the staff survey, 15 of the 26 respondents strongly agreed or agreed that the staff forum has helped improve communication, six staff strongly disagreed or disagreed that it has, while five neither agreed nor disagreed. This year, staff were consulted via the staff forum about moving the start of the holiday year from April to January. Changes were implemented from 1 January 2013 Shared Interest invests in staff training and development. This year we continued to support training and development throughout the organisation although the number of training days decreased very slightly from last year. Training costs have also reduced. This is mainly due to an increase in the number of in-house training courses being provided for teams, departments or all staff. In addition, there has been an increase in the level of online training. Both of these tend to be less expensive methods of training than individuals attending external training courses. Induction costs remain the same as last year. Management Team training increased due to an increase in business planning and training days. This resulted from the continuation of the Foundation’s strategic review, an additional Management Team member for the full year and work with an external consultant on organisational development.
Next Steps Our social accounts have been audited by an independent panel in line with the process outlined by the Social Audit Network (SAN). They have subsequently been approved by the Boards of Shared Interest Society and Foundation and will be presented for adoption by our members at our AGM in March 2014. We publish our social accounts on our website and plan to explore ways to enable this to be accessed at a summary level, with the option to drill down to further information as desired. We will also summarise key parts of the social accounts and disseminate these in appropriate ways for different stakeholder groups. This will include a summary in our annual review and articles in member, donor, and customer newsletters. The recommendations from each of the Aims will be progressed by the Management Team and Board, with progress reported in our social accounts next year.
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4
WHY WE EXIST AND WHAT WE DO
Shared Interest Society is the world’s only 100% fair trade lender. Established in 1990, in order to provide trade-related finance that would benefit people in need, particularly in poorer countries, the way we operate has developed over the last 23 years, and that journey is summarised in Section 7. This includes the development of our charity, Shared Interest Foundation, which delivers business support to fair trade businesses. Shared Interest Society and Foundation are working to achieve complementary visions through a single mission and set of values:
4.1
VISION, MISSION AND VALUES
Vision Shared Interest Society is working towards “A world where justice is at the heart of trade finance”. Shared Interest Foundation seeks to create “A world where businesses create livelihoods in disadvantaged communities”.
Mission Our mission is to provide financial services and business support to make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries. We work with people who share our commitment to fair and just trade. Together we take and share risk, because we value the difference that fair and sustainable trade makes. We seek to satisfy the needs of producers as they trade their way out of poverty and to meet the aspirations of our investors and donors to support them in achieving this aim.
Values We will conduct our business in a manner which reflects the principles of love, justice and stewardship. We will:
Work to recognised fair trade standards1
Respect the diversity of different cultures
Value and engage with our members and supporters
Place partnership at the heart of what we do when working with others
Work with our people and encourage their commitment, talents and energy in an environment of mutual respect.
1
Such as those of Fairtrade International at http://s.coop/1tnxc and the World Fair Trade Organization (WFTO) 10 principles of fair trade at http://s.coop/1tn8q
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SOCIAL ACCOUNTS for the year ended 30 September 2013
4.2
AIMS AND ACTIVITIES
Our social accounts analyse the delivery of our vision, mission and values by dividing our work into six aims with associated activities, which form the following Sections. These aims and activities are reviewed and amended annually by the Social Reporting Team, and approved by the Management Team and Board of Directors. (Section 8 explains the social accounts process and the stakeholders involved.) These aims work together to achieve our mission, rather than there being any priority order to them.
Aim 1: Provide financial services and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries Activities: 1. Providing fair and appropriate financial services. 2. Raising regional awareness of fair finance. 3. Examining and monitoring the impact of our financial services on disadvantaged communities. 4. Assessing our customers’ satisfaction with our financial products and services.
Aim 2: Provide members and supporters with a social return which attracts new share capital and retains existing investments Activities: 1. Engaging with and valuing the views of our members and supporters. 2. Assessing our members’ and supporters’ satisfaction with the community benefit arising from their investment. 3. Growing and developing the membership and supporter base. Changes from last year: We have reworded Aim 2 to emphasise our responsibility to provide a social return. We have also reworded Activity 2 to focus on members’ satisfaction with the community benefit arising from their investment.
Aim 3: Provide business support and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries Activities: 1. Providing effective business support services which have a positive impact on disadvantaged communities. 2. Focusing our business support activity on access to finance. 3. Raising and using donor funds wisely. Changes from last year: Activity 1 is a combination of what were previously two activities. Activity 2 is new, reflecting the evolved strategic direction of Shared Interest Foundation. Activity 3 is expanded to include wise generation of funds.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Aim 4: Work in partnership with people who share our commitment to fair and just trade Activities: 1. Identifying and building appropriate partnerships. 2. Evaluating the effectiveness and benefit of our partnerships. Changes from last year: Activity 2 has been reworded to simplify it.
Aim 5: Conduct our business in a manner which reflects the principles of stewardship and environmental sustainability Activities: 1. Minimising environmental impact. 2. Managing liquidity and operating costs and ensuring prudent financial controls. 3. Considering ethical issues in investment and procurement decisions.
Aim 6: Encourage staff’s talent and commitment in an environment of mutual respect Activities: 1. Encouraging understanding of different cultures. 2. Offering fair pay and benefits and respecting employees’ work-life balance. 3. Aiming to provide job satisfaction, offering regular reviews and supporting personal development. 4. Aiming for effective communication and participation in decision making where appropriate. Changes from last year: Activity 4 has been very slightly reworded to recognise that we aim for participation in decision making is where this is appropriate.
Indicators Consistency in our reported aims and activities remains in order to allow for year-on-year comparisons. However, we ensure these elements are updated if required in order to maintain relevancy. We continue to develop the indicators by which we measure achievement of these activities. Where possible, we have developed internal reporting systems to supply the latest data alongside annual comparisons. In addition, we have sought the views of appropriate stakeholders. Details of our stakeholders and which of these have been involved in this year’s consultation processes, can be found in Section 8.
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4.3
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WHERE THE FUNDS OF SHARED INTEREST INVESTORS AND DONORS ARE USED TO SUPPORT FAIR TRADE
SOCIAL ACCOUNTS for the year ended 30 September 2013
5
OUR PERFORMANCE AGAINST AIMS AND ACTIVITIES
5.1 AIM 1: PROVIDE FINANCIAL SERVICES AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES In this section we report the scale of our lending, review the work being done to grow our customer base, consider our social impact and report the thoughts of producers from our online surveys and producer committee discussions.
Activity 1: Providing fair and appropriate financial services An explanation of Shared Interest lending products can be found in Appendix 2. Broadly speaking, our lending falls into two categories: funds lent directly to fair trade producer groups in developing countries, and funds lent to fair trade wholesale or retail businesses in developed countries. For simplicity, we refer to these as ‘producer lending’ and ‘buyer lending’. The majority of the funds we lend to buyers are used by them to pre-finance orders with producers. We therefore also refer to ‘recipient producers’, meaning those organisations that will receive funds from us, when in fact they have been borrowed by a buyer.
Lending to producer groups For a number of years, we have been following a strategy to increase the proportion of our direct lending to producers. The table below shows how this has grown year on year. Lending to producer groups over the last five years 2009
2010
2011
2012
2013
63
77
71
79
97
165
218
223
241
364
£2,051,420
£2,506,068
£3,311,143
£3,292,801
£3,256,343
140
237
217
227
135
£940,660
£1,120,151
£1,786,743
£2,002,801
£1,819,368
31
26
14
24
24
£1,225,904
£1,154,710
£603,643
£970,911
£1,871,508
£4,217,985 £4,780,929 Total producer lending** * At 30 September ** The average total of money drawn on any one day *** Total number of payments or new loans made during the year
£5,701,530
£6,266,513
£6,947,219
No. of producers groups with credit/loan accounts* No. of commercial order export credit payments* Value of commercial order export credit out on loan** No. of fair trade export credit payments*** Value of fair trade export credit out on loan** No. of new term loans*** Value of term loans**
At 30 September 2013, we were lending directly to 97 producer groups in 24 different countries. This is an increase of 18 producer groups compared with September 2012. Direct lending to producers has continued to grow and has seen the total average amount drawn increase by £680,706 - a growth of 11% on the previous year. This year we have seen a significant increase in customers borrowing against contracts from buyers who do not
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SOCIAL ACCOUNTS for the year ended 30 September 2013
hold an account with Shared Interest (shown as ‘commercial orders’). This is a reflection of our increasing lending to commodity producers, in particular those producing coffee. These contract values have generally been low due to the price of coffee, which explains why the overall value has not risen despite an increasing number of contracts. The figures shown above are an annualised average of the money drawn. The actual amount paid to producers in commercial orders was £9,887,701 against 364 contracts and the actual amount paid to producers in export credit was £2,245,600 against 135 contracts. The value of our term lending has doubled this year, although the number of loans is the same. This is because we approved several larger loans during the year. Thanks to the way in which you have scheduled our loan repayments you have aided us with the liquidity needed to grow our business and increase our sales volume. This allows us to pay a higher price to our producers than they can access locally and has a positive influence on their quality of life. Cesar Rivas Peña - Café Peru - Peru
Lending to buyer organisations Lending to buyer organisations declined this year by almost £1.9m (17%). There are several reasons behind this decline including access to cheaper credit, the economic climate and a more competitive trading environment for our customers. It is important that we maintain our portfolio of buyers as they provide a vital source of credit to producers and they assist in spreading the risks associated with our lending portfolio. Lending to buyer organisations over the last five years 2010 39
2011 42
2012 41
2013 38
£10,825,817 £10,010,089 Value of pre-finance** 31 25 No of new term loans*** £1,664,107 £1,784,403 Value of loans** £12,489,924 £11,794,492 Total buyer lending** 1.62 1.55 USD/GBP exchange rate * At 30 September ** The average total of money drawn on any one day *** Total number of new loans made during the year
£9,653,791 1 £1,646,658 £11,300,449 1.55
£10,049,300 1 £823,984 £10,873,284 1.62
£8,958,776 1 £35,935 £8,994,711 1.62
No of buyers with accounts*
2009 38
As three-quarters of our lending is in USD, changes in exchange rates have a significant influence on the sterling equivalent value. There was no change in the average exchange rate between 2012 and 2013.
Lending to all customers The graph below shows averages in both producer and buyer lending. Lending direct to producers has increased in each of the last five years, and there has been a gradual reduction in our lending to buyers. As a result, our overall average lending decreased by almost £1.2m in 2013. Average lending last year fell for a number of reasons including a fall in the international coffee price, which resulted in a lower demand for credit against contracts, and an overall decline in the handcraft market as a result of low consumer demand and increased competition from Asian markets. Additionally, cost cutting exercises by many of our buyer customers have seen them move to cheaper sources of credit, typically with a local commercial bank. Although this has reduced our lending it has been encouraging to
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SOCIAL ACCOUNTS for the year ended 30 September 2013
see some of our buyer customers being able to source conventional finance for their alternative trading model and we believe it has been our support (sometimes for many years) during their early growth stage that has enabled this to occur. This change frees up share capital for us to lend directly to producers. Average lending to all customers over the last five years £18,000,000 £16,000,000 £14,000,000 £12,000,000 £10,000,000 £8,000,000 £6,000,000 £4,000,000 £2,000,000 £0 Producer Buyer
2009 £4,217,985 £12,489,924
2010 £4,780,929 £11,794,492
2011 £5,701,530 £11,300,449
2012 £6,266,513 £10,873,284
2013 £6,947,219 £8,994,711
Total
£16,707,909
£16,575,421
£17,001,979
£17,139,797
£15,941,930
The figures reported in this section are annualised averages, which do not show the peaks and troughs of our lending throughout the year. However, these are shown in the graph below, illustrating that since May 2013 we have for the first time been lending more to producers than to buyers. Given our strategy to increase producer lending through the opening of in-country offices, this is a significant milestone in the history of Shared Interest. Average monthly drawn values split between producers and buyers, Oct 2012 – Sep 2013 £14,000,000 £12,000,000 £10,000,000 £8,000,000 £6,000,000 £4,000,000 £2,000,000
Producer Lending Buyer Lending
£0
We are able to approve lending facilities greater than the value of our share capital, as, due to cyclical harvest seasons, not all accounts are used to their maximum at the same time of year. The chart below shows the average of lending committed at any one time during the year compared with the share capital we held at the year end. We also show the average of drawn lending at any one time in the year and express this as a percentage of the share capital. Various risk factors such as exchange rate fluctuations mean we would not wish to lend 100% of share capital, but ideally we aim for a figure of 65-75%.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Average lending committed and drawn as a percentage of share capital over the last five years £35,000,000 £30,000,000
116%
105%
106%
66%
65%
67%
2010
2011
2012
105%
105%
£25,000,000 £20,000,000
76%
57%
£15,000,000 £10,000,000 £5,000,000 £0 2009 Drawn
Share Capital
2013
Committed
Although the average amount on loan to both buyers and producers this year was £15.9m, the total of all payments made to producers during the year was £46.8m (159% of share capital). We are able to make payments of more than 100% of share capital during the year as funds are continually being repaid and lent again.
Interest rates The interest rate we charge a customer is a combination of a prime rate calculated from the cost of borrowing the relevant currency plus a margin to cover our operational costs. To this we add a risk premium, which is defined through due diligence to calculate an appropriate percentage to represent associated risks. Below we make analysis of the rates we charge to both producers and buyers versus the rates they are able to access through other sources. This data is taken from analysis of our annual review process with borrowers. Producer customers borrowing from other sources, 2012/13 Number of loans
Secured
Minimum
Mean
Maximum
USD
226
171
0.0%
9.51%
26.0%
EUR
17
11
2.0%
7.79%
12.0%
Currency
Producer customers borrowing from Shared Interest, 2012/13 Number of loans
Secured
Minimum
Mean
Maximum
USD
5
0
10.0%
10.95%
12.50%
EUR
15
0
9.0%
11.62%
13.0%
GBP
87
1
8.50%
10.11%
12.0%
Currency
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SOCIAL ACCOUNTS for the year ended 30 September 2013
On average, Shared Interest charges a higher rate of interest across facilities in both USD and EUR (0.60% higher in USD and 3.83% in EUR). However, the majority of the comparative loans from other sources are secured, and the average figure includes interestfree loans which are typically from family members, friends or development organisations. Our highest rate is 13%, lower than that used from other sources. Despite us working with an increasing number of producers, the total amount of facilities in USD has fallen by 21; however the percentage of these loans secured have remained the same at 75%. We have no producer customers borrowing in GBP through other sources. Buyer customers borrowing from other sources, 2012/13 Number of loans
Secured
Minimum
Mean
Maximum
USD
47
22
0.0%
6.22%
19.24%
EUR
21
13
2.0%
4.78%
10.50%
GBP
40
14
0.0%
3.13%
15.0%
Currency
Buyer customers borrowing from Shared Interest, 2012/13 Number of loans
Secured
Minimum
Mean
Maximum
USD
27
6
6.0%
8.70%
11.50%
EUR
7
3
7.0%
10.21%
12.0%
GBP
19
5
5.50%
9.61%
13.0%
Currency
For buyers, the picture is similar, with much of their borrowing from other sources being secured, and a greater range of rates, both lower and higher than those offered by Shared Interest. In the case of buyers, there is a greater difference between the average rate of interest from Shared Interest versus other sources. This is primarily due to the historically low interest rates which prevail in the current economic climate.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 1 CONTINUED: PROVIDE FINANCIAL SERVICES AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Activity 2: Raising regional awareness of fair finance In addition to our UK office, we have continued to maintain offices in Kenya, Peru and Ghana. Staffed fully by local people with familiarity and knowledge within the region, we find that this local presence helps us reach prospective customers. It is far easier for prospective customers to speak to someone who shares their language and culture. This year, for the first time since 2011, we also employed a representative in Costa Rica. Regional Producer Committee meetings are another mechanism by which we gain a better understanding of the issues facing producer groups. Details of these meetings can be found on page 33. Shared Interest staff have visited over 70 producers during the year, both existing and prospective borrowers. Countries visited include: Peru, Kenya, Ghana, Costa Rica, Ecuador, Panama, Brazil, Ethiopia, Uganda, Rwanda, Malawi, Tanzania, Benin, Burkina Faso and the Ivory Coast. Staff also attended important fair trade conferences in order to raise awareness of Shared Interest. These included: Fair Trade Africa convention in Ethiopia CLAC and SPP annual meetings in Ecuador (the fair trade networks for small producers in Latin America) World Fair Trade Organization biennial conference in Rio de Janeiro Fairtrade Foundation Commercial Conference in London Biofach food trade fair in Germany Speciality Coffee Association of America (SCAA) conference. Coupled with these larger trips and events, our regional staff regularly make short trips locally to meet producers, other social lenders and fair trade-accredited bodies. We estimate that direct communication with producers, including Skype and telephone calls accounts for 35 to 40% of their time. We also organise an annual programme of overseas visits by UK staff to our regional offices, where they can meet the people we support face to face. This ensures a good level of organisational awareness regarding the practicalities and impact of our work. Historically, we have focused our marketing activity on gaining investors here in the UK. In order to promote our lending to producers we are beginning to develop our overseas marketing. We started by sending out the first in a planned series of customer newsletters containing information on our Queen’s Award, as well as case studies and news of regional relevance. We are also liaising with fair trade networks across the globe to explore opportunities for promotion to our mutual benefit. In the next 10 years I hope for greater awareness by the global public and greater demand for widespread acceptance of conditions by more companies. Claudette Davis - African Home Creative Homeware CC – South Africa
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Raising awareness of Shared Interest in Africa In comparison with our lending to other regions worldwide, we believe we are currently under-lent in Africa. Lending in the whole of the African continent represents 8% of our total lending by number of transactions. Consequently we commissioned a report this year to understand the changing demand and supply factors relating to social finance in Africa and how Shared Interest might respond to these challenges. The research involved an online survey which was sent to 400 Fairtrade Africa (FTA) and World Fair Trade Organization Africa members from which 109 responses were received. A manual survey form was also provided for those without internet access (50% of WFTO Africa members.). Responses were supplemented with reference to secondary data and 15 telephone interviews. Awareness of Shared Interest among respondents was 68%, which was higher than other providers of social finance, but lower than local conventional banks. However, the research identified lending opportunities in some African countries such as Malawi and Sierra Leone where we have not yet had a focus. Perceptions of Shared Interest differed; there were some very positive comments about our flexibility and customer commitment but we were also seen as being slightly more passive than some of the other social lenders when it comes to new business opportunities and taking risks. The research recognised that there are an increasing number of lenders who will consider lending to the sectors on which we focus. Sometimes backed by donor and government funds, this includes conventional banks who have traditionally avoided lending to agriculture. However these financial institutions tend to focus on ‘stronger’ businesses, particularly those wanting finance to support long-term strategic investments, such as processing. There is a continued reluctance to invest until the economic outlook improves. Those classed as ‘weaker’ groups remain in great need of financing but work around building the capacity of businesses is required first, in order to mitigate the risks involved in such lending. One of the ways in which Shared Interest is able to respond to this challenge is through the capacity building work of Shared Interest Foundation. Funding has been secured this year from Comic Relief for a two-year ‘Access to Finance’ project, which aims to train 150 fair trade businesses in financial management across five countries in Africa. This is a significant opportunity to raise the profile of Shared Interest, as the training is also designed to ensure that fair trade producers understand the role of social lenders. This year 94 producers attended this training, more details of which can be found on page 59. Our regional staff in Africa played an important role in the design of this training, and attended the workshops held in the Ivory Coast, Ghana and Kenya, where they were able to explain the role of a social lender.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 1 CONTINUED: PROVIDE FINANCIAL SERVICES AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Activity 3: Examining and monitoring the impact of our financial services on disadvantaged communities Development of relevant indicators In 2013, we financed 97 producer groups Representing 155,443 individuals Including 46,264 women As well as 6,532 permanent employees. These businesses collectively earned revenues of £236,056,545. The 38 groups producing coffee sustainably cultivated 78,930 hectares, And exported 66m kg into sustainable supply chains. (Next year we intend to include the total amount paid to farmers.)
