Social Accounts

SOCIAL ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER 2011

SOCIAL ACCOUNTS for the year ended 30 September 2011

CONTACT Shared Interest 2 Cathedral Square Groat Market Newcastle upon Tyne NE1 1EH Tel 0191 233 9100 socialaccounts@shared-interest.com http://socialaccounts.shared-interest.com

Shared Interest Society Limited an Industrial and Provident Society Registered Number 27093R Shared Interest Foundation Registered Charity Number 1102375

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SOCIAL ACCOUNTS for the year ended 30 September 2011

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 Patrick Boase, Judith Brown and Margaret Wightman for taking part in the Social Audit Panel. The Social Audit Network has continued to be a useful source of guidance and training. We would also like to thank Tracy Mitchell and 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 seventh set of social accounts, particularly Andrew Ridley, Ruth Taylor, Andrea van Wagtendonk, Sally Reith, Joanne Tong, Margaret Woodhouse and Elisabeth Wilson as well as to other staff who contributed to specific areas.

ABBREVIATIONS USED IN THIS REPORT AGM

Annual General Meeting

AUD

Australian Dollar

COEC

Commercial Order Export Credit

ECCR

Ecumenical Council for Corporate Responsibility

EUR

Euro

FLO

Fairtrade International

FSA

Financial Services Authority

FTA

Fairtrade Africa (formerly African Fairtrade Network, AFN)

GBP

Pounds Sterling

HDI

Human Development Index

KPIs

Key Performance Indicators

NGOs

Non Governmental Organisations

OECD

Organisation for Economic Co-operation and Development

PwC

PricewaterhouseCoopers

QR

Quarterly Return

RDE

Regional Development Executive

REDO

Rural Environment and Development Organisation

RWAFAT

The Rwanda Forum for Alternative Trade

SROs

Supporter Relations Officers

SWIFT

Swaziland International Fair Trade Association

TJM

Trade Justice Movement

USD

United States Dollar

WFTO

World Fair Trade Organisation

WFTO Africa

previously known as COFTA (Cooperation for Fair Trade in Africa)

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SOCIAL ACCOUNTS for the year ended 30 September 2011

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 ‘2011’ refer to the 12 months ended 30 September 2011.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

CONTENTS

PAGE

1

Welcome

2

History and Background 2.1 Shared Interest history 2.2 Key developments during the year 2.3 Governance 2.4 Social accounts

7 7 8 13 14

3

Vision, Mission, Values, Objectives and Activities 3.1 Vision, mission and values 3.2 Objectives and activities

15 15 16

4

Stakeholders, Methodology and Scope 4.1 Stakeholders 4.2 Methodology 4.3 Scope

19 19 21 24

Analysis of the Social Accounts 5.1 Objective 1: Provide financial services and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries 5.2 Objective 2: Enhance our sustainability by increasing share capital, investing it wisely and ensuring a social return 5.3 Objective 3: Provide business support and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries 5.4 Objective 4: Work in partnership with people who share our commitment to fair and just trade 5.5 Objective 5: Conduct our business in a manner which reflects the principles of stewardship and environmental sustainability 5.6 Objective 6: Encourage staff’s talent and commitment in an environment of mutual respect 5.7 Progress, conclusions and recommendations Compliance 6.1 Compliance with statutory and voluntary codes 6.2 Legal structure and reporting

25 25

118 127 127 128

7

Social Audit Statement

129

8

Next Steps

130

5

6

Appendices are available separately to cover the following areas Appendix 1 to support Objective 1 Customer list Appendix 2 to support Objective 1 Customer satisfaction questionnaire Appendix 3 to support Objective 2 Members’ survey Appendix 4 to support Objective 2 Volunteers’ policy Appendix 5 to support Objective 4 Partnership survey Appendix 6 to support Objective 4 Full Responses to Partnership Survey Appendix 7 to support Objective 4 Partnership list Appendix 8 to support Objective 5 Environmental policy Appendix 9 to support Objective 6 Staffing and cultural questionnaire Appendix 10 to support Objective 6 Staff list Appendix 11 to support Objective 6 Ground rules on line questionnaire Appendix 12 to support Section 6.1 Key aspects checklist

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6

59 70

85 92 101

SOCIAL ACCOUNTS for the year ended 30 September 2011

1

WELCOME

Welcome to Shared Interest’s seventh annual social audit report covering the 12 months to 30 September 2011.