For a number of years we have explored different ways of demonstrating the social impact of our lending. In last year’s social accounts, we took a new approach to this challenge. We selected a specific segment of our producer portfolio (coffee producers in Peru) and examined if there was any association between movements in Shared Interest lending facilities and changes in the producers’ financial performance and social indicator statistics. The analysis showed occasional trends associated to movements in the Shared Interest limit, but there were too few instances to draw meaningful conclusions. However, it was felt that this approach did have potential, and a recommendation was made to develop it further in order to demonstrate the social impact associated with our lending. We have since become an active member of a social impact committee established by the Council on Smallholder Agricultural Finance in December 2012. The other members of the committee include Alterfin, Oikocredit, Root Capital, ResponsAbility and Triodos Bank. We are working together to identify core measurements to be used by all social lenders which are meaningful, measurable, and can tell a clear story. The opening statement above shows our first attempt at reporting on seven of the eight common measurements that the group has agreed. (Next year we intend to include the total amount paid to farmers.) In an effort to ensure all involved have a clear understanding of the meaning behind each measurement, the wording has been taken from Impact Reporting and Investment Standards (IRIS) which provides a library of commonly reported impact terms in an effort to standardise social and environmental reporting. These have been written with a focus on agricultural producers and thus consider factors such as hectares under cultivation and volumes of
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SOCIAL ACCOUNTS for the year ended 30 September 2013
product sold. This does not exactly fit our customer base as we lend to both handcraft and agricultural producers. Additionally, the data we have on volumes requires further work for us to standardise therefore for the purpose of this exercise we have only included the hectare and volume data associated with our coffee producers. As well as reporting on the reach of our lending, we are conscious of the need to capture a picture of its impact on individual farmers and their families. Working with the social impact committee, we hope to identify a range of such social outcomes. We aim to analyse these results through joint quantitative studies and in-depth qualitative case studies. Together, we will also look for ways to compare our results with the outcomes of producers who do not receive loans. Making progress in this will provide us with the research needed to make a much stronger statement on the impact of our lending. We are also hoping that this joint endeavour will allow us to learn from areas of success and failure, providing a steer for our future development. It should enable us to establish much clearer benchmarks and profiling for potential and existing customers and provide a more thorough and consistent approach to risk assessment. For next year, we aim to report against all eight measurements and include hectare and volume information that is associated with more than purely our coffee lending. The next phase of development with the wider group of social lenders is to agree on the best format and process for the collective collation, management and analysis of data. We also recognise that the data reported here relates only to the half of our lending which is directly to producer customers. It is an even greater challenge to assess the impact of our lending to fair trade buyers, who in turn use those funds to support a wider range of fair trade producers. This year, we recruited a Monitoring and Evaluation Officer (MEO) based in our East Africa office. This person will be responsible for collecting data on individual African producers and developing the framework used to capture social impact data. We have established a working group comprising both Society and Foundation staff who will work alongside our MEO to ensure that the systems developed become embedded within the work of each business area. As well as these measures, the impact of our lending can be seen through case studies of individual producer groups. Such stories convey how Shared Interest finance transforms livelihoods and communities. Some examples are included in Appendix 3. We have also produced short films to bring some of the stories to life which can be found in the About Us section of our website.
Producer lending portfolio The type and location of producers to whom we lend has a bearing on our overall impact. While all of our customers meet certain criteria (such as being fair trade businesses), they are based in different locations and sell differing products through a range of routes to market. Tracking trends in the characteristics of our overall producer lending portfolio ensures that we maintain an appropriate diversity of lending. Our mission states that we take and share risk with people who share our commitment to fair and just trade. By tracking the characteristics of our lending portfolio and making this data publicly available, we ensure that we can be held accountable by our stakeholders for the balance we strike between potential risk and impact.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Number of producer group customers by region over the last five years 2009
2010
2011
2012
2013
38 34 27 26
22 23
22
25 25 20 20 21 16
15 5
Africa
4
4
2
36
2
Asia / Middle East
Central America
South America
The opening of our West Africa office in Ghana in 2012 has paid dividends, with the African producer portfolio growing by 65% from 23 to 38 over the last 12 months. The actual number of new customers in Africa was 17 but we closed two accounts in the year. In Central America we did not close any accounts, and gained one. The customer base here has remained static over the last four years. This is encouraging as since 2011 we have not had any presence in the region. However, we employed a local representative in Central America during 2013, so we expect the number of producers in this region to increase over the next financial year. South America continues to be a strong area of lending for us and the number of producers we work with in this region has continued to grow. There were a total of eight new customers approved in South America during the last 12 months, meaning we closed six accounts in the same period. For the last two years we have had two customers in Asia and none in the Middle East (the customer we had in Palestine no longer needs our services). We continue to be restricted by local lending regulations in the Indian sub-continent and have not placed much focus on working in this region. Analysis of lending committed to producer groups by region over the last five years £12,000,000 £10,000,000 £8,000,000 £6,000,000 £4,000,000 £2,000,000 £0 Africa
Central America
South America
2009 2010
£1,579,797 £1,301,616
£2,812,282 £4,215,213
£4,148,640 £6,138,457
Asia / Middle East £494,309 £357,543
2011 2012
£1,184,567
£3,985,632
£6,282,720
£224,904
£1,683,887 £3,460,128
£3,907,993 £4,806,580
£8,266,579 £9,627,286
£18,031 £27,528
2013
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SOCIAL ACCOUNTS for the year ended 30 September 2013
The growth in the number of customers in Africa is clearly reflected in the value of money committed in the graph above. This figure more than doubled in this year, increasing by almost £1.8m. Despite obtaining only one new customer in Central America, we have agreed increased facilities with existing customers. As a result, we have increased committed lending in this region by £0.9m, a growth of 23%. We have also increased committed lending in South America by almost £1.4m, a growth of 16% compared with 2012. Analysis of routes to market by producer group customers over the last five years 90% 80% 70% 60%
2009
50%
2010
40%
2011
30%
2012
20%
2013
10% 0% Fair Trade Export
Other Export
Local
Data we collect as part of the annual review process with customers shows that our producer customers continue to have a strong reliance on fair trade certified exports. This is conveyed by the fact that 76% of all goods made by our producer customers are being sold through this channel. The percentage of non-certified export sales has continued to fall, with a corresponding increase in the percentage of local sales. Product mix of the producer groups to whom our lending is committed over the last five years 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Handcrafts
Other
Cocoa 2009
Page 28
Coffee 2010
2011
Sugar 2012
Tea 2013
Nuts
Fruit
SOCIAL ACCOUNTS for the year ended 30 September 2013
We formulate this graph by taking the product mix from each of our producer customers and aggregating this data into product categories. The figures do not represent value of lending or the quantities produced. While we have continued to approve new coffee facilities, proportionately we have approved more lending in fruit, nuts and other food. The majority of these customers started working with us due to our increased presence in West Africa. Particular areas of growth have been pineapples, cashews and bananas. The continuing decline in the proportion of our lending to handcrafts is due to growth in other product categories across the portfolio, rather than declining lending in absolute terms.
Analysis of country risk Country risk categorisation is one of the factors we take into account when carrying out due diligence on potential new customers or reviewing the performance of existing customers. By maintaining a spread across these categories, we balance the desire for our share capital to reach those who need it most with the need to avoid placing our members’ capital at excessive risk. To make this analysis we use Coface, a French credit insurer, who on a quarterly basis publishes its assessments of country risk for 157 countries with an evaluation made on economic, financial and political data. Their categories are shown below. Category
Risk assessment
A
The political and economic outlook can vary between very good and somewhat shaky. The business environment is relatively stable although volatility may affect corporate payment behaviour. Corporate default probability is more than acceptable on average.
B
The business environment is mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. Inter-company transactions run appreciable risks in the unstable, largely inefficient environment.
C
The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Inter-company transactions run major risks in a difficult environment.
D
The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. The institutional framework has very serious weaknesses. Inter-company transactions can thus be very difficult to manage in the highly risky environment.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Number of producer group customers in each risk category 100% 90%
13
11
9
9
19
18
19
80% 70% 60%
21
7
8
5 30 D 15
50% 28
40% 30% 10%
B
18
20% 11
C
36
44
2011
2012
A 47
19
0% 2009
2010
2013
We currently have 31 customers in Peru, which accounts for two-thirds of category A. Growth in category B has come through new lending facilities in Benin, a country in which we were not previously lending. We have also seen an increase in facilities in Ghana, which has moved from category C to B. The decline in category D customers reflects in part the increase in category C (as Nicaragua moved from D to C this year). Also influencing the increase in category C customers was a rise in the number of Kenyan and Ugandan customers. Our lending to customers in category D is currently in Belize, Burkina Faso, Rwanda and Swaziland. 11 Amounts committed to producer groups in each risk category 100% 90%
£348,432 £2,304,921
£1,677,521
£907,558
£1,605,499
£1,483,710 £1,666,510
80% 70%
£2,135,020
£4,809,801
£748,535 £602,883
£1,364,641
£1,140,006
D
60% 50% 40%
C
£5,944,968
B
£3,854,918 £7,851,511
30%
£9,803,379
£11,623,283
A
20% 10%
£3,025,284 £1,510,548
0% 2009
2010
2011
2012
2013
Increased lending in Kenya and the shift of Nicaragua from category D has added £1.7m of lending in category C. This accounts for a large part of the £3.1m increase in lending to that category from 2012 to 2013. Included within this value is both share capital from members and investment from a social investment pilot funded by Comic Relief.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Using the country risk standards does not tell the whole story. Lots of our lending is done in Peru for instance which is considered to be a category A country and therefore low risk. However within individual countries there are wide inequalities, and the funds we are lending are reaching the more remote and underdeveloped regions of the country where access to basic services and finance is limited. The bad debt provision this year was 2.5% of our outstanding lending amount at financial year end. Our average over the last five years is 2.7%. If you would like more information on this charge please refer to note 24 in our financial accounts.
Support provided to producer groups that are not customers Every year we make payments on behalf of our buyer customers to hundreds of producer groups who do not have a Shared Interest credit facility. This remains one of our main business activities. This year, in addition to the services we provide to our customers, we made payments to a further 241 producer groups. These producers were based in a total of 53 countries. As well as making payments, we provide these producer groups with additional valuable services which are detailed in Appendix 2. Since Shared Interest support fair trader in Europe and America which is support producers in development country, directly or not Shared interest have been helped poor people to out of poverty. Yolita Ainun Rahmawati - Pekerti Nusantara, PT – Indonesia I hope that people will understand more about the value of products from a fair trade organization. The price of the product is not the first thing for people to make decision to buy but the most important thing is they want to help people to get fair wages and better living. Mong Socheata - Villageworks Songkhem Co., Ltd. – Cambodia
Payments to producer groups analysed by the Human Development Index The map on the following page shows the distribution of payments made to all producers, both customers and recipients, totalling 338 in 53 countries according to their HDI ranking.
Page 31
SOCIAL ACCOUNTS for the year ended 30 September 2013
PAYMENTS TO PRODUCER GROUPS ANALYSED BY THE HUMAN DEVELOPMENT INDEX
Page 32
SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 1 CONTINUED: PROVIDE FINANCIAL SERVICES AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Activity 4: Assessing our customers’ satisfaction with our financial products and services In addition to the on-going interactions we have with customers in the management of their accounts, we carry out more deliberate consultation exercises each year to assess the views of our customers. We currently do this by convening regional producer committee meetings and administering an online survey. Our findings from both these exercises in 2013 are reported here.
Producer committees Regional producer committees were set up in 2010 in order to get more direct customer feedback. Meetings were held in Kenya and Peru in August 2013, and a meeting is planned to take place in Ghana in October 2013. The meeting in Kenya was chaired by our Regional Development Executive (RDE) for East and South Africa and was attended by representatives from four producer groups, including handcraft and coffee producers. Two further groups were unable to make it due to a fire at Nairobi airport. The meeting in Peru was chaired by our RDE for South America and was attended by representatives from six Peruvian producer groups, between them producing Brazil nuts, coffee, cocoa, sugar, bananas and handcrafts. Of the attendees, half of those in Peru and all of those in Kenya had not attended a previous producer committee. Agenda items included the environment, other social lenders, marketing our lending to prospective borrowers, as well as the future format of meetings. In Africa, some discussion took place around one of our Foundation projects in Africa, and the development of our monitoring and evaluation work. All producers expressed concern in discussions about the environment. They are worried about the future availability and cost of resources, including land. Ideally they would like to see funding for environmental projects such as indigenous tree-planting. They also feel they would benefit from training programmes showing them how to mitigate against environmental changes. In South and Central America, the biggest challenge currently facing the coffee producers is combatting ‘roya’ or leaf-rust. This is a wind-borne fungus that eventually causes a plant to lose its leaves, killing or severely weakening the tree. Some of the key issues relate to how to treat the disease, for instance, with or without chemical fertilisers. Other general concerns around coffee centred on the impact of low export prices coupled with excess supply. In terms of other products, there was a representative who expressed that waste generated by a nearby mining industry could affect the quality of nuts grown on their farm.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
The African producer committee group felt that Shared Interest had taken a risk to partner with them while they were quite small businesses, as opposed to other social lenders. The fact that Shared Interest lends to both handcraft and agricultural customers was seen as a positive. Attendees seemed content with our lending requirements, as well as the communication with their account manager. However, both the African and South American producer groups felt we should be doing more to link them with prospective buyers. The South American group felt that our charges are similar to those of other social lenders but they were encouraged to see some of the other lenders offering technical assistance or grants alongside finance. They felt we needed to differentiate ourselves more from the ‘competition’ and respond more quickly to the changing marketplace. There was a sense that they would see further visits to their organisations as valuable. We asked producers about how we currently market our lending. There was mixed feedback around which channels had brought them to Shared Interest. Platforms included: international trade fairs, buyer recommendations, fair trade networks, word-of-mouth or through receiving payments from us on behalf of a fair trade buyer. There was a general perception that we do not market our lending sufficiently. One suggestion was to send regular customer bulletins (the first customer e-newsletter was distributed this year) as well as other events we could attend. There remains a desire for finance to help in attending trade fairs and conferences to find more buyers. One concern around sales was that African handcraft producers increasingly feel they have to look at local and regional routes due to the current state of the European market. “There are opportunities within Africa. There is need to tap this market. There are buyers within Africa who need to link with producers. We need to close the missing link.” Martin Dartey, Monda, Kenya It was suggested that increased production costs have made the situation worse. However, although competing against countries with lower cost levels, the African coffee producers believe their greatest opportunity lies within Europe. This is because coffee is not always the beverage of choice in the local market. Producers at the African committee also discussed borrowing in local currency. Those present were not keen to do this as they felt the rates would be higher, and because they are exporting. However, they did feel that it would be good to explore such lending possibilities for other businesses selling locally. Comments relating to the Foundation’s new Access to Finance project (see page 59) were all very positive. Those who had attended the course felt that the topics included were key to helping them run their business. These included: assistance with the preparation of profit and loss accounts, balance sheets, cash-flows and budgeting. However they felt strongly that their managers should attend the course also, so they are able to understand fully the financial reports. Although they do not currently monitor the impact of projects and activities, they would welcome assistance to do this and recognised the benefits of carrying out such an exercise annually.
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Overall feedback on the meeting format was that attendees would like full (rather than half) day sessions, and for these to include specialist training workshops.
Producer surveys In an effort to avoid survey saturation we have narrowed the scope of customers we contacted for feedback in this year’s social accounts. We have taken the decision to focus on one specific region per year for our direct producer borrowers so that we can look for trends specific to each region. We also feel that we are likely to get better response rates from buyer organisations if we survey them every other year. We have therefore established the following programme of surveys over the forthcoming years. Year
Producer Borrowers
Recipient Producers
2013
South America
All
2014
East Africa
All
2015
Central America
All
2016
West Africa
All
Buyer Borrowers
Other
All
Other buyers from our customers
All
Other buyers from our customers
This year we consulted our producer customers from South America as well as all of the producer organisations who received money from us on behalf of buyer customers in the last 12 months. Both of our surveys this year have been undertaken online and it is our intention that we continue this trend for future consultations. This is predominantly because of poor lines of communication when undertaking telephone surveys and the additional demand on resource. South American producer customers survey The survey was sent to 35 producer groups and we received 14 completed surveys. The list of respondents can be found in Appendix 4 The majority of respondents were positive in their assessment of the service currently being received and the speed with which we respond to queries. There were unfortunately some respondents who felt that they are receiving a poor service. As the reasons were not explained, we will be following up to understand better where and how we might be able to make improvements. All respondents felt that the frequency of our contact was appropriate and the preference of almost all was to be contacted by email. We received positive feedback on the quality of the communication we send to our producer customers. We recognise that there is room for improvement and are in the process of looking to make changes in particular to statements and annual review documents. It was encouraging to see that the facilities we provide are meeting the needs of our producer customers in South America. We are making continuous efforts to be innovative and meet the needs of an ever-changing market through providing flexibility with our current lending products and providing new types of account to meet changes in market circumstances. We are also looking to develop online access to producer account details
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SOCIAL ACCOUNTS for the year ended 30 September 2013
following a response indicating that almost all producers would like to be able to view their account this way. We also established that producers do find it easier to access funding through Shared Interest than they do through other social lenders and local banks, we are hopeful that access to their account online will only further improve this opinion. We asked our South American producer customers why they were involved in fair trade. Almost all stated that the price they were paid was the foremost reason followed by improved working conditions. Improvements to local facilities were considered to be the least important. We wanted to try and better understand what impact having a Shared Interest account had on their sales performance and the number of people they employ. A theme throughout the responses was that not having the facility would have had a negative impact on their organisation. A negative impact on sales performance and reduced employment were not the only areas mentioned. Some of the respondents also felt that lack of this facility would have affected their ability to collect from and pay their own producers, process their product and market themselves efficiently. There was only one respondent who stated that they would have just looked elsewhere for an alternative credit facility. The benefits of having a Shared Interest account were predominantly being able to make timely payments to producers along with having the peace of mind that they have a credit facility available when they need it without the need to navigate the barriers often associated with commercial lenders. We asked the producers where they felt fair trade was going over the next 10 years. We received a mixed response to this question. There were some who felt that there would be a decline in demand for their products and that there were greater demands from buyers to meet certification requirements. There was also a feeling that Fairtrade International would become weaker in its authority to enforce standards, which is a reflection of the changing fair trade market, with more certifiers and labels entering, and of the disquiet about Fairtrade International’s plans under the Fairtrade Sourcing Partnership. The positives tended to focus on improvements to living standards and improved efficiencies of producers which in turn would have a positive impact on the environment. Also in the next 10 years they would like to see Shared Interest reduce rates of interest and offer a wider range of financial products. There was also mention of increasing our field presence by opening more regional offices. Every respondent felt that we were achieving our mission. Through the financial support provided by the Society it was felt that we have adapted to be flexible to the credit needs of producers and as a result have helped to increase capacity, generate greater profits, improve quality of life and allowed some producers to fulfil their aspirations. Through our relationship with Shared Interest we have been able to acquire a loan to purchase a blueberry packaging machine and also access a line of credit in order to purchase honey and make prompt payment to our producers. Juan Eduardo Henriquez – Apicoop – Chile In the next 10 years I anticipate a steady growth in the fair trade market place, however in handcrafts I anticipate a further decline. Moner Lizana - Intercrafts Peru - Peru
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Recipient producers survey The survey was sent by email to a total of 240 producer groups, of which we know that 194 emails were received. We received a total of 18 fully completed surveys from 11 different countries. This is a response rate of 7% compared to 6% in 2012. The list of respondents can be found in Appendix 5 We gathered some social data from the respondents to this survey. The total number of individuals who sold to the 18 respondents in the last 12 months was 13,215 and of those 61% were women. The total number of individuals employed by these organisations was 1,648 and of those 55% were women. The total business revenue resulting from the respondents’ business activities over the last 12 months totalled £4,392,262 and of that £3,119,686 was paid to the individuals. We provide only a limited service to recipient producers, however it is encouraging to see that they consider it to be a good and quick service with only one respondent rating it poor. The quality of communication being sent to producers is considered to be good, the frequency appropriate and, like producer customers, the preferred form of communication is by email. Interestingly working conditions were considered to be the most important element of fair trade from this group of respondents with price only being considered to be third most important. Improvements to local facilities received a response at both ends of the scale but most considered it to be less important. These respondents were much more positive about the future of fair trade than those from the South American producer customer survey. There was greater hope that awareness would grow, further expansion of the fair trade market into the main stream, increased range of products and designs and just a greater feeling that the market would continue to grow. They would like to see Shared Interest assist them in capacity building, assist with marketing and access to international exhibitions, function more in developing countries and aid disadvantaged communities. As more and more players get into fair trade the range of products and designs will improve and hence the market will expand exponentially Arjun Adya - CFM Market Linkages Pvt Ltd – India All respondents felt that we are achieving our mission which is very encouraging to hear. They recognised the importance of Shared Interest providing buyer organisations with credit accounts without which they would not have been able to access the pre-finance they currently receive.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 1 CONTINUED: PROVIDE FINANCIAL SERVICES AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Progress (on recommendations made in last year’s social accounts)
‘Continue the development of our website to incorporate ability for producers to access their account details, submit review information and view reports.’ – Due to significant work required this year to transfer to a new IT system for our core banking operations, we were unable to develop this recommendation.
‘Consider the feedback provided from the producer committees on how we can improve our annual review process.’ – We reviewed the documents used to request information and attempted to make them more user friendly. We also looked to collaborate with other social lenders when requesting information so that it only needs to be sent once.
‘Monitor the impact achieved by lending from the new Comic Relief Social Investment Fund. Use this knowledge to help us to develop further indicators and start to incorporate these across our lending portfolio.’ – Throughout the year individual assessments were carried out on producer groups that had received loans through the Comic Relief funded Social Investment pilot. We are currently finalising the end of year report to go to Comic Relief.
‘Continue to develop the methodology introduced this year to try and demonstrate the positive social impact of our lending.’ – Through our involvement with the Council on Smallholder Agricultural Finance we were able to move this forward using external expertise and collaborated resource. Additionally we established our own working group to embed our learning from the council and our own monitoring work.
Conclusions (from this year’s social accounts)
Our lending direct to producer groups continues to increase and for the first time this year we had more money on loan to producers than buyers. We expect buyer borrowing to reduce further and we are encouraged that some are now strong enough to source conventional finance which frees up our share capital for producer lending.
Regional offices are having an obvious positive impact on the number of producers we work with. Having recently employed a representative in Central America, we expect to increase lending in this region in the coming year.
We are lending less to category D (high risk) countries and therefore appear to be taking less risk, however this measure does not reflect the existence of disadvantaged groups to whom we lend within countries with a lower risk profile
There remains a strong desire from producer organisations to be able to access their account details online which we were unable to fulfil this year due to lack of resources.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Recommendations (progress to be reviewed in next year’s social accounts)
Reach the target of 70% of share capital being borrowed, by lending more to producer groups where we believe the social impact is greater.
Continue the development of social indicators looking at how we report impact and scale and the documentation used to gather and retain the information.
Explore ways to consider and present the risks within our lending portfolio at a disaggregated level which does not rely on broad country level risk categorisation
Continue efforts to diversify the product range of our lending portfolio.
Scope out requirements of an online platform for producers including a realistic timetable for implementation.
Review survey results and get a more considered view from those who rated us low in certain areas in order to address concerns where possible.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
5.2 AIM 2: PROVIDE MEMBERS AND SUPPORTERS WITH A SOCIAL RETURN WHICH ATTRACTS NEW SHARE CAPITAL AND RETAINS EXISTING INVESTMENTS Shared Interest Society is a community benefit society and a member of Co-operatives UK. It is owned and controlled by its 8,806 members. Our membership, although still predominantly individuals, continues to diversify and includes faith groups, fair trade partnerships, small businesses, schools and community organisations. We also have a range of other volunteers and supporters, not all of whom are members. In this section we explain how we engage with our members, share what we know about their satisfaction with our work, and consider our progress in growing our membership further.
Activity 1: Engaging with and valuing the views of our members and supporters Membership survey Understanding our members and other supporters offers us the opportunity to learn from them and take into account their views as we develop our work across all areas of the business. One of the ways we build this understanding is by conducting a biennial membership survey. This was sent to all 7,446 members who are happy to receive mailings from us. This year, 1,993 members completed our survey (a response rate of 27% compared with 30% two years ago). Of these respondents, 42% had not completed a membership survey in the past. We provide an analysis of some of the responses throughout the relevant headings and activities below. You can read the full results in Appendix 6
Member events Our membership survey showed that 85% of respondents rarely contact the membership team. It is important that we therefore engage with members proactively to understand their views. In addition to our Annual General Meeting (AGM) we hold a series of member events in different locations to which all local members are invited. A sample of these are described
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SOCIAL ACCOUNTS for the year ended 30 September 2013
below. These events have been structured to facilitate an open debate on topics suggested by members. To gauge the success of these events we have introduced feedback forms. Ethical Investment Debate, Oxford On 6 October 2012 we were joined by almost 70 guests, a third of whom were Shared Interest members, to discuss the importance of ethical investment and its impact. Shared Interest Board member, Carol Wills opened the event with a speech on the history of the fair trade movement (the full text can be found on our website). This was followed by questions and answers with a panel of experts. Andrew Studdert-Kennedy, Rural Dean and Team Rector of Marlborough, discussed his research on ethical finance, which has been written up for the St Paul’s Institute. Feedback forms showed 74% of attendees rating the event as excellent or very good. Brighton Member Meeting In celebration of World Fair Trade Day 2013 we held a member event in Brighton. This involved three panellists discussing the impact of social investment in fair trade. During the presentations Simon Maxwell, Director at the Overseas Development Institute, described Shared Interest and our members as “pioneering and courageous” in recognising that trade is vital for development and challenged the audience to consider how fair trade can be scaled up sustainably and effectively. Attendance at this event was lower than expected but 95% of the attendees rated it as excellent or very good. Annual General Meeting, Newcastle The 23rd Members’ Day and AGM was held at the Assembly Rooms, Newcastle, on 15 March 2013. The event proved to be a great success with nearly 100 members joining us. Feedback was positive, with many stating that highlights included: meeting like-minded members, participating in the workshops, talking to the overseas team, and hearing firsthand the impact their investment has made. Following member feedback last year, we introduced three structured workshops into the AGM with attendees having the opportunity to participate in all discussions. The first workshop entitled ‘Environment – Where do we stand?’ was facilitated by Ian Barney, former Managing Director of TWIN. Members were asked to consider topics such as ‘How important is the environment to you and why?’ and ‘To what extent should Shared Interest seek to encourage good environmental practices amongst its customers?’ A second workshop gave members the opportunity to ask both the overseas team and customer, Gabriel Kamudu of Craft Aid Mauritius, questions around Shared Interest lending and its impact. Finally, Head of Shared Interest Foundation, Chris Pay was joined by Faith Ndunge from Swazi partner SWIFT to present on the capacity building work of the Foundation and its future strategic direction. We followed up the environmental workshop at the AGM with questions on this topic in the membership survey. These are reported under Aim 5, Activity 1.
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In the membership survey we asked respondents to identify areas where they would like future events to take place. The results are shown below in a ‘wordle’, which is a text cloud that uses the size of the text to represent the frequency of each word in the source data:
When asked what discussion topics members would like, the following responses were received.
Democratic involvement When asked about participation in the Society, a number of respondents indicated that they submitted votes if they could not attend the AGM. However, 36% of respondents said they had never been involved with an AGM or postal vote. At the AGM in 2013 we received approximately 1,311 votes by post and by proxy and over 100 members attended in person. This reflects engagement of approximately 15% of our membership in this year’s AGM process, a similar proportion to the previous AGM. When asked about the Council, 74% of respondents said they did understand its role and 98% said they had not considered serving on the panel. This is consistent with the results of the 2011 survey. When asked if they would accept a place on Council if chosen by random selection, 63% of respondents said ‘no’ but 29% indicated that they would consider it if they knew more about what the role entailed.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
When asked if Shared Interest should involve members more deeply in decision-making, 95% said they were content with the current situation where the “Board of Directors make the major decisions with oversight from the Council on behalf of the members.”
Newsletter We published the 88th issue of our newsletter, Quarterly Return or QR, this year. Although some of our members prefer to read it online, 78% request a hard copy along with their statements. In terms of how QR is received, 43% of membership survey respondents read every issue and 41% read most issues. The stories about new lending were by far the most popular articles. When members were asked which resources best provided them with a sense of our social impact, 93% of respondents said articles in our newsletter QR formed the best source of information.
Website Secure Area In response to demand from our last membership survey, we launched the Secure Area on our website in July 2012. This provides a portal for members to view their share account statements, balance and personal details as well as accessing messages and resources. This year’s membership survey shows that 81% of members have internet access. At the end of the year 2,076 members (24% of our overall membership) were registered to use the Secure Area. Of those responding to the survey, 69% of members using the Secure Area said they would like to have the facility to make transfers and withdrawals in the future.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 2 CONTINUED: PROVIDE MEMBERS AND SUPPORTERS WITH A SOCIAL RETURN WHICH ATTRACTS NEW SHARE CAPITAL AND RETAINS EXISTING INVESTMENTS Activity 2: Assessing our members’ and supporters’ satisfaction with the community benefit arising from their investment In our membership survey, 95% of respondents stated they were either ‘very satisfied’ or ‘satisfied’ with how we utilise their investment. This is consistent with the satisfaction levels identified in 2011. The chart below shows the changes in satisfaction of members since 2005. Overall, how satisfied are you that we are utilising your investment to achieve the vision, mission and values? 100% 90% 80% 70% Very satisfied
60%
Quite satisfied 50%
Neither satisfied nor dissatisfied
40%
Quite dissatisfied
30%
Very dissatisfied
20% 10% 0% 2005
2007
2009
2011
2013
Risk as an indicator of satisfaction Part of our mission is to ‘take and share risk because we value the difference that fair and sustainable trade makes’. Risk is therefore inherent to the work that we do and we are explicit about this to our members. One measure of the satisfaction of our members is their attitude to the level of risk we take with their investments. Risk is highly subjective and one member’s perception or willingness to take risk may be very different to that of another. Members’ share capital is not protected by the Financial Conduct Authority Compensation Scheme. Despite this, when members were asked about their perception of risk, 62% of respondents saw their investment as low risk due to our strong track record and relationship with producers.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
How do you perceive the risk element of your Shared Interest investment? 2% Low risk given Shared Interest’s success to date
5%
30% 31%
Low risk given Shared Interest’s good ‘on the ground’ relationship with producers and fair trade businesses Medium risk – there is a possibility of risk with any investment High risk – because of the nature of lending to countries in the developing world
32%
High risk as Shared Interest is not regulated by the FCA
Previous survey results have shown only slight variation in our member satisfaction with the level of risk we take, with the large majority of responding members indicating they view the risk we take as satisfactory. However, in the last decade there has been an increase in the percentage of members wanting us to take more risk. In 2001, 12% of respondents wanted less risk and 1% more risk, in comparison to the recent survey results which indicated 61% of respondents saying they would be prepared to take a little more risk and 12% indicated much more risk. Only two respondents (0.2%) said they wanted less risk to be taken. We posed a question in the survey to ascertain whether members would be prepared to use their investment to write off producer debt and found the following result:
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Hypothetically speaking, if we had to use members’ funds to write off producer debts, how much of your investment would you be prepared to lose?
8% 20% None at all Up to 10% 5%
30%
10%-25% 25%-50% 50% – 75%
15%
75% - 100%
22%
Attitude to investment While a Shared Interest share account is an investment, the survey results show a range of perceptions of its definition by members, with 25% viewing it as part of their charitable giving, while 32% see their investment as a way of supporting fair trade. We recognise that the categories are not necessarily mutually exclusive. Which of the following phrases best describes how you view your investment in Shared Interest?
17% 25%
As part of your charitable giving Specifically as ethical investment Support for fair trade
32% 26%
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Support for a cooperative business
SOCIAL ACCOUNTS for the year ended 30 September 2013
The main driver for most of our members is the social return offered by our lending activity rather than the interest received on investments. We currently offer 0.5% interest in order to retain members and attract new investors. The chart below shows that 65% of the members responding to the survey strongly agreed or agreed with the policy to offer interest to members. Shared Interest currently offers interest to help retain members in the Society. Which of the following best describes your view on this policy?
Strongly agree Agree Indifferent Disagree Strongly disagree
0%
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10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 2 CONTINUED: PROVIDE MEMBERS AND SUPPORTERS WITH A SOCIAL RETURN WHICH ATTRACTS NEW SHARE CAPITAL AND RETAINS EXISTING INVESTMENTS Activity 3: Growing and developing the membership and supporter base The table below shows how membership and share capital have grown over the last five years. Share capital and membership in the last five years 2009
2010
2011
2012
2013
Share capital
£26,006,924
£27,675,694
£28,207,927
£28,669,111
£29,454,000
Membership
8,743
8,837
8,763
8,790
8,806
The average length of time a member holds a share account is 12 years. Withdrawals during the year of £1.9m meant that despite an inflow of £2.7m, the net increase in share capital was £785,000. This compares with the past three years as shown in the graph below. Net growth in share capital over the last three years £3,000,000 £2,500,000 £2,000,000 Inflow
£1,500,000
Outflow £1,000,000 £500,000 £0 2011
2012
2013
Our 8,806 members are spread across the UK but we do have a higher concentration of investors in Glasgow, Edinburgh, Newcastle, Leeds, Manchester, London, Bristol, Oxford and Brighton. Although we do not hold date of birth information for all our members, our database shows that the average age of members for whom we hold data is 68. This is supported by the findings of the membership survey in that 57% of respondents were over 65 years and
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SOCIAL ACCOUNTS for the year ended 30 September 2013
overall 80% were over 55 years. Coupled with this, 66% of respondents said they were retired and 14% were in full time employment. With regards to faith, 67% of respondents to the membership survey said they were Christian and 27% said they had no faith. These findings are similar to the survey undertaken in 2011.
The table below shows the spread of share accounts. This year the number of accounts valuing less than £5,000 has reduced by 39 and the number of accounts valuing £10,000 or more has increased by 42, this is largely due to existing members topping up their accounts. Account distribution
3,380
No of Accounts
3,501
956 417
100-999
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1,000-4,999
5,000-9,999 £ Invested
10,000-14,999
552
15,000-20,000
SOCIAL ACCOUNTS for the year ended 30 September 2013
This year we received a total of 506 enquiries. This was a substantial drop from 1,198 the previous year and is a direct result of a reduction in promotional activity due to budget constraints. This year we developed a number of new methods to reach new audiences, including using our existing membership. We have made considerable efforts to improve conversion rates and these increased from 24% to 51% in the year. This is due to a combination of factors; improved share account application forms; quicker turnaround of enquires; improved follow up letters; better supporting literature and clear consistent messaging.
Referrals A significant amount of work has taken place to improve the coding and evaluation of enquiries. A high proportion of new members are identified as coming to Shared Interest through the referral route. This could be from an existing member or an ambassador. To assist this, we introduced referral cards in our quarterly newsletter, QR, in October 2011, and in a calendar sent to all members in 2012 as a replacement to our usual Christmas card. We intend to continue creating tools to help members spread the message. Our members are very active and involved in numerous networks. Within the membership survey we asked respondents to identify other networks and membership organisations they are involved with and the results are shown below.
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Advertising In total, 12 insert campaigns were placed this year. We currently calculate that the return on investment for insert activity is 2.2 years and at present the most effective publications are the Big Issue, Ethical Consumer, Practical Action, New Internationalist, The Guardian, Amnesty Magazine and The Week. Although we are conscious that there is a finite time we can utilise these mediums because of saturation of message, we will continue to monitor their success and look to identify new publications and partnerships. Which publications do you read? 45.9%
42.0%
36.9% 30.5%
Third Way
Big Issue Magazine
The Observer
The Times
The Guardian
New Statesman
Practical Action
Social Enterprise Magazine
New Internationalist
5.7% 4.5%
4.4%
3.8%
0.3%
The Financial Times
6.0% The Economist
The Ecologist
Amnesty International
3.4%
16.8%
The Friend
14.3%
12.5%
Digital media We continued to build up the content of our new website launched in 2012 and increased the number of investor and lending case studies. We developed the search engine optimisation this year to improve the visibility of the site and increase the links the site has with partners. All marketing materials reference the website and we have an increasing number of enquiries coming through this route. We believe that one limiting factor in attracting new investors is the lack of immediacy in opening a share account. Due to budget restraints we were unable to improve this process but it is our intention to implement it in the next financial year. The first step will be to create an online application form and, if budget permits, introduce a payment system to accept the first investment. Although we placed less emphasis on social media activity this year we have updated our Facebook presence and grown our Twitter followers from 5,803 to 6,429.
Gift packs The Shared Interest Gift Pack was introduced at the end of 2011. We have promoted the packs within the ethical gift market but so far we have only had accounts opened by existing members as gifts for family members. We intend to continue their promotion through member communication but will not be doing any further external inserts or advertising in the coming months.
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Faith focus We identified in Shared Interest’s business plan that faith groups are a key area for development. The membership survey identified that a significant proportion of our existing membership are Christians. This leads us to believe that there must be scope to pursue new members in this area. We have made a start in this by establishing a good working with the Church of Scotland, Church in Wales and the Ecumenical Council for Corporate Responsibility (ECCR). We have created materials and contributed to their newsletters but banner advertising and inserts in faith publications have yielded very few enquiries. We will therefore continue to build our partnerships with key individuals at the regional and national level.
Volunteer programme We have a number of classifications under the umbrella title of “volunteer”.
Volunteers are defined as individuals that give their time but not in an income generation role. Tasks include administration and data input.
Ambassadors are individuals who give their time to raise the profile of Shared Interest by organising and/or attending events and giving talks to local groups.
Active members are classed as those that promote Shared Interest but do not want to become a formal ambassador.
We currently have 138 volunteers, of which 78 are ambassadors. This year our members attended 85 events across the country and through these contributed 265 hours to support Shared Interest. This is in addition to time spent on other activities such as leaflet drops and talks to churches, fair trade groups and coffee mornings. We will continue to monitor our volunteer activity and are currently investigating ways to encourage ambassadors to provide more information to enable us to carry out further monitoring and evaluation. A total of £332 in expenses was claimed by volunteers in the year. Approximately £49,000 of the new share capital invested this year is directly attributable to ambassador activity. However, this figure should not be viewed in isolation as the influence they have on attracting potential members is far greater. New members often express that they are attracted to Shared Interest through a number of sources, but in most instances verbal recommendation plays a significant role in their decision making process. It should also be noted that a large proportion of our ambassadors do not seek recognition for their support and as such new investments are not always identified as a result of their promotion. There have been a number of milestones achieved in the development of the volunteer programme, including a new database, which was introduced in 2012 and allows more statistical data to be gathered on volunteer activity. It also holds all volunteer records to enable more efficient contact and management. New training materials have been rolled out to all ambassadors; business cards were introduced, tablecloths and pop up stands were issued, and the secure area of the website now provides a platform for resources and discussion. We are still conscious that we need to improve our ambassador training and we are looking at more cost effective ways to do this. In terms of an ambassador recruitment process, our focus has been to recruit from the current membership. We have also promoted the scheme during the AGM, at member events, and also in QR. This yields a far better level of engagement and retention as these
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ambassadors can talk knowledgably about Shared Interest. We have ceased recruiting volunteers from volunteer centres as this proved time consuming and costly. We know from the volunteer survey conducted last year that our volunteers feel engaged and are happy with our new resources. We will be looking to improve networking between volunteers in the current year by setting up a regular Skype chat with volunteers and facilitate meet ups in key areas. We will also continue with our pattern of alternating surveys between members and volunteers annually so that we hear from each of them every two years.
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AIM 2 CONTINUED: PROVIDE MEMBERS AND SUPPORTERS WITH A SOCIAL RETURN WHICH ATTRACTS NEW SHARE CAPITAL AND RETAINS EXISTING INVESTMENTS Progress (on recommendations made in last year’s social accounts)
Continue to alternate membership and volunteer surveys – The findings from the surveys continue to help with understanding and shape future strategy.
Learn from and develop volunteer scheme following responses from the volunteer survey – The volunteer scheme has developed over the past year and we have continued to engage with our volunteers. The secure area for volunteers provides a central point for resources and a recently introduced Skype network has enabled ambassadors to discuss best practice and generate ideas for future activity.
Evaluate website secure area for members – We monitor feedback from members regarding the Secure Area and have included questions in the membership survey.
Consider how to draw out a deeper understanding of members and volunteers through surveys and other means – The membership survey has been developed to tease more views from members. A feedback mechanism has been introduced for all member events and we continue to encourage volunteers to evaluate the success of their events.
Record hours given by volunteers and carry out a cost/benefit – A new tracking mechanism was introduced to record events and volunteer involvement.
Conclusions (from this year’s social accounts)
Member numbers have been maintained through sustained marketing campaigns and a regional focus but we would have liked to increase share capital further with greater promotional activity.
In the last decade there has been an increase in the percentage of members wanting Shared Interest Society to take more risk.
Most members are content with the current situation where the “Board of Directors make the major decisions with oversight from the Council on behalf of the members.”
Those members who attended events gave positive feedback about the opportunity to engage in thought-provoking debates.
Ambassadors continue to play an important role in the promotion and development of our membership. We will continue to develop our understanding of our volunteers and use this information to shape the development of the volunteer scheme.
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Recommendations (progress to be reviewed in next year’s social accounts)
Continue to try new methods of multi-channel marketing promotion, carefully evaluating the cost-benefit to find the most effective approaches.
Investigate the feasibility of allowing enquirers to open share accounts online and giving members the ability to make payments and withdrawals through the Secure Area.
Consider how to draw out a deeper understanding of, and engagement with, members and volunteers through surveys and other means.
Look to engage with our volunteers more to help identify their activities and record hours given, allowing a more detailed cost/benefit analysis to be undertaken.
Investigate the members’ changing view of lending risk, their perception of risk and the potential direction of future lending through the strategic review process.
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5.3 AIM 3: PROVIDE BUSINESS SUPPORT AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Through Shared Interest Foundation, we provide business support to the fair trade movement around the world. This takes the form of training in business skills, the development of fair trade business support networks, and occasional grants for emergency assistance when fair trade businesses face a threat to their existence due to natural disaster. As a result of our strategic review, where possible, we aim for the work of Shared Interest Foundation to focus on financial capacity building in order to complement the work of Shared Interest Society. In this section we report on the scale and impact of our business support, explain the outcome of the strategic review of Shared Interest Foundation which was underway at the time of our last social accounts, and provide information on our donor funds.
Activity 1: Providing effective business support services which have a positive impact on disadvantaged communities This year we worked in eight countries to provide support to 137 businesses. We work in partnership with local organisations that have a clear understanding of the local context for both needs analysis and project delivery. Where appropriate we also recruit local consultants with specialist skills. Our key interactions are summarised below. Country
Project
Key Partners
Swaziland
Swaziland Craft Industry Development Programme
Kenya Tanzania Uganda Ghana Ivory Coast
Swaziland International Fair Trade Association (SWIFT) Fairtrade Africa
Improving access to finance in East and West Africa
Rwanda
Needs Analysis
Ethiopia
Needs Analysis
Organisations trained 43 handcraft 84 agribusiness
WFTO Africa 10 handcraft Rwanda Forum for Alternative Trade (RWAFAT) Yirgacheffe Coffee Farmers Co-operative Union
0
Swaziland Craft Industry Development Programme Through our in-country delivery partner, SWIFT, we are currently working with 43 businesses at three different levels of development in Swaziland. This project is designed to help businesses progress through stages of growth and creates a network of co-operation between all levels. The levels are classified as below: Level of business Level 1 Level 2 Level 3
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Description Informal artisan, have little or no systems in place, little or no record keeping, not exporting, mainly sole entrepreneur Have some management systems in place, employing a minimum of two contracted employees, little or no export capabilities, been in operation for more than 3 years. Have an annual turn-over of ZAR 500,000 Management systems in place, employ a minimum of 20 contracted employees, exporting, in operation for more than 5 years, annual turnover of ZAR 1,000,000.
SOCIAL ACCOUNTS for the year ended 30 September 2013
By increasing sales, we aim to create new jobs for rural workers and grow income for current producers. We have had significant success in this respect, with 182 jobs created since the project began in 2010 and the incomes of 2,553 producers raised by over 10%. At a single event, the Bushfire Festival in May 2013, SWIFT facilitated sales for members of over ÂŁ22,000 in just three days. The development of SWIFT as a local business support organisation is also an important part of this project. As we near the end of three years of funding by Comic Relief, we are working with SWIFT to plan for its future post-funding. Having been granted a six-month extension to the project, it will now conclude in March 2014. Achieved: 24 new Level 1 businesses registered with an average sales increase to date of 67% There are 24 new Level 1 businesses registered with the project. They have an average sales increase to date of 67%. This year SWIFT has been assisting the 26 artisans who graduated from Level 1 training last year to register as formal businesses. This was achieved with all but two of the producers, providing valuable learning for SWIFT about some of the bureaucratic hurdles in the business registration process. As a result, SWIFT began a useful dialogue with the Ministry of Commerce on simplifying registration for small businesses. This has led to a productive working relationship with the Ministry. They have also discovered cultural issues relating to gender roles and that consequently there is a need to engage with the husbands of women-led businesses to ensure their full participation. Twenty-two of the Level 1 graduates are now showing consistent sales growth. SWIFT is working closely with the remaining four to understand the underlying causes. These appear to be a mixture of wrong location, hesitancy to take on staff, and lack of focus. SWIFT has also been back to meet the 74 Level 1 artisans involved in the first wave of training to assess its impact and relevance to them. Of those surveyed, 95% had found the training really helpful and were keen to participate further. Several have been able to use the learning to improve their business practices. SWIFT is maintaining a relationship with these small businesses and hopes to include them in any future training programmes. “Business is doing well because I have been applying the tips given during training, for example creating an appealing display and, as a result my sales are improving.â€? Simphiwe Mkhabela, soapstone carver Achieved: Level 2 and Level 3 are growing in line with our targets, with an average 28% increase in sales Level 2 businesses, which employ staff and have an established local customer base, have benefited from training on finding new customers, key account management and social media for promotion. Five of the businesses will graduate to become Level 3 businesses by the end of the project as planned. The Level 3 businesses, which already sell into export markets, have benefited greatly from social media training, improving their marketing skills, and most significantly from work on strategic planning. They have added extra value to the project by putting in orders for produce from Level 1 businesses and acting as mentors to the lower level businesses. The loss of key founding members in two businesses highlighted the need for succession planning, something that SWIFT is now developing. In addition some businesses have encountered problems with the role of their board, which has highlighted a need for corporate governance training. This group has also posed an interesting challenge
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to our project logic: as they grow and succeed, will they increase incomes for existing producers or increase the number of people they employ? This challenge needs further enquiry as it will have a significant impact on project aims and the ultimate impact on the rural communities in which they are often the sole employer. “I see I am able to meet all my needs and still have money in my pocket. Last year I had no money left� Gugu Shabangu, Weaver for Tintsaba, a Level 3 business Achieved: SWIFT has grown as a membership organisation SWIFT has gained eight new members in the last six months, taking it to a network of 46 businesses. This year the team hosted visits from two international clients (from Colombia and Uganda) and established a new link with the US embassy in Swaziland. They have increased their media profile, with journalist tours, a prime time television appearance, production of a handcraft catalogue and a regular radio slot. We are also working to maximise their profile in the fair trade world. We co-ordinated a visit to Swaziland by WFTOAfrica who are keen to extend their links to the Swazi-based network. We also worked with Traidcraft to introduce the concept of the living wage to SWIFT members. This was very well received, and member businesses made a commitment to explore its implementation. In April SWIFT opened a shop, providing a well-located outlet for 15 lower level businesses to sell their products. The shop provides a great learning opportunity for less experienced businesses to use SWIFT as a practice customer. To date this has taught valuable lessons about fulfilling orders on time and to specification. One of the key objectives for the coming year is to assist SWIFT in securing funding after March 2014, when current Comic Relief funds come to an end. SWIFT has been working on diversifying its income streams, but we also plan to apply for further large scale funding to work with them again. We have learned from our work in Rwanda that a three-year period is not long enough to fully establish an independent, sustainable fair trade business support network. It is also not long enough to move the lower level businesses on from street seller to exporting business. We feel that there is more positive work we can do to build on tremendous successes with a partner we trust to deliver. During the transition in funding, we are conscious that staff retention is a potential issue and we are working with SWIFT to engage staff in plans for the future and offering learning and development opportunities to maintain their commitment. Achieved: The HIV/Aids programme component has trained all three levels of business Swaziland has the highest prevalence of HIV/Aids of any country in the world. Our Swazi project therefore contains an element to raise awareness of how to manage this in a work context. We work in partnership with the Swaziland Business Coalition on HIV and AIDs (SWABCHA) on this aspect of the project. Developing a full and participatory workplace policy has proven to be more complicated than anticipated and only two companies have achieved this to date. Nevertheless all 15 top level companies have been trained on how to implement the process and 37 peer educators have been trained in total. These peer educators are now reporting positive feedback from staff interactions and are widening their remit to discuss and advise on other common illnesses such as TB and diabetes.
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Achieved: We are improving our understanding of impact We have been gathering data each year on increased sales and business growth as an outcome of this project. This provides us with the sales increase figures quoted above. This year we have sought to understand the impact of this growth at a household level for individual rural producers. SWIFT conducted surveys with a sample of 250 producers. This was an in-depth piece of work, gathering a mixture of quantitative and qualitative data and triangulating this with other information sources to confirm or disprove what the data suggests. While we are still in the process of analysing this data, it has already provided some revealing results about poverty levels in Swaziland. While we can clearly see that the project is making a difference in terms of household incomes, research clarified that many participants still live on or below the poverty line due to the pressure of high numbers of dependents and rising food prices. Once the analysis is complete, we will be using it as the basis for discussions with SWIFT member businesses to explore how they can further assist their producers. We will also provide details of our findings in next year’s social accounts.
Improving access to finance in East and West Africa We were delighted that Comic Relief granted us new funds this year to work on an ambitious project across five countries in East and West Africa. Access to finance is cited as a barrier to growth for many of the businesses we work with. This project allows us to examine in depth what lies behind this; what barriers prevent access to fair finance and what support cooperatives need. Working together with Fairtrade Africa we aim to train 150 businesses from Kenya, Tanzania, Uganda, Ghana and Ivory Coast over two years. Then 45 will receive comprehensive mentoring to facilitate loan applications worth over ÂŁ1m in total. This breaks down as follows: YEAR ONE 100 CO-OPS TRAINED
YEAR TWO 50 CO-OPS TRAINED
30 MENTORED
20 MENTORED
20 APPLY FOR LOANS
10 APPLY FOR LOANS
The project began in April 2013 and we have so far trained 94 out of a target 100 businesses for Year One. In Ghana and Ivory Coast, where co-operatives are less developed, we have involved the respective co-operative departments to explain some of the nuances and changes in co-operative law. This was very positively received. The mentoring stage of the project is now underway. The local consultants that we have recruited all have strong experience of both financial management and working with similar businesses. They will visit the co-operatives and guide them through applying financial management concepts in their own environment within their context and resources. Once this phase is complete the project will directly support 20 of these businesses to apply for loan finance, with the first results of applications expected by March 2014.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
As part of this process we are working with Fairtrade Africa to build up a detailed picture of the financial capacity and needs of fair trade businesses across East and West Africa. Through using a financial profiling tool and rigorous measures, we will be able to track the progress of businesses throughout the project and highlight exactly what their needs are. We have used learning from previous projects and the experience of our partners, Fairtrade Africa, to develop a stronger monitoring and evaluation plan than we have had on previous projects. We look forward to being able to report the impact of this project in detail next year.
Rwanda needs analysis This year we returned to our partners in Rwanda following the conclusion of the three-year Rwandan Producer Support project in 2011. We carried out a needs assessment of the fair trade support network RWAFAT and a sample of its 38 member businesses. It was positive to see the co-operatives still surviving and providing employment for their members. However the trading environment continues to be very challenging and the fortunes of member businesses varies. While all appreciate and value the RWAFAT training only those with a stronger local market are progressing. The majority have suffered as the worldwide demand for handcraft goods declines. We also discovered that RWAFAT, as a relatively new support organisation, is not yet ready to stand independently and is struggling to survive at the moment with no donor funded projects underway. It relies heavily on time volunteered by the Board President and has no current operational budget. Returning to assess the longer term impact of our work in Rwanda provided vital learning for our future project development approach. We have seen that a longer term plan is needed to provide support for fledgling organisations such as RWAFAT. Three years is not long enough to build their capacity, reputation, resources and income to adequate levels of selfsufficiency. In addition the member co-operative training programmes should always include an element of market access as without this the development of the business will stall. As our strategy moves us further towards a financial management specialism we recognise that, in future, this would mean partnering with other organisations who specialise in complementary areas of development work. We have begun putting in place an action plan to support our Rwandan partners and have already successfully won an external grant from the Commonwealth Foundation to link RWAFAT in a best practice exchange with our Swazi partners SWIFT and the Malawi Fairtrade Network, a more established African fair trade organisation. This project will begin next year and will help RWAFAT learn about ways to improve and strengthen their organisation. We are also preparing applications for large scale funding to work on a new three year project which will focus on strengthening RWAFAT.
Ethiopia needs analysis In 2012, we funded a workshop for 24 coffee producer groups in Ethiopia focusing on climate change adaptation and access to information. The relationships developed through this project with Yirgacheffe Coffee Farmers’ Co-operative Union were used as the basis for a wider needs analysis carried out in Ethiopia on our behalf in May 2013. This involved interviews with three coffee co-operatives, six international NGOs working in the region, and questionnaires/interviews with 41 households in three communities. This research provided us with a rich picture of the position of coffee farmers in relation to their income levels and access to credit, along with ownership of physical assets, their
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geographic challenges and benefits, their education levels and membership of social structures locally. (These aspects are known collectively as ‘sustainable livelihood capitals’.) It also provided detail on the current priorities of a range of development organisations locally in relation to these farming groups. As a result, an opportunity was identified to continue to work with Yirgacheffe Union, building their capacity to communicate agricultural information more effectively with coffee farmers through radio and mobile technology. It was suggested that work is carried out with individual co-operatives to improve their financial and marketing skills and that, as a result, their farmers would be better supported to take practical action in adapting to the challenge of climate change. The potential for work on a carbon trading scheme was also highlighted. While there was some interest from other NGOs to partner with us in developing a project, we are conscious that climate change adaptation and carbon trading are not areas of expertise for us. Where there is opportunity for us to offer financial management training as part of a wider project, this may be more appropriate. At this stage we are continuing to explore whether there are viable partnerships that would benefit from our engagement, before considering whether to look for funding options to take this further.
Livelihood Security Fund We continued to operate a livelihood security fund, which exists to provide small-scale emergency support to producer businesses that experience a natural disaster or other shock, affecting their chances of sustainability. The fund is designed to be responsive and operate at short notice in order to enable businesses to begin trading again as quickly as possible. It is currently restricted to Society customers, for whom we have direct and instant access. We are pleased to report that we have not had cause to utilise this fund during this year.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 3 CONTINUED: PROVIDE BUSINESS SUPPORT AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Activity 2: Focusing our business support activity on access to finance Strategic review A strategic review of the work of Shared Interest Foundation was carried out over six months to December 2012. This involved primary and secondary research as well as focus groups and interviews with a mixture of Shared Interest staff members, Board and Council members and volunteers. There was input to the process from Shared Interest producer committees, and interviews carried out by an external facilitator with key contacts spanning the fair trade community, Foundation project partners and institutional funders with experience of working with Shared Interest. The review concluded that since its inception, the Foundation had made a valuable contribution through producer training and the establishment of business support networks, but that this had developed through pragmatic opportunism rather than on the basis of a clear strategy. In developing a more distinctive focus, it was felt that the Foundation could position itself more clearly. Of the options considered, the most widely shared view was that this should involve the development of a service offer around training in financial skills, helping producers become ‘investor ready’. Fair trade was also seen as an important component of the Foundation’s potential distinctiveness. Developing a greater focus on financial capacity building within the fair trade movement was also recognised to have the advantage of aligning the work of Shared Interest Foundation more closely with Shared Interest Society. It was recommended that, over time, this would help the Foundation and the Society to present a more cohesive approach under the umbrella of one ‘Shared Interest’. In addition, the review recognised the importance of continuing to diversify sources of funding. It also recognised that achieving on-going funding from major donors would be dependent on an ability to demonstrate impact, so that work to develop the Foundation’s monitoring and evaluation systems was important. As a result of this review, we are aiming to focus our business support activity increasingly on capacity building interventions which help fair trade businesses to access the finance they need to grow and develop their businesses. We recognise that there are other areas which are also very important to the groups we work with, such as accessing new markets for their products, but that we are not necessarily best placed to meet such needs, and may need to work collaboratively with others to bring in expertise as required. The development and funding of our project to ‘improve access to finance in East and West Africa’ is an important step forward for us in the delivery of this new strategy.
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Financial management research Delivering this new strategy will require an element of research. Alongside the Access to Finance project we have therefore opened up dialogue with five other leading social lenders. We have introduced these lenders to our project work and begun to develop a better understanding of how they operate. Our focus has been to understand approaches to capacity building, to find out which lenders do this, how and what common issues they find. Over the next year we plan to design and develop a refined financial training and support package. The training will equip producers with essential financial management skills which they can embed within their business. It will enable them to investigate routes to finance and inform them about the perspective of a social lender; who they lend to, and how to access this money. It will also provide them with information about other sources of finance and how they can be better placed to take advantage of this. We are grateful to Education Services, a charitable trust that has provided us with important funding to contribute to the development of this research in the coming year.
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AIM 3 CONTINUED: PROVIDE BUSINESS SUPPORT AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Activity 3: Raising and using donor funds wisely Following the completion of Shared Interest Foundation’s strategic review, a Development Officer was appointed in March 2013 to be responsible for fundraising. Since then activity has been undertaken to target new funding streams identified in the review as well as to strengthen existing sources.
Shared Interest Foundation income We are pleased to report that income to Shared Interest Foundation this year was 23% more than our target. This increase came mainly from institutional funders, with a new grant from Comic Relief for the Access to Finance project in addition to the existing Swaziland project that they also fund. We were pleased to receive funding for the first time from the Commonwealth Foundation. While this is a new project that will not begin until the new financial year, funds have been remitted in the year under review, inflating the institutional funding figure and accounting for approximately half of the 23% above. Individual donations increased slightly from the previous year, accounting for 41% of total income. Legacies are an important component of this, and we were delighted at the response rate to our invitation to Shared Interest Society members this year to consider leaving their investment as a legacy to Shared Interest Foundation, with over 100 new legacies pledged, totalling over £250,000 in future income. From our strategic review we identified new target markets for individual fundraising. This is in order to build on the relatively small numbers of individual donors on whom we currently rely. Our initial work to target these groups has had a disappointing response rate. However, we have realised that it will take time to build up new markets and will therefore continue to develop innovative plans to raise donations from new individual, corporate and group donors over the coming year. Shared Interest Foundation income over the last three years Income source
2011
2012
2013
Institutional funders
£31,123
£112,072
£167,053
Individuals (inc donations, event sponsorship & gift aid etc)
£74,937
£123,193
£125,922
Corporate
£12,626
£2,884
£2,354
Trusts, churches and other groups
£31,925
£14,122
£12,881
£150,611
£252,271
£308,210
Total
Trusts and foundations We are encouraged to have received repeat funding from some trusts that have supported us previously. In addition we are grateful to those who have responded to appeals for support in a particular area of need. We would like to thank the following trusts for their support this year:
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Donations by trusts to Shared Interest Foundation, 2013 Trust
Project supported
Education Services
Access to Finance Research
Maidenhead Malachi Trust
Rwanda Needs Assessment
St Mary's Charity
Rwanda Needs Assessment
Dorema Charitable Trust
Unrestricted
Rothley Trust
Unrestricted
Tisbury Telegraph Trust
Unrestricted
Financial management Income and expenditure is forecast on a rolling three-year basis by the Head of Foundation as part of an annual business plan which is approved by trustees. Financial results are monitored monthly and any plans to significantly change from budgeted expenditure as a result are discussed by the Management Team. Shared Interest Foundation follows a policy of maintaining 3 - 6 months of total expenditure in reserves. The Management Team and Board of Trustees review our management accounts at their respective regular meetings. Shared Interest Foundation publishes annual accounts in accordance with charity accounting best practice and UK law. Shared Interest publishes a consolidated Directors’ Report and Accounts (including the results of Shared Interest Foundation) in accordance with UK law and accounting standards. We aim to keep the running costs of Shared Interest Foundation as low as possible. To ensure the most cost-effective use of resources we use (and are charged for) the Society’s central services such as HR, IT and Finance. This year we have spent 29p on overheads to run Shared Interest Foundation for every £1 spent on charitable projects. This is the same as the previous year. The total overhead cost increased from £56,000 last year to £63,000 this year. This was primarily due to investing in building the staff team to three people. We are beginning to explore appropriate ratios against which we can benchmark performance in the Foundation. For this year we have looked at our management costs as a percentage of charitable expenditure (24%) and our fundraising costs as a percentage of income (8.8%). Further work is required on these to ensure that they are calculated in line with industry norms. The Institute of Fundraising reported an industry average last year of £4.14 of income for every £1 invested in fundraising, which would equate to fundraising costs of 24% of total income, against which we compare very favourably. We would recognise however that the income we receive from legacies and institutional grants comes in chunks and that this income does not necessarily relate to investment in fundraising in the same year.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Shared Interest Foundation expenditure, 2013 Activity Swaziland Craft Development Project Improving Access to Finance in East & West Africa
Expenditure £183,143 £65,096
Fairtrade Foundation support and other grants
£7,586
Rwandan Producer Support Project (Follow on assessment)
£7,070
Rwandan Forestation (REDO)
£2,259
New projects Ethiopian Coffee Project Governance and fundraising Total
£14,215 £2,946 £33,566 £315,881
Donor communication and accountability Newsletter, website and database We send out a quarterly newsletter to our supporters. One in every ten newsletters sent out results in an enquiry or donation, with an average donation of £80. We are also delighted to have received support from over 50 donors this year who are either new or had not donated to us for over two years. We continue to refine the Foundation area of the Shared Interest website. The Donate Now page has been simplified following donor feedback and we have added information on legacy giving and other ways to support us. We have begun to build a bank of case studies online and use them to tie into specific campaigns. We have developed our donor database to enable us to keep a record of correspondence with individual donors. We have also made progress in ensuring that we hold good quality data, and that reports tie in with our accounting systems. This enables us to maximize Gift Aid recovered from donations. Raising our profile In addition to communication with existing members we increased the marketing activity to attract new donors. This included press releases on new projects, insert campaigns, advertorials in regional, national and specialist publications, and communications with Shared Interest Society members. In addition we are working with the Fairtrade Foundation on a joint project to raise the profile of both organisations with students through a series of university events. The Fairtrade Foundation has produced a guide on campaigning for students in which Shared Interest Foundation will feature. We have also developed our social media presence with 350 followers on our Foundation Twitter account, supported by additional accounts run by individual staff members.
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AIM 3 CONTINUED: PROVIDE BUSINESS SUPPORT AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Progress (on recommendations made in last year’s social accounts)
Swaziland: continue to work in partnership with SWIFT and Comic Relief to ensure that the project implementation delivers on expected outcomes. – We received a positive response from Comic Relief on the end of year two report.
Review the pilot Ethiopia commodity producers training in order to progress project development plans. – Further detailed research with coffee farmers has been carried out and the resulting recommendations are now being evaluated.
Continue to progress the recommendations within the Livelihood Security Fund evaluation in order to build up a stronger evidence base. – Not possible as no requests for this type of funding were made in the year under review.
Complete the strategic review and develop implementation plan. – Strategic review and implementation plan completed.
Continue to seek ways to raise our profile outside our immediate network by implementing the recommendation of the strategic review in relation to communications and marketing approach. – We continue to carry out test marketing with five groups identified in the strategic review. The results from this are feeding in to our evolving strategy for marketing the Foundation.
Appoint a new fundraiser to build on previous experience and networks and implement the review recommendations in relation to seeking funds. – Development Officer appointed and recommendations being implemented.
Conclusions (from this year’s social accounts)
Our work in Swaziland has shown us that projects that do not take into account gender sensitivities will encounter problems. The different experiences of women and men when setting up a new business or opening a business bank account must be factored in to the project design.
The issue of whether growing businesses will increase wages or take on more employees needs further investigation.
An average three-year project period is not enough time to achieve sustainability for an in-country partner network.
Shared Interest Foundation has, to date, provided a useful contribution to development but must now be more focused on its strengths in financial management. In recognising our expertise we should then develop new partnerships that complement our offer.
We are still dependent on legacies and donations from Shared Interest Society members for unrestricted funding to deliver business support, and need to develop more diverse funding sources.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Recommendations (progress to be reviewed in next year’s social accounts)
Increase collaboration between Shared Interest Foundation and Society on ways to measure the impact of our work. Develop a cohesive approach to monitoring and evaluation across the organisation.
Ensure that project design is based on clear analysis of local need.
Use learning from current projects to refine methodology for delivery of financial management capacity building and developing realistic project timescales for building the capacity of partner organisations.
Diversify sources of income by testing new markets for fundraising.
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5.4 AIM 4: WORK IN PARTNERSHIP WITH PEOPLE WHO SHARE OUR COMMITMENT TO FAIR AND JUST TRADE The number of Shared Interest partnerships continued to grow this year. Our partners include a wide range of organisations, which are important to us for different reasons. Our relationships with partners represent a key element of Shared Interest’s social capital, which is a concept we introduced in our 2011 social accounts. Last year we developed a ‘social capital map’, which is explained in Section 8. As this is a relatively new concept, we have not yet been able to identify external benchmarks for measurement and comparison. However, this year we have focused on understanding better the nature of the social capital generated through our key partnerships. Last year, we surveyed all 44 organisations identified as partners to analyse our relationships and gain feedback. This year, we have narrowed our analysis to 10 partners, examining those relationships we believe to be the most important, to assess the benefits gained from working together.
Activity 1: Identifying and building appropriate partnerships We have identified that Shared Interest has 54 partner organisations this year, compared with 44 in 2012. The list includes 18 fair trade networks around the UK, 14 Fairtrade certification bodies, and a number of co-operatives, church networks, NGOs and fund providers. The full list can be found in Appendix 7 We categorise our partnerships into three levels. These are shown in the table below:
Description:
No. of partners:
Level 1
Level 2
Level 3
Those partners with whom Shared Interest has the strongest relationships and receives the most benefit
Those partners we find valuable and with whom we hold good relationships
Those partners we have identified as valuable but with whom we do not have a particularly strong relationship at present
10
35
9
Our Level 1 partners are: Comic Relief, Co-operatives UK, Ecumenical Council for Corporate Responsibility (ECCR), Fairtrade Africa (FTA), Fairtrade Foundation, Fairtrade International, Rwanda Forum for Alternative Trade (RWAFAT), Swaziland International Fair Trade Association (SWIFT), World Fair Trade Organization (WFTO) and WFTO Europe. A considerable amount of staff time is spent on building these relationships, with over 50 days this year spent working with Level 1 partners. These 10 organisations were invited to complete an online survey. We received nine responses, which is a 90% response rate compared to 36% last year when we surveyed all partners. Of the nine partners that replied, six had also replied to our 2012 partnership survey. As part of the survey we wanted to check whether our partners found the relationship as valuable as we do. We received a very positive result, with eight of the nine responses identifying the relationship as very valuable and the other claiming it to be moderately valuable.
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Shared Interest aims to build long-term relationships based on solidarity, trust and mutual benefit. A strong bond of trust is recognised to be a key element of developing social capital. We therefore asked our key partners about the level of trust they felt in their relationship with Shared Interest and received an encouraging response with all responders believing there is a strong bond of trust. In last year’s social accounts, of the six Level 1 respondents, five said that they had either a strong or very strong bond of trust with Shared Interest and the remaining respondent believed that there was a partial bond. We are encouraged therefore that we continue to retain the trust of our partners. We then asked how we could strengthen the partnership between our organisations. Four of the partners did not make suggestions. From those who did, we received the following recommendations: “Coordinate more the activity to recruit new members and to inform our members about the services which Shared Interest can offer to them.” WFTO “Continued collaboration that includes sharing information that could enhance our capacity for mutual benefit. Increased flexibility based on changing needs and circumstances.” SWIFT “I would be keen to deepen the relationship between Shared Interest and Fairtrade's international work. Obviously you know the Foundation well in the UK but I think we could do much more to connect at an international level as well.” Fairtrade International “Capacity building for Rwafat Board, market access for RWAFAT producers and establishment of a permanent General Secretariat.” RWAFAT We described in last year’s social accounts how we planned to assess the current and potential connections achieved through our Board and Council. This work is on-going and will be completed in the next 12 months.
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AIM 4 CONTINUED: WORK IN PARTNERSHIP WITH PEOPLE WHO SHARE OUR COMMITMENT TO FAIR AND JUST TRADE Activity 2: Evaluating the effectiveness and benefit of our partnerships In our last social accounts we started to analyse our partnerships in terms of social capital. This year we continued and refined this approach. One description of social capital is the collective or economic benefits derived from the cooperation between individuals and groups. One of the ways to evaluate social capital is to assess the benefits gained from both parties involved in the partnership. We therefore carried out an exercise this year to identify the key benefits from all of our Level 1 partners, a summary of which can be found in Appendix 8. Some of the main benefits we identified were that through the donation of staff time on various boards of directors we are able to influence the decisions of key players within the UK and global fair trade movements. We are also able to build the profile of Shared Interest to both potential investors and customers through collaborations with our partners. We asked our partners how their organisation had benefited from partnering with Shared Interest over the last 12 months, some of which are shown below. A full list of responses can be found within the survey results in Appendix 9 “Outreach opportunities at Shared Interest events, working together on an exciting partnership event in Wales. Mutual exchange of ideas, interest, concerns.” ECCR “Shared Interest lends to many Fairtrade certified groups who find it hard to get credit. You have also supported the Fairtrade Foundation in the UK with grants and with Patricia's time and expertise as treasurer.” Fairtrade International “We are doing a joint project on helping farmers get access to finance. Shared Interest have participated in our conferences, trained our farmers and are members of our market organisation in Eastern Africa.” Fairtrade Africa “Additional funding opportunities and submission of final concept notes and proposals to various UK-based donors Obtaining UK-based volunteers to help SWIFT with producer survey data analysis Linkages with other potential partners Fundraising for additional organizational requirements that are not covered by scope of current funding e.g. Printing of Swazi book, office space Exposure especially of the Project Manager through travel to UK and capacity building through interaction with Shared Interest staff Expansion of professional contact database facilitated by Shared Interest.” SWIFT
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SOCIAL ACCOUNTS for the year ended 30 September 2013
This year, our Supporter Relations Team and volunteers have attended or taken part in over 55 promotional events or activities. Of these activities, 26 were in collaboration with partners. Both of the above statistics are higher than in 2012 as efforts have been increased this year to hold more member events and ensure volunteer feedback is received after events that they organise. Although it is hard to know how to quantify social capital generated from each event, we regularly receive positive feedback on event attendance from members and partner organisations. To gain feedback from our partners about Shared Interest’s operations we asked them whether they believe we are meeting some of the WFTO Fair Trade Principles. Did they agree that we have a plan of action to reduce poverty and support marginalised producers? Their responses were positive as shown in the graph below. To what extent do you agree that Shared Interest has a plan of action to reduce poverty? 7 6 5 4 3 2 1 0 Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
When asked to what extent our partners believed Shared Interest is transparent and accountable to its stakeholders we received another positive response with only one partner being unsure.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
To what extent do you agree that Shared Interest is transparent and accountable to its stakeholders? 5 4 3 2 1 0 Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
Don't know
The above two questions were also asked in the 2012 partnership survey and showed very similar results with all but one respondent either agreeing or strongly agreeing to both statements. Overall, our work this year to identify, build and evaluate our partnerships gives us reassurance in the quality of social capital that Shared Interest is developing. We are conscious of the difficulties involved in quantifying the resulting benefits of social capital. However, we believe it is important to evaluate both the efficiency and effectiveness of the time we spend developing partnerships. We will therefore continue to develop our understanding of social capital as it applies to Shared Interest and our relationships with all stakeholders, seeking to build strong mutually beneficial relationships in pursuit of our mission.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 4 CONTINUED: WORK IN PARTNERSHIP WITH PEOPLE WHO SHARE OUR COMMITMENT TO FAIR AND JUST TRADE Progress (on recommendations made in last year’s social accounts)
‘Analyse Shared Interest’s network of connections including those through the Board and Council’ – All current partners have been categorised and assigned a main point of contact within Shared Interest. We have also identified potential partner organisations where we currently have no contacts but feel it would be beneficial to develop a relationship. We will carry out a piece of work in the coming year to discuss these lists with the Board and Council to see if they have any contacts and also to possibly identify further organisations that we should be partnering with.
‘Further our understanding of how we can grow and strengthen our social capital’ – We have tried to value the time we spend on our partnerships and what the added value is although this is often intangible and difficult to quantify. We considered asking our partners to put a value on their relationship with Shared Interest but felt this would be difficult to do and decided against it at this stage. We are now trying the spread the concept of social capital throughout the social accounts and not only with those we consider as partners.
‘Analyse how our national partners have contributed to the generation of share capital’ – Although it is difficult to measure and accurately track where investment is inspired from, we know we have raised investment from joint events with partners this year. All our events with partners have been very well attended and brought in some new investment. We will continue to work in partnership faith groups and will seek new relationships with this network as we feel this is a rich vein of potential investors for the Society.
Conclusions (from this year’s social accounts)
Partnerships add value to the work of Shared Interest.
Partnership with Shared Interest is seen as important by our key partners.
Recommendations (progress to be reviewed in next year’s social accounts)
Continue to build relationships with existing and appropriate new partners.
Continue to develop understanding of social capital and how to evaluate it.
Conclude research on the partnership working of members of Shared Interest’s Board and Council.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
5.5 AIM 5: CONDUCT OUR BUSINESS IN A MANNER WHICH REFLECTS THE PRINCIPLES OF STEWARDSHIP AND ENVIRONMENTAL SUSTAINABILITY For Shared Interest, stewardship is about doing the best we can with the resources that are entrusted to us. This includes both financial and environmental aspects. Historically we have sought to increase our environmental awareness and reduce our environmental impact. Key activities have included recycling, carbon offsetting and cycle to work schemes. This year we have aimed to be more strategic in our approach. We also continue to place great importance on robust financial controls and explain our approach to financial stewardship. Consideration of ethical issues features prominently throughout our decision making processes, especially with investment and procurement decisions. We detail our actions in this regard with the widely publicised problems this year of our main bankers the Co-operative Bank.
Activity 1: Minimising environmental impact Strategic perspective Following on from previous years, we continued to explore our options and the appetite for developing a more strategic approach to environmental and sustainability issues. We completed a piece of work commissioned last year that looked at environmental issues faced by customers. The report also analysed which commodities and geographical areas are most at risk. We presented the results at a workshop for members at our AGM, where we also asked members where they stand personally from an environmental perspective. We also rolled this out via our membership survey and found that 60% of respondents are deeply interested in environmental issues. There is also strong support for lending to customers who aim to improve management of environmental issues or generate alternate sources of income; 88% agree or strongly agree with this. We found that members are keen to learn more about environmental issues faced by customers as well as being eager to reduce their own environmental footprint. The strongest support (72%) is for investing in lending products specifically designed to manage or adapt to environmental issues. Through this year’s partner survey, we asked for external views on our organisational approach to environmental concerns. 56% of respondents felt that it was very important (and 33% quite important) that Shared Interest develops further in this area. Shared Interest has pledged to share further information and seek further debate with members and partners as we develop our thinking in this area.
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Reduction, reuse and recycling activities by Shared Interest staff We engage in various activities to minimise our environmental impact, supported by our Green Policy (which has replaced our Environmental Policy). Through regular communication of objectives, appraisals and achievements, we help our staff to understand and implement the relevant aspects of the policy in their day-to-day work. The environmental team involves a rotating cross-section of staff who work to increase awareness of the current environmental issues and what we can do to help. Their main activities this year were the review and substantial development of the Green Policy and Green Checklist (see Appendix 10) as well as deciding how the carbon offset fund is spent. Staff continue to recycle paper, card, plastics and glass. Other office equipment is recycled as appropriate; for example this year we replaced office IT equipment and 22 desktop PCs were offered to staff. We also have a Freegle account to recycle/reuse items locally and have recycled office furniture this way. Freegle is a network of local online reuse groups who share the ethos ‘don’t throw it away, give it away’. Similarly to last year, we have recycled over 2,500 items of plastic and glass and 38 wheelie bins of paper (2012: 40). We promote reading and storing of documents electronically to minimise unnecessary printing. We used 107,500 sheets of paper in the year and carried out 142,413 print jobs. This represents reductions of 22% and 4% respectively on the previous year. Where possible, we aim to procure our goods and services from local suppliers, both to minimise environmental impact and to support the sustainability of local businesses. During the year, purchases from local suppliers in North East England totalled £287,000. This represents 44% of our purchases for the year (compared to 42% in 2012.)
Reducing / offsetting carbon dioxide emissions arising from our operations Our main causes of carbon dioxide emissions are from running our offices and business travel. The majority of staff travel to work either by public transport, on foot or by bike. In 2008 we implemented the Government’s cycle-to-work scheme where employees purchase a bike in a tax efficient way by having the cost deducted from their salary in monthly instalments.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
This year we conducted our annual staff transport survey. Results show that 91% of staff travel all or part of their journey in an environmentally-friendly way (using public transport, cycling, walking or working from home). 72% of staff use public transport for all or part of their journey to work and five people regularly walk the full journey to work. We offer a staff travel scheme by providing funding so staff can purchase an annual bus or metro pass and again have the cost deducted from their salary while saving around 20%. Nine staff have taken advantage of the opportunity this year. Newcastle office Southern Electric has been our electricity supplier since 2010. Southern Electric is part of the SSE Group, which generates more electricity from renewable sources than any other energy company in the UK. Our electricity usage this year was 57,518 Kwh (2012: 53,530 Kwh) which is a 7% increase on 2012. We presume this can be attributed to the colder winter and hotter summer. We endeavour to minimise our electricity consumption in the office, ensuring heating and lights are turned off when the office is not occupied and computer equipment is turned off when not in use for prolonged periods. The majority of our printed materials are now Forest Stewardship Council (FSC) certified and carbon-balanced. Business travel We continued to log all business mileage (car journey, train journeys and flights) and offset the associated carbon emissions using the Climate Care website (www.climatecare.org) and carbon calculator www.co2balance.com. Carbon offsetting This year our total carbon emissions equated to 95.7 tonnes (2012: 76.42 tonnes) which is an increase of 25% on 2012. This due to increased air travel, the inclusion for the first time of travel by regional staff and other previously uncaptured travel. The calculated cost of offsetting this year’s carbon emissions is £1,035.49 and some of this, along with last year’s funds, was used for the installation of solar panels on a warehouse belonging to vanilla and cocoa producer, Gourmet Gardens based in Uganda and the Democratic Republic of Congo.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 5 CONTINUED: CONDUCT OUR BUSINESS IN A MANNER WHICH REFLECTS THE PRINCIPLES OF STEWARDSHIP AND ENVIRONMENTAL SUSTAINABILITY Activity 2: Managing liquidity and operating costs and ensuring prudent financial controls Operating costs Shared Interest continued to operate its agreed processes regarding budgetary control and financial reporting, details of which can be found in Appendix 11. These are the key elements to managing operating costs effectively. During the year, we undertook two reforecasting exercises. This is necessary when actual financial performance is not on track with that budgeted. It allows us to reassess what the expected year-end result will be and if appropriate make adjustments to plans for the remaining months of the year so that an acceptable financial result is achieved.
Liquidity The majority of our share capital is deposited in GBP in fixed rate deposit accounts (see Activity 3). The funds lent to our customers in foreign currency (we offer facilities in four major currencies: GBP, USD, EUR and AUD) are from foreign currency loans which are secured against the deposited share capital. The challenge for Shared Interest in regard to liquidity is to achieve a balance in terms of ensuring that there are sufficient readily available funds to meet the fluctuating borrowing demands of our customers while making optimal returns on deposits. In terms of our currency lending, further challenges are presented by the need to estimate in advance our customers’ currency requirements to calculate the level of weekly currency borrowing required.
Financial controls We adopt a proactive approach towards internal controls; we are constantly reviewing, updating and making improvements where possible, ensuring that controls, systems and procedures are appropriate as Shared Interest evolves. Authorisation procedures In keeping with all good businesses, we have internal controls in place to help ensure that expenditure is properly authorised and payments are appropriately/suitably approved. We continue to operate authorisation procedures designed to ensure robust financial controls, further details of which can be found in Appendix 11. Credit policies Also important are our credit policies, which play a key part in helping to manage our exposure to risk. The Society operates a number of prudential limits on lending in order to restrict the level of risk to our members’ investments. They limit the proportion of our share capital that we can lend by commodity, country risk, region, product and customer size.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
We continued to operate under the following prudential limits this year, as set by the Board: Approved lending – no more than 125% of share capital Country risk: Overall – no more than 30% of share capital lent to Categories C and D Country risk: Individual Country o Category C: 8% (high risk) o Category D: 5% (highest risk) Term loans – 20% Coffee lending: Total exposure: – no more than 50% of share capital Coffee lending: Regional limits o Central America 19.0% o South America 21.5% o Africa 9.5% Other commodity limit – no more than 10% of share capital against any one commodity (eg tea, cocoa etc). Large customer – no more than 30% of share capital to any one customer Internal audit We constantly challenge ourselves on how to improve delivery of our aims and the Audit Committee this year concluded that it would be appropriate for Shared Interest to add some internal audit resource to the process of assurance that controls are robust and operate as planned. The work of the internal auditor (which is being contracted to a local firm of Chartered Accountants, Ryecroft Glenton) will complement the work of the external auditors and look in more detail at the controls in place, probing for possible weaknesses or omissions. Their work will be reported back to the Board through the Audit Committee. It should be noted that this development does not signify a concern that there are unidentified problems; it just shows that the Society has reached a point of sufficient scale and complexity that a small amount of internal audit work such as this is appropriate. As a matter of good practice, we periodically review the provision of the key services we purchase. This year this involved the review of our payroll provider, the result of which was to remain with our current provider. We have also recently put in place additional financial controls in this area regarding the security of funds and the transmission of data.
Year-end position Our financial accounts provide full details of our financial performance for the year to 30 September 2013. In summary, we generated consolidated income of £2.92m (2012: £2.95m), profit before tax and share interest of £331k (2012: £310k) and profit after tax and share interest of £216k (2012: £156k).
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 5 CONTINUED: CONDUCT OUR BUSINESS IN A MANNER WHICH REFLECTS THE PRINCIPLES OF STEWARDSHIP AND ENVIRONMENTAL SUSTAINABILITY Activity 3: Considering ethical issues in investment and procurement decisions Investment decisions Decisions on all investments and deposits are agreed by the Management Team and, if appropriate, any proposals are forwarded to the Board to make a final decision. In addition to having the technical capability to provide the service we require, our three main considerations when selecting where to place our money are:
Safety of the deposits Receiving a good return Working with ethical partners.
It is not possible to rank these in priority order, as they cannot be considered in isolation. An overall context-specific assessment considering all three factors is carried out when we conduct investment reviews. Co-operative Bank During 2013 the Co-operative Bank has had widely publicised problems leading to a need to raise £1.5bn of extra capital to satisfy the Regulator that it is financially sound. The Board of Shared Interest has been considering ways to manage the potential risk to the Society and has commenced a process of ensuring that a proportion of our capital is deposited outside of the Co-op Bank. This diversifies the risk but cannot be achieved very quickly as a proportion of our funds are tied up on fixed term deposits (in order to maximise interest earned). The latest statements from the press and the Co-operative Group (as of end of October 2013) indicate that a deal has been struck in principle to ensure the survival of the Co-op Bank. We understand that this, however, comes at a price with the Co-operative Group relinquishing control and remaining as a 30% shareholder - albeit the largest single stake. A significant proportion of the other shares would initially be owned by former creditors of the Bank but this does mean that their mutual status will change dramatically. Encouragingly the CEO of the Co-op Group is quoted as saying "This bank will remain the Co-operative Bank. ... We are embedding the co-operative principles in the constitution of the bank to guarantee this". It is our Board's agreed view that, this news means that any risk to the survival of the Co-operative Bank and the safety of our deposits at this point is much reduced, and this is obviously welcome news. We do however want to reassure members and potential investors in the Society that we are; a) continuing a strategy of reducing dependence on any one bank and; b) currently reviewing whether the Co-op Bank remains the optimal main banking partner for Shared Interest. This will look at the same major aspects we considered in 2011 when we last formally reviewed our banking arrangement - the ethics of the organisation, security and pricing as well as the technical capability to provide the service we require.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Distribution of cash investments at 30 September 2013
1% 6% 4%
0%
Shares 1% 9% 3%
16% 20%
32%
8%
Cooperative Bank GBP Current accounts Cooperative Bank currency Current accounts Co-operative Bank 95 day deposits Co-operative Bank 1 year deposits Co-operative Bank 2 year deposits Co-operative Bank 3 year deposits Co-operative Bank 4 year deposits Co-operative Bank 5 year deposits Other 1 year deposits Social banks (Ecology and Triodos banks)
The chart shows that at the end of the year 93% of our funds (including shares) were held at the Co-operative Bank, compared with 99% in previous years. This reflects the start of the planned diversification in the latter part of the year. At the end of the year we had a total of ÂŁ2m deposited with Triodos, Nationwide and NatWest. The funds with the Co-operative Bank are split into current accounts and different terms of fixed rate deposit to maximise the interest we receive, while maintaining sufficient liquidity to meet customer demands. In total, 88% of our funds are currently on fixed term deposit, with terms varying from 3 months to 5 years. We have increased our fixed rate deposits during the year, by depositing a further ÂŁ1.2m. From the chart it can also be seen that we have a very small investment in shares, less than 1%. This form of investment is variable but the investment is not liquid and therefore not easy to turn back into cash at short notice.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Shared Interest Foundation Shared Interest Foundation also benefited from the Co-operative Bank’s fixed rate deposit accounts during the year, making good use of liquid reserves and the advance funds it received from Comic Relief. The Foundation also makes use of a higher interest Treasury account for other funds.
Procurement decisions Shared Interest operates a business model that does not require significant purchasing of goods or services or involvement with sub-contractors, but it is still entirely appropriate that all efforts are made to maximise ethical considerations when entering into such business relationships. The fundamentals behind the approach of Shared Interest are detailed in Appendix 12. During the year we reviewed and substantially developed our Green Checklist regarding the purchasing of goods and services and planning of events. Both our auditors, PwC, and our legal advisers, Watson Burton, demonstrate strong corporate social responsibility policies and support local charities and not-for-profit organisations. We aim to support local businesses where possible and usually use local suppliers so long as their prices are competitive (see also Aim 5, Activity 1).
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 5 CONTINUED: CONDUCT OUR BUSINESS IN A MANNER WHICH REFLECTS THE PRINCIPLES OF STEWARDSHIP AND ENVIRONMENTAL SUSTAINABILITY Progress (on recommendations made in last year’s social accounts)
‘Continue to monitor carbon emissions and to strive to achieve a realistic reduction.’ – Our carbon emissions figure has increased by 25% on 2012, however the figures are not directly comparable to last year due to inclusion of additional travel.
‘Conclude our work to identify what incentives can be offered to our customers to make environmental changes.’ - This work has progressed, a detailed mapping of some of the key issues has been prepared, we have tested members’ and partners’ appetite to our strategic involvement and are currently considering the next steps in taking this forward.
‘Review the procurement criteria to include relevant indicators of sustainability and local benefit.’ – This was incorporated into the review of our Green Policy and Checklist during the year, which have been significantly developed.
Conclusions (from this year’s social accounts)
The uncertainty over the future direction of the Co-operative Bank is an ongoing challenge and risk to Shared Interest. In order to maintain the balance between safety, return and ethics, it is important for us to continue to diversify our deposits and increase the percentage of our capital lent to customers.
While we continue to try to minimise our environmental impact through our Green Policy and carbon offsetting, we have established that there is strong support from members and partners for Shared Interest to use its strategic power to respond from an environmental perspective.
We have introduced an internal audit which did not identify any material concerns with our internal controls.
Recommendations (progress to be reviewed in next year’s social accounts)
Continue a strategy of reducing dependence on any one bank.
Review whether the Co-operative Bank remains the optimal main banking partner for Shared Interest.
Explore and develop further understanding of the opportunities for Shared Interest to get more involved in environmental issues from a strategic perspective.
Continue internal audit to maintain high level of risk and control structure.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
5.6 AIM 6: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT On 30 September 2013, Shared Interest was employing 31 members of staff, working for Shared Interest Society and Shared Interest Foundation. The majority of these posts are based in our UK head office in Newcastle upon Tyne. We also have staff based in Africa, South America and Central America. The 31 staff are split as follows: Shared Interest staff at 30 September 2013 Full-time
Part-time
Female
18
0
Male
12
1
Appendix13 provides a list of all staff employed during the year. During this period, there was a restructure within the Supporter Relations Team. Unfortunately this resulted in three positions becoming redundant. This led one of those affected to lodge an unfair dismissal claim with the Employment Tribunal. We successfully defended this claim but the process was difficult and time consuming for all those involved and affected relationships within the organisation. Over the last year, four employees joined the staff team and seven left. Three out of the four new members of staff were recruited into newly created roles and the remaining one was a replacement for a member of staff who had left. Total available working days for staff during 2013 was 8,349, of which we lost 107.5 days (1.3%) through sickness absence. This compares to 1.4% in 2012, and a national average benchmark of 3.5%. None of these absences were due to an accident at work.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Staff survey In this section we provide information on how we seek to encourage an understanding of different cultures within our staff team; about staff benefits; job satisfaction and communication. In all of these areas we also report on the views of staff as expressed through an anonymous online survey. This was fully completed by 26 staff members, which represents a 79% response rate of the 33 staff employed at the date of the survey and compares to 88% last year. Two staff completed only some questions – these results have not been included in the analysis. We recognise that there has been a deterioration in the results of the staff survey across many of the questions asked. There were also a number of challenging comments in free text boxes which we feel we need to understand more fully. The survey was undertaken during a difficult period which we feel is likely to have impacted on the views expressed. As we wish to address staff concerns fully, we have presented the findings of the survey to staff and intend to discuss these in more detail through focus groups to be run by the staff forum. While we only report in this section those questions and quotes which relate specifically to the activity headings, the full results have been circulated to all staff. Where we have comparative data from the staff survey in previous years we have included it in the analysis. This is for up to four years depending on the year in which the question was added to the survey.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 6 CONTINUED: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT Activity 1: Encouraging understanding of different cultures As an organisation, we believe that everyone should be treated with dignity and respect. We are therefore committed to the development of policies and procedures to promote equal opportunities in employment, personnel practices and services for which we are responsible. At the same time we value the fact that we are all individuals and that diversity is about recognising, valuing and taking account of people’s different backgrounds, knowledge, skills and experiences and encouraging and using those differences to create a productive and effective team. Providing staff with the opportunity to visit our customers overseas is one way that Shared Interest tries to promote a greater understanding of different cultures. This year 10 UKbased staff travelled to various countries including Benin, Brazil, Kenya, Rwanda, Swaziland, USA, Netherlands and France. After each trip, staff are encouraged to share their experiences with the staff team via presentations, email or blog. The overseas teams have also travelled widely in their own regions seeking new customers and visiting existing ones. These trips are detailed under Aim1, Activity 2. Staff share information on different cultures 100% 90%
3 7
80%
10
11
70% 60%
Strongly Agree
15 10
Agree
50%
Neither Agree or Disagree
40% 30%
16 7
5
12
Disagree Strongly Disagree
20% 10%
4
6
0% 2010
2011
3
3
2012
2013
Staff regularly send emails or give presentations to the team detailing events or celebrations within the regions and countries we work, providing an understanding of their culture and current issues for example, details of Ecuadorian Independence Day. One member of staff gave a talk to the team about Ramadan, its meaning and implications.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 6 CONTINUED: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT Activity 2: Offering fair pay and benefits and respecting employees’ work-life balance Although we are a small organisation, Shared Interest aims to reward employees fairly for their work. One key element of this is remuneration. The salary review process was carried out during the latter part of last year and despite the continuing global recession pay rises were awarded in January 2013. The cost of living, performance and salary benchmarking are all taken into account in considering individual increases. In accordance with the Remuneration Policy, we used an external consultant to benchmark our salaries. Using information such as role function, responsibilities, geographical location and size of the organisation, the consultant produced a bespoke report providing market pay assessments for each role at lower quartile, median and upper quartile levels. We aim to provide staff with appropriate benefits. These include Shared Interest contributions of 9% into a group personal pension scheme, life assurance cover, income protection cover, a sick pay scheme, maternity, paternity and adoption leave and pay that is more generous than the statutory requirements. We operate a childcare voucher scheme, cycle to work scheme and a travel ticket purchase scheme. We also provide free tea and coffee. Many of our staff consider the fact that they have the opportunity to travel overseas as part of their job as a significant benefit. Staff were consulted via the staff forum about moving the start of the holiday year from April to January. The holiday entitlement was benchmarked against other similar organisations and revised. Changes were implemented from 1 January 2013. Staff are also now eligible for increased holiday entitlement based on their length of service.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Results from staff survey I am satisfied with my salary 12 10 8 6 4 2 0 Strongly Agree
Agree
Neither Agree or Disagree
Disagree
Strongly Disagree
This was a new question this year, so we have no comparison with previous years.
I am satisfied with the benefits package 100% 90%
5
7
5
80% 70% 60%
12
11
Strongly Agree Agree
50%
15
Neither Agree or Disagree
40%
Disagree Strongly Disgree
30%
6
9 20% 5 10% 0%
3
2 1
1 1
1
2011
2012
2013
Shared Interest has several staff policies which we believe support staff in creating a balance between work and their personal lives. Although there are times when workloads naturally increase, we try to ensure that they are not unreasonable and do not have a detrimental effect on staff members.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Shared Interest provides appropriate policies and support to promote work-life balance 100% 5
90% 80%
9
7
10
70%
Strongly Agree
60%
Agree
40%
11
18
50%
14
18
30% 4
20% 4
10% 0%
3
2
2010
2011
5
3 1
2012
2013
Neither Agree or Disagree Disagree Strongly Disagree
We recognise that flexibility over working hours is one aspect of employment which is valued by staff and the aim of the flexitime policy, introduced in 2010, is to help staff balance their own personal circumstances with the operational needs of Shared Interest. Our TOIL (time off in lieu) policy enables staff to be compensated when they have to work at weekends either overseas or at events. In addition, our holiday policy encourages staff to take appropriate breaks from work. The deterioration in the scores below is one of the areas which will be discussed in more detail by staff forum focus groups. The flexi-time policy has had a positive impact on my work-life balance 100% 90% 8
80% 70%
12 18
Strongly Agree 21
60%
Agree
50%
10
40%
Neither Agree or Disagree Disagree
11
30% 20% 10% 0%
9
4 6
2 1
3
2
2 2
2010 *
2011 *
2012
2013
Wording of question slightly different in 2010 and 2011.
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Strongly Disagree
3
*
SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 6 CONTINUED: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT Activity 3: Aiming to provide job satisfaction, offering regular reviews and supporting personal development As an organisation, Shared Interest aims to provide staff with job satisfaction by offering interesting and varied work combined with generous and flexible benefits. Although career opportunities are limited due to the size of the organisation, staff are encouraged to participate in one of several cross functional teams or projects. Opportunities include social accounts, the staff forum, the environmental team, the health and safety committee and the social committee. In addition, staff have participated in several of the teams working on new IT projects. Staff are notified of any new vacancies and invited to apply, providing them with the opportunity to take on new roles or move to other areas within the organisation. Staff are also encouraged to pass on details of vacancies to anyone they know who meets the criteria and may be interested in the role.
Job satisfaction Overall, how satisfied are you with your job? 100% 90%
8
80%
9
9
70% 60% 50% 40%
16
11 18
30%
Very Satisfied Satisfied Neither Satisfied or Dissatisfied Dissatisfied Very Dissatisfied
20% 10% 0%
5
3 2
1 1
1
2011
2012
2013
Staff were asked about the things they most liked about working for Shared Interest. Common reasons can be grouped into the following categories:
The mission and impact of the organisation
The type and variety of work they do
The people or team they work with
The sector in which we work
Benefits of the organisation
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Specific comments included: “Location is excellent and staff are friendly and easy to get along with. Benefits such as flexitime and the pension scheme are really appreciated. It's great to work for an organisation that is genuinely trying to help people and do something positive.” “I like working for an organisation that is so involved in such an ethical/developmental movement. It is great to know that what we are doing is really affecting people’s lives.” “I like the impact the Society has on producer groups around the world.” “I like the flexibility and work life balance, and the satisfaction of working for an ethical organisation.” The things staff least like about working for Shared Interest can be grouped into the following categories:
Poor communication
The office atmosphere/office politics
The consistency of decisions and time taken to make them
Level of salaries.
Comments included: “I do not like the fact that we are sometimes too risk averse and take time to try out new things.” “Lengthy meetings and negativity between staff members which sometimes happens.” “The time it takes to make decisions.” “I would like to be able to build a relationship with our customers and to provide actual 'customer service'.”
Following a request from the staff forum, more free text boxes were included throughout the survey this year. These free text responses included a number of comments which we wish to consider further and address, such as a feeling of divide between staff and the Management Team. We have not published these quotes as part of our social accounts, but have shared them fully with all staff and intend to explore the issues raised in consultation with the staff forum.
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The office atmosphere is good 100%
2
90% 80%
9
6 12
70% 60%
1
3
Strongly Agree
5
18
50%
9
1
Neither Agree or Disagree
40% 30%
Disagree
11
10
5
Strongly Disagree
4
20% 10%
Agree
5
4
2 2
5
2010*
2011
2012
2013
0% * Question worded slightly differently in 2010
My morale is good 100% 90%
5 8
80%
10
70% 60%
10
8
Agree
50%
Neither Agree or Disagree
40%
15
Disagree
6
4
3
4
30% 20% 10%
Strongly Agree
4
3 1
0% 2011
2012
Strongly Disagree
3 2013
These results will be followed up through discussion with the staff forum.
Regular review Annual appraisals were concluded in September 2013. SMART objectives are set every year which tie into the business objectives and in turn feed into each person’s Personal Development Plan (PDP).
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SOCIAL ACCOUNTS for the year ended 30 September 2013
I receive regular reviews on my performance 100% 90%
6 10
80% 70%
Strongly Agree
60%
Agree 50% 40%
Neither Agree or Disagree
16
13
Disagree Strongly Disagree
30% 20% 4 1 1
2 1 1
2012
2013
10% 0%
Clear objectives are agreed with my manager 100% 90%
8
80% 14
11
70% Strongly Agree
60%
Agree 50%
Neither Agree or Disagree
15
40%
Disagree 11
12
1 2
4
1 2
2011
2012
2013
30%
Strongly Disagree
20% 3 10% 0%
Personal development All learning and training is captured throughout the year together with cost of time and actual cost. Staff are asked to complete a training request form beforehand and a training evaluation form afterwards, to ensure that objectives have been met. The training budget is 5% of salary costs.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Total cost of staff training 2012 and 2013 Description
2012
2013
Training cost (course/trainer fees)
£29,285
£18,674
Staff time cost (whilst on courses)
£32,809
£28,592
Inductions (staff time cost carrying out and attending inductions)
£5,772
£5,792
Management Team away days (staff time, venue and trainer costs)
£9,905
£16,872
Total
£77,771
£69,929
Number of training days
370.5
360.5
The table shows that Shared Interest continues to invest in staff training and development. We do continue to support training and development throughout the organisation although the number of training days has decreased very slightly from last year. Training costs have also reduced. This is mainly due to an increase in the number of in house training courses being provided for teams, departments or all staff. In addition, there has been an increase in the level of online training. Both of these tend to be less expensive methods of training than individuals attending external training course. Induction costs remain the same from last year. Management Team training has increased due to an increase in business planning and training days. This resulted from the continuation of the Foundation’s Strategic Review (now complete), an additional Management Team member for the full year and work with an external consultant on organisational development.
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I have received the training I need to do my job efficiently and effectively 100% 90%
4
7
8
8
80% 70% 60%
Strongly Agree
12
7
Agree
50% 40%
Neither Agree or Disagree
18
8
15
30%
10% 0%
Strongly Disagree
13
20%
Disagree
6 1 2010*
2011
2 1
2 1
2012
2013
* Question worded slightly differently in 2010
My personal development has been supported 100% 90% 9
80% 14
Strongly Agree
70% 60%
Agree
50%
10
Neither Agree or Disagree
40% 10
Disagree
30% 20% 10% 0%
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1 2
4
2
2 1
2012
2013
Strongly Disagree
SOCIAL ACCOUNTS for the year ended 30 September 2013
AIM 6 CONTINUED: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT Activity 4: Ensuring effective communication and participation in decisionmaking where appropriate Our Information and Communication Policy is designed to encourage effective communication within the organisation. Our intranet and email continues to be used to share information with staff on work related and fair trade issues, and we also have a news section on the website to publicise any key items. Meetings (1-2-1s) are held each week between individual staff members and their line manager. These meetings provide an opportunity to agree objectives, provide feedback, support and encouragement, and generally improve communication. 85% of respondents either agreed or strongly agreed that these meetings are useful and productive. Team meetings are also held regularly, enabling an exchange of ideas and updates to the rest of the team members. 88% of respondents either agreed or strongly agreed that team meetings are useful and productive. Fortnightly slots have been allocated for staff to use for updates, training and general sharing of information. These slots have been used to update staff on overseas trips, survey results, new policies etc. The business plan is presented at this time together with quarterly reviews. The Management Team holds a brief meeting at the start of each day to discuss any immediate issues and ensure consistency of decision-making. A formal management meeting is held every two weeks and Project Board Meetings are also held once a month. All staff briefing sessions are held on the first Monday of each month when the Management Team provides details of forthcoming activities. This includes expected visitors to the office, external meetings, overseas trips and a general update.
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Results from staff survey I believe that communication within Shared Interest is effective 100%
2
90% 80%
6
4
6 7
70% 60%
7
8
Strongly Agree 17
50%
Agree 5
6
40% 30%
4
Disagree
12 3
20%
Neither Agree or Disagree
7
Strongly Disagree
9 4
10% 3
1
0% 2010
2011*
2012
3 2013
*
* Question worded differently in 2011
This question was also asked as part of a five-point survey carried out earlier in February 2013. At that time, 63% of respondents agreed or strongly agreed that communication was good, whereas 13% disagreed or strongly disagreed. This is in line with results from both the full staff survey and five-point survey in 2012. We continue to strive towards improved communications and the recent deterioration in these results is an issue that will be discussed further through the staff forum. I am involved in decisions that affect me 100% 90%
4 7
4 8
80% 70%
10 11
8
60%
Agree
50% 40%
6
Disagree 7
7
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5
3
3
2 1 2
2010
2011
2012
10% 0%
Neither Agree or Disagree
16
6
30% 20%
Strongly Agree
2 2 2013
Strongly Disagree
SOCIAL ACCOUNTS for the year ended 30 September 2013
Team building The social committee organised lunches for Christmas and Fairtrade fortnight, including creating mini-marchers as part of a Fairtrade Foundation initiative. In addition to each individual team having a teambuilding event during the year, we held an all staff event in March, working together to create a mosaic of the Shared Interest logo which is now on display in the office. Winning the Queen’s Award provided us with an opportunity to hold a ceremony at the Mansion House which was attended by the Lord Lieutenant and other guests. We aim to celebrate success together as a team whenever significant milestones are achieved.
Organisation development An organisation development consultant has been working with Shared Interest this year to assist us to clarify our individual and organisation strengths. This consisted of interviews with staff, a focus group, and an all staff event. This work will continue next year.
Staff forum We continue to work with the staff forum to try and resolve issues and improve communication generally. The forum is made up of volunteers from each department who represent the staff group as a whole and liaise directly with the Management Team. The forum asks staff for their ideas, suggestions and recommendations and puts any relevant ones before the Management Team for consideration. The forum members report back the outcomes to their own teams. Their feedback has been sought in a number of areas including changes to the holiday year. In the staff survey, 15 members of staff strongly agreed or agreed that the staff forum has helped improve communication, six staff strongly disagreed or disagreed that it has, while five neither agreed nor disagreed.
Social committee The social committee was set up to promote less formal team building and as a way to improve communication within the organisation. This year they have organised and celebrated Ecuadorian Independence Day. They also organised a lunch during Fairtrade Fortnight which involved food tasting of Fairtrade products and home baked products made with Fairtrade ingredients. This activity involved the team in creating ‘mini marchers’ as part of a Fairtrade Foundation initiative. They have also been responsible for arranging the Christmas lunch. They regularly update the notice board in the kitchen with information about events and activities. In the staff survey, 17 members of staff strongly agreed or agreed that the social committee had been a good way to promote less formal team building and improve communication within the organisation. Eight staff neither agreed nor disagreed and one staff member disagreed or strongly disagreed this was the case.
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AIM 6 CONTINUED: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT SUSTAINABILITY Progress (on recommendations made in last year’s social accounts)
Continue team-building activities – See team building update on page 98.
Continue trying to find ways to improve communication - In addition to weekly individual 1-2-1s and team meetings, monthly all staff updates are held and minutes circulated. We work with the staff forum to resolve issues and improve communication.
Review the staff survey results identifying areas for improvement and implementing initiatives where practical - Feedback was positive last year about the effects of the office changes on the general office atmosphere. There has been a further reorganisation of the team’s locations within the office in an attempt to provide staff the opportunity to work with other teams and hopefully get to know them better.
Review the Ground Rules and implement appropriate improvements - The Ground Rules were reviewed but it was not felt necessary to revise them. New initiatives are to be considered with the current staff.
Conclusions (from this year’s social accounts)
The response rate to the staff survey has reduced, but remains high.
Despite initiatives on communication it could still be improved.
The majority of staff are satisfied with the benefits package and believe that we have appropriate policies in place to promote work-life balance.
The restructuring and tribunal during the year has affected morale and relationships within the staff team.
There was a feeling of divide between staff and the Management Team.
Staff believe that we promote an understanding of different cultures with a number of staff having had the opportunity to travel overseas which has aided this process.
Shared Interest continues to invest in training and development of staff. Staff believe that they have received the training to carry out their job efficiently and effectively.
Recommendations (progress to be reviewed in next year’s social accounts)
Continue team-building activities.
Continue looking for ways to improve communication.
Consider alternative methods of assessing staff satisfaction because we have identified that the staff survey does not provide us with good contextual information.
Build on the organisational development work already begun, identifying areas for improvement and implementing initiatives where practical.
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6 NEXT STEPS Following the completion of the audit process for these accounts, they have been approved by the Boards of Shared Interest Society and Foundation. As in previous years, we will publish this document as a PDF file that can be downloaded from our website. We will also explore ways to enable this to be accessed at a summary level, with the option to drill down to further information as desired. We will be exploring ways in which we can summarise key parts of the social accounts and disseminate these in appropriate ways for different stakeholder groups. For example, a summary will be contained within our annual review which will be sent to all members. We will issue a link to this document in electronic form to all our customers, and where we are developing newsletters for particular groups, we will seek include articles drawn from the content of these accounts. Both social and financial accounts will be formally presented to our AGM for adoption in March 2014. The recommendations from each of the Aims will be reviewed regularly by the Management Team to ensure progress, a report on which will be presented to the Board mid-year. These will also feed in to a ‘review of the year’ by both management and staff of Shared Interest that will consider lessons learned and priorities for the current year. The social accounting process will continue immediately to ensure all learning from this year’s process is taken on board and as part of our drive to continue to embed social accounting within our normal operations.
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7 ABOUT SHARED INTEREST HISTORY Shared Interest Society is the world's leading fair trade lender. For over 23 years we have been providing bespoke financial services and a vital means of support to some of the most disadvantaged communities across the globe. Our journey started in 1986 when the Christian development agency, Traidcraft Exchange, sponsored research into the role of banking and investment within the fair trade movement. The research found that the main challenge faced by those producing fair trade goods was access to working capital. It was out of this that Shared Interest was created, a unique financial organisation that aimed to do business for mutual service rather than for investor profit. The Society was publicly launched in October 1990 with the financial backing of the Joseph Rowntree Charitable Trust and the Ecumenical Development Co-operative Society (EDCS). Within a year, we had attracted £750,000 of Share Capital and 600 members. Today, we have almost 9,000 members in the UK, each investing between £100 and £20,000. This provides share capital of over £29m with which we share the risk of lending to communities in the developing world. While we were based on Christian principles, we have a lot of support both from various faith groups within the UK as well as from those with no religious affiliation. We operate as a community benefit society with members who share our vision of a world where justice is at the heart of trade finance. We form the link between UK social investors and fair trade organisations across the globe needing finance to grow their business and improve livelihoods. The majority of the businesses to which we lend are either certified by Fairtrade International (FLO) or are a member of the World Fair Trade Organization (WFTO). They range from small-scale handcraft producers to large coffee co-operatives and fair trade retailers. We offer a variety of lending options that enable our customers to pre-finance orders, build up harvest stocks, purchase essential machinery and infrastructure, make advance payments to farmers and artisans and finance inventory for new shops selling fair trade goods. You can read case studies of how our support has assisted producers in Appendix 3. In 2004, Shared Interest established a subsidiary, Shared Interest Foundation. The charity delivers practical business support in the developing world, helping fair trade businesses to improve their financial management and other business skills. Through Shared Interest Foundation we have helped to establish fair trade country networks in Rwanda and Swaziland, and work in partnership with others such as Fairtrade Africa to target support where it is needed most. Our Foundation has brought in funding to support this work from donors such as Big Lottery Fund and Comic Relief, and is also supported by donations from around 200 individuals, organisations or trusts each year. For the last eight years, Shared Interest Society has been following a strategy to increase direct lending to producers. In 2006 our first overseas offices opened in Central America and
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East Africa. We now have representatives in Kenya, Ghana, Peru and Costa Rica. As a result, for the first time in 2013, direct lending to producers exceeded lending to buyers. We are proud that the Queen’s Award for Enterprise has been awarded to Shared Interest Society twice in the category of sustainable development. This happened first in 2008 and again in 2013. During 2012/13, our finance reached 375 fair trade organisations globally and we made payments of £46.8m to producers and buyers across the world. In addition, we provided training and support for 137 fair trade businesses in eight countries.
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OWNERSHIP AND GOVERNANCE Shared Interest is an independent organisation based in the UK. As at 30 September 2013, it employed 24 people in England, and a further seven people in Kenya, Ghana, Peru and Costa Rica. Shared Interest consists of Shared Interest Society and a charitable subsidiary, Shared Interest Foundation. Shared Interest Society is owned and controlled by its membership of almost 9,000 investors. It has a democratic structure with an annual general meeting of members as well as various regional member events during the year. Each member has an equal voice and vote, regardless of the amount invested. Shared Interest Society is the sole member of Shared Interest Foundation. Shared Interest Society is governed by a Board of Directors which is currently made up of nine members; two executives and seven non-executives. Eight of these nine Directors also form the Trustee Board which governs Shared Interest Foundation. A Council of nine Society members monitors the work of the Society’s Board of Directors. The Council has the power to question the Directors and management and, if it sees fit, to address the membership independently. To ensure the Council is a representative body, six members have been randomly selected for nomination, while the other three members applied for their roles and were subject to a ballot of members. Membership of Council and Board of Directors 2012/13 Council
Board of Directors
Sue Cotterell
Non-Executive:
Executive:
Rod Gilpin (from Mar 2013)
Pauline Cameron *
Patricia Alexander * (Managing Director)
Mark Hayes
Peter Freeman * (until Mar 2013)
Sue James David Nussbaum * Lis Murphy (from Mar 2013) Kate Priestley * (Chair) Margaret Newens Keith Sadler * Malcolm Nunn Carol Wills * Stephen Sanders (until Mar 2013) Jason Watkiss
David Bowman * (from Dec 2012 )
Martin Kyndt * (from Dec 2012 ) * indicates also a Trustee of Shared Interest Foundation Claire Wigg
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SOCIAL ACCOUNTS for the year ended 30 September 2013
LEGAL STRUCTURE AND REPORTING Shared Interest Society is incorporated with limited liability under the Industrial and Provident Societies Acts 1965 to 1978 as a community benefit society and is registered in England, Number 27093R. The Society submits annual returns to the Financial Conduct Authority (formerly the FSA). Shared Interest Foundation is registered as a company limited by guarantee in England, Number 4833073, and is a registered charity, Number 1102375, and submits annual returns to the Charity Commission and to the Registrar of Companies. The annual returns due in 2013 were submitted as follows:
Shared Interest Society Limited : January 2013. Shared Interest Foundation - Charity Commission : January 2013 Shared Interest Foundation - Companies House: July 2013.
Shared Interest Society Limited is an exempt person from regulated activity for the purpose of the issue of shares by it pursuant to paragraph 24 of the Financial Services and Market Act 2000 (Exemption) Order 2001. The shares are not a specified investment for the purpose of section 22 of the Financial Services and Markets Act 2000 pursuant to paragraph 76 of the Financial Services and Markets Act (Regulated Activities) Order 2001. The Society’s shares are withdrawable (although the Directors can impose a notice time limit or complete moratorium on withdrawal at any time) and not transferable except on death or bankruptcy.
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COMPLIANCE WITH STATUTORY AND VOLUNTARY CODES Part of Shared Interest’s social performance is defined by and monitored through its compliance with statutory and voluntary codes. To support this Shared Interest has a compliance action plan that was agreed in June 2005 (see Appendix 14). This established a regular routine of reviews to be carried out either by an internal team or by external auditors.
Update for 2013
Money laundering – awareness training is provided for all staff. The procedure of review of applications for membership using a sub-contracted identity and financial check has been successful and will continue. All customers of the Society are subject to checks on a risk-assessed basis.
Bribery Act 2010 – this has been enacted in 2011. Specific training has been provided for all staff and documentation and procedures updated accordingly.
FCA / Treasury regulation – the FCA is the registrar of Shared Interest Society and is also its supervisor for money laundering purposes. We continue to apply best practice in terms of Money Laundering checks and following legal advice around promotion of our activities and raising investment in the Society.
Statutory/financial – audit completed November 2012. No significant compliance issues were raised in the audit report from PwC for either the Foundation or the Society.
Co-operatives UK Code of Corporate Governance (May 2005 revision) – exceptions are reported on in our Financial Statements together with the reasons. These relate to our size and scale of operation.
Risk review – formal updates to the Board take place twice yearly with the latest at February 2013.
Health and safety – a health and safety policy is in place and available to all staff. We have a Health & Safety Committee, which meets regularly. Work station risk assessments were completed by all staff during the year and points arising have been followed through. Risk assessments continue to be completed by staff working regularly at home.
Data protection – staff were given a formal training session on data protection and IT security in January 2013, refreshing their roles and responsibilities.
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8 ABOUT OUR SOCIAL ACCOUNTS Social Accounts are one of the ways in which Shared Interest holds itself accountable to those people that have an interest in its activities. Part of the social accounting process is to identify key groups of such stakeholders, and to consult with them on their view of our performance against the mission and values which we espouse. In the section which follows, we therefore define our understanding of the stakeholders of Shared Interest and detail the consultations which have taken place over the past year. In addition to stakeholder consultation, we provide a report on our performance using internal data. This seeks to show the progress that we have made in the year on delivering against key indicators, as measures of the aims and activities outlined in Section 4. Where possible we have provided external benchmarks against which this performance can be evaluated. Increasingly we expect such information to come from business systems which are used in the daily running of our operations. Given the time and resources which go into producing social accounts, it is important to us that they are used to help us improve future performance. Under each section we therefore draw conclusions and develop recommendations against which we report progress in the following year. This is our ninth set of annual social accounts. It has been compiled in accordance with the process recommended by the Social Audit Network UK and audited by a panel chaired by a SAN qualified social auditor. Drafting this report was undertaken by the Social Reporting Team: Andrew Ridley, Credit and Services Manager; Kerrey Baker, Marketing and Relationships Manager; Jo Hall, Projects Leader; Louise Mounsey, Customer Service Account Manager; Jo Tong, Finance Manager; Denise Sumner, Executive Assistant; Stina Porter, Communications Manager, and Chris Pay, Head of Foundation.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
STAKEHOLDERS Key stakeholders Number of stakeholders 2012
Number of stakeholders 2013
N/A
N/A
79
97
Buyer customers
41
38
Other organisations that receive or make payments via Shared Interest Society
Recipient producers*
321
240
Commercial buyers
56
67
Organisations who benefit from the support of Shared Interest Foundation Shared Interest Society investors Individuals/Organisations who contribute financially to the development of Shared Interest Society but not as members Individuals who volunteer their time and expertise to Shared Interest Collectively responsible for the direction and management of the Society,8 of these 9 are also Trustees of Shared Interest Foundation Body which serves to represent and reflect the views of membership
Producers trained Producer groups receiving grants
194
137
2
0
8,790
8,805
2
2
120
138
8
9
Stakeholders
Definition
Potential customers
Organisations we strive to or may be able to work with
Customers
Beneficiaries Members
Supporters
Volunteers
Board of Directors
Borrower organisations which enter into a business contract with Shared Interest Society
Description Fair trade producer groups and buyers that could benefit from becoming customers Producer group customers
Members
Supporters
Ambassadors and volunteers Elected representatives (executive and nonexecutive)
Appointed/elected Shared Interest Society 9 9 members Individual donors 97 218 Corporate donors 6 5 Churches and other Shared Interest Foundation 6 2 Donors groups donors Sponsored event 27 1 participants Grant-making bodies 7 9 Employees Staff Staff 34 31 People, groups and organisations we work Those we collaborate with for Partners with and umbrella 44 54 mutual benefit groups of which we are members * Recipient producers are those producers who do not have a credit facility with Shared Interest but who receive payments through Shared Interest on behalf of their buyers. Council
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Other stakeholders There are other stakeholders with whom, for reasons of practicality, we have not consulted. These include friends and family of staff, the local and wider community including potential members and service providers. Additionally, there are groups that are essential to us to whom we are not essential, such as Government Regulators (Financial Services Authority (FSA) and HM Treasury).
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SOCIAL ACCOUNTS for the year ended 30 September 2013
SOCIAL CAPITAL We recognise that there is a complex web of relationships between people in the various stakeholder groups with which we interact. These relationships enable us to act with others more effectively to pursue shared objectives. This is a concept which has been labelled ‘social capital’ in recognition that it is of significant value. We have made some attempt in Aim 4 to articulate the social capital that has come from our relationship with key partners, however, placing a value on relationships and networks continues to pose a challenge. One of the ways that we have sought to understand social capital in Shared Interest has been to develop the diagrammatic representation below.
The circles represent the stakeholders of Shared Interest. The size of each circle reflects the number of links with other stakeholders, the smallest circles showing fewer links and the larger circles indicating more links. The linking lines in blue and red indicate in which direction the benefits of the link travel. Blue lines indicate a reciprocal link with benefits travelling between the stakeholders, for example benefits to customers from members (ie loan finance) and benefits to members from customers (ie social return). The arrows on the red lines indicate in which direction the benefits are moving, for example potential customers benefit from links with existing customers (ie lending referrals) but existing customers do not necessarily draw any benefit from this link. There may be individuals who are represented through a number of stakeholder groups, for example a member could be an ambassador and also involved in a partner organisation, but at present we are not covering social capital in this level of detail.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
SCOPE The period covered by these social accounts is the year from 1 October 2012 to 30 September 2013. They cover the full operations of both Shared Interest Society and Shared Interest Foundation. These are summarised in the aims and activities which are detailed in Section 4. We consult with stakeholders in a range of both formal and informal ways, but the consultations reported in our social accounts tend to be the more formal methods such as surveys as these are the easiest to capture and analyse. For many stakeholder groups we have now established a pattern to our formal consultations in order to avoid surveys to everyone each year.
CONSULTATIONS Much of the statistical information we report on in our social accounts is now embedded within our internal transactional databases and collated over the year. In addition to this data, we report on consultations we hold with our stakeholders as part of the social accounts activity:
Potential customers We carried out research into potential customers in Africa through a questionnaire to 400 fair trade business, from which 109 responses were received.
Customers Details of our producer committees can be found in Aim1, Activity 4. The only formal consultations undertaken with customers in addition to these this year was with our South American producer customers. We took this decision for a number of reasons including excessive demands on staff resource and additional demands on those with a second language, repetitive survey saturation and unreliable lines of communication. We felt that focusing on South America would allow us to get a greater and more condensed level of data which is hoped will show trends specific to each region. This year we sent our online survey to 37 producer customers and received 14 responses. It is our intention to rotate the producer customer surveys by region each year and undertake buyer customer consultations in alternate years. The same will apply for commercial buyers and these will be undertaken at the same point as buyer customers. In an effort to build our bank of social data from recipient producers we will continue with our annual consultations. This year we sent our online survey to 196 recipient producers and received a response from 18. Entry into a prize draw to win USD 500 for all fully completed responses was offered, this was won by Akany Tsimoka, a handcraft producer in Madagascar.
Beneficiaries Our Swazi partner SWIFT carried out consultations regarding training packages with 74 Swazi artisans. We funded a research visit to Ethiopia where interviews were carried out with the management of three coffee farming co-operatives, and with 41 farmers at household level as well as with six NGOs. We carried out a needs analysis visit to Rwanda where we met six craft co-operatives and 12 individual producers. We worked with Fairtrade Africa to profile the financial capabilities of 94 Fairtrade businesses across five countries in
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SOCIAL ACCOUNTS for the year ended 30 September 2013
East and West Africa. The findings of these consultations are detailed in individual reports and provide the basis for decisions regarding the future direction of our project activity.
Members We conducted our biennial membership survey this year and received 1,993 responses. Feedback was gathered through ad hoc correspondence to Head Office as well as feedback from the three members’ events we hosted this year, our Annual General Meeting in Newcastle, a members’ event in Oxford and another in Brighton.
Volunteers We did not conduct a volunteer survey this year as it is a biennial survey and we alternate it with the membership survey. We have however received evaluation forms from volunteers throughout the year following events they have attended.
Employees An anonymous online staff survey was issued to staff again this year with a mixture of questions from previous surveys for comparison reasons and some more specific questions. 26 out of 33 staff members responded.
Donors In addition to on-going reporting and face-to-face meetings with our largest donor, Comic Relief, they have been consulted as part of the partners’ consultation. As 80% of the donors to Shared Interest Foundation are also members of Shared Interest Society, the vast majority of donors will have received a membership survey this year. We therefore plan to survey donors every other year, as with volunteers.
Partners An online partner survey was carried out this year which focused on our 10 key partnerships. The table below compares the consultations carried out this year with the previous three years.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Consultations with stakeholders over the last three years Stakeholder Potential customers
Customers
2011 Survey sent out to prospective customers by Regional Development Executives and BD Assistant (30/80)
2012 Survey sent out to prospective customers by Regional Development Executives and BD Officer (17/50)
Online survey to recipient producers (22/314) and commercial buyers (3/39) Online questionnaire to customers (32/113 – 6 buyers and 26 producers)
Online survey to recipient producers (33/862) and commercial buyers (9/126) Telephone survey to customers (9 buyers and 13 producers) Producer committees
Foundation Beneficiaries
Evaluation forms completed after each training session and by each grant recipient Independent evaluations Interviews with service receivers, site visits, stakeholder meetings, steering groups
Evaluation forms completed after each training session and by each grant recipient Project reports including interviews with service receivers, site visits and stakeholder meetings
Members
Questionnaire sent to all members who are happy to receive mailings (2,506/8,225)
Feedback forms at AGM and members meetings (109) Volunteer survey (36/91) Some consulted for Foundation strategic review Consulted for Foundation strategic review
Volunteers
N/A
Board
Consulted as members
Council
Consulted as members and separately for their partnerships
Consulted for Foundation strategic review
Questionnaire (29/32)
5 point survey (28/33) Staff Survey (31/33) Consulted for Foundation strategic review
Employees
Donors
Quotes plus two large grant donors consulted in partner survey
Partners
Questionnaire (16/36)
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On-going dialogue with Comic Relief. Regular donors are being consulted as part of the strategic review in Autumn 2012 Questionnaire (16/44) Consulted for Foundation strategic review
2013 Research by consultant via questionnaires to members of WFTO Africa and Faritrade Africa (109 responses from 400 questionnaires) Online survey to recipient producers (18 responses from 194 emails delivered) Online survey sent to South American Producer Customers (14 responses from a possible 37) Producer committees (with representatives from 4 groups in Kenya, and 6 in Peru) Consultations via SWIFT with 74 artisans in Swaziland re training Co-op (3), and household level (41) research with coffee farmers in Ethiopia Needs analysis visit to 6 co-ops and 12 producers in Rwanda Financial profiling with 94 businesses across 5 countries in Africa. Questionnaire sent to all members who are happy to receive mailings (1,993 responses from a possible 7,446) Feedback forms at AGM and members meetings Evaluation forms from events Feedback on resources and newsletters Consulted as members Consulted as members 5 point survey (30 responses from 33 staff) Staff Survey (26 responses from 33 staff) Comic Relief as recipient of partner survey below. Many donors also receive the membership survey as 80% of Foundation donors are also society members. Questionnaire (completed by 9 out of 10 key partners consulted)
SOCIAL ACCOUNTS for the year ended 30 September 2013
9 GLOSSARY AND ABBREVIATIONS AGM Annual General Meeting. Members are invited to attend our AGM where reports are given on the progress of the Society and Foundation. They can also engage in the Society through voting on issues, including Board and Council membership (postal ballot only), either in person, by proxy or postal ballot.
Ambassadors and volunteers Shared Interest ambassadors actively promote the organisation to the general public through talks, presentations and general profile-raising activity. Shared Interest volunteers get involved behind the scenes, from helping out at head office to taking photographs at events.
AUD (A$) Australian Dollar, one of the currencies we use for lending.
Baht (THB) Thai Baht, one of the currencies we use for lending.
Beneficiaries A generic term for those who have benefited from Shared Interest Foundation projects.
Board Shared Interest’s Board is made up of nine members; two executives and the remaining seven being non-executives. The Board is responsible for setting the strategy for the Society and Foundation and making sure it is delivered within an appropriate risk framework. (See also Trustees.)
Buyer customers Hold a credit account with Shared Interest and are borrowing from us directly.
CFA Franc (XOF) The CFA Franc is one of the currencies we use for lending. It is the currency of Communauté Financière Africaine (BCEAO) used in several French speaking West African countries.
CLAC Coordinadora latinoamericana (de comercio justo) y del Caribe - a fair trade network of small producers in Latin America
Comic Relief A high profile national grant giving body that funds UK and international projects.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Commonwealth Foundation A grant giving body linked to the Commonwealth institutions, concerned with encouraging collaborations between Commonwealth countries.
Co-operative levels In a ‘first level’ co-operative the members are individual farmers, artisans, workers or other people. In a ‘second level’ co-operative the members are usually first level co-operatives. The Board of Directors consists of representatives from each of the first level co-operatives. This two tier co-operative system is common among coffee producers in Latin America.
Council Shared Interest’s Council is made up of nine Shared Interest members whose role is to help make sure the Board sets a strategy that adheres to the mission of the Society and then delivers this strategy to meet the expectations of members.
Donors Please see members, donors and supporters.
EUR (€) Euro, one of the currencies we use for lending.
Fairtrade Africa (FTA, formerly African Fairtrade Network, AFN) The organisation representing all Fairtrade certified producers in Africa. It shares premises with Shared Interest in Accra, Ghana.
Fairtrade Foundation The organisation that licenses the use of the Fairtrade Mark in the UK. It also plays a key role in promoting fair trade in the UK.
Fairtrade International (formerly known as FLO) The organisation that co-ordinates Fairtrade labelling at an international level.
Financial Conduct Authority (FCA) The FCA is a regulatory body in the United Kingdom, formed in 2013 as one of the successors to the Financial Services Authority (FSA).
GBP (£) Pounds Sterling, one of the currencies we use for lending.
Human Development Index (HDI) A comparative measure of life expectancy, literacy, education, standards of living and quality of life for countries worldwide. It is a standard means of measuring wellbeing, especially child welfare.
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SOCIAL ACCOUNTS for the year ended 30 September 2013
Members, donors and supporters Members are individuals or organisations who invest anything between £100 and £20,000 into an ordinary share account with Shared Interest. Each member has one vote irrespective of the size of their investment. Donors are individuals or organisations who make donations to Shared Interest Foundation. Supporters are individuals or organisations who support Shared Interest Society with finance but who do not hold a share account.
NGOs Non-Governmental Organisations.
Producer customers Hold a credit account with Shared Interest and are borrowing from us directly. Producer customers may be co-operatives, limited companies, associations etc.
PwC PricewaterhouseCoopers, Shared Interest’s accountants.
QR Quarterly Return, the quarterly magazine for Shared Interest members and supporters.
Rand (ZAR) South African Rand, one of the currencies we use for lending.
RDE Regional Development Executive, Shared Interest‘s main contacts based in Kenya, Peru, Ghana and Costa Rica.
Recipient producers Producer groups for which Shared Interest facilitates payments on behalf of buyers. Recipient producers do not hold a credit account with Shared Interest and are not borrowing from us directly.
RWAFAT The Rwanda Forum for Alternative Trade.
SPP Sello de Pequeños Productores – Small Producers’ Mark
Supporters Please see members, donors and supporters.
SWIFT Swaziland International Fair Trade Association.
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Trustees See Board. Eight of the nine Directors of the Society are also Trustees of Shared Interest Foundation. The Finance Director of the Society is also Company Secretary for both Society and Foundation.
USD United States Dollar, one of the currencies we use for lending.
Volunteers Please see ambassadors and volunteers.
WFTO World Fair Trade Organization, the global association of fair trade organisations (formerly known as IFAT).
WFTO Africa The African regional network of WFTO, formerly known as COFTA (Cooperation for Fair Trade in Africa).
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