Against a backdrop of global financial uncertainty it is pleasing that we are able to report steady and measurable progress towards the achievement of our social goals.

Our members have continued to show their commitment to fair finance - investments rose in the year to £28.2m. The average amount out on loan on any one day during the year was a total of £18,011,050 of which £6,133,301 represents producer borrowing and £11,877,749 represents buyer borrowing.

In line with our strategy we have continued to widen our lending portfolio, increasing direct lending to 71 producer groups and 42 buyer organisations. We have also diversified the range of products we lend to and as a result have approved our first facilities for marula nuts and vanilla. In this year’s members’ survey 95% of our members stated that they were either ‘very satisfied’ or ‘satisfied’ with the utilisation of their investment.

I am delighted to share with you the news that we have taken the decision to open a new overseas office in Ghana. Our overseas offices have been very successful in both raising our profile and increasing our direct lending to producers. The West Africa office will help us to branch out into the French-speaking fair trade market and increase our lending in a wide range of commodities including cocoa, fruit, rice and cotton.

We have continued to develop our network of ambassadors this year implementing a new volunteer policy. Our ambassadors, supported by dedicated staff, have continued to raise our profile and attract new members through local and national events. During Fairtrade Fortnight we teamed up with Newcastle Fairtrade Partnership and local radio station, Real Radio. The campaign was heard by over 457,000 people in north-east England and led to 627 primary school children entering a competition to design a Fairtrade T-shirt.

In recognition of our efforts we beat stiff competition from major financial institutions to win the Sustainable Finance Award, part of the City of London’s Sustainable City Awards Scheme. Four members of the team also attended the Culture for Success Awards dinner on Thursday 7 April at the Northern Stage and were thrilled to hear that we had been Highly Commended in the medium-size business category.

The Shared Interest Foundation, our charity, had another very successful year with a number of major projects coming to an end although their legacy will be long-lasting. The Rwandan Producer Support Project, funded by a grant of £245,000 from the Big Lottery Fund, completed its third and last year. As this project draws to a close our three-year Swaziland Producer Support Project, funded by a grant of £502,000 from Comic Relief, has begun with the recruitment of in-country project staff and a new project office.

As the worldwide recession continues, the number of customers in arrears remains high. If we continue to fulfil our purpose of reaching out to those who are otherwise denied affordable credit, we are bound to experience some lending losses.

I hope you find these accounts a stimulating read. We welcome feedback from Shared Interest members, customers and from observers. You can comment directly by email to socialaccounts@shared-interest.com.

Kate Priestley Chair

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SOCIAL ACCOUNTS for the year ended 30 September 2011

2

HISTORY AND BACKGROUND

2.1 SHARED INTEREST HISTORY Shared Interest Society was established in 1990 by a group of fair trade pioneers with a vision of a new way of investing money to reduce poverty. They created a financial cooperative with the aim of using the members’ pooled capital to lend to disadvantaged producer groups in the developing world.

From making loans through Dutch-based bank, Oikocredit, Shared Interest went on to develop its own credit facility and this year we facilitated payments of nearly £42m in 65 countries around the globe. At 30 September 2011 we had 113 customers (71 producer groups and 42 buyer organisations). Shared Interest’s share capital has continued to grow and this year surpassed £28m although investor numbers fell slightly to 8,763. The Society now operates independently as a financial co-operative and the world’s only 100% fair trade lender, maintaining values based on love, justice and stewardship with an all-inclusive approach to cultures and religious beliefs.

Shared Interest works with organisations in the fair trade movement including the World Fair Trade Organisation (WFTO) and Fairtrade International (FLO). Fair trade contributes to sustainable development by offering better trading conditions to, and securing the rights for, marginalised producer groups and workers in the developing world.

Our charitable arm, Shared Interest Foundation, was set up in 2004. The Foundation widens the social impact of Shared Interest by complementing the services offered by the Society.

The Foundation is owned and controlled by the Society; as such the financial accounts of the Foundation are consolidated into the Society’s accounts. These social accounts also cover both the Society and the Foundation.

The Foundation focuses on providing education and training, particularly in business and financial management. Other work includes supporting the development of the fair trade movement, widening access to finance as well as a small grants scheme.

In 2006 Shared Interest opened overseas offices in Central America and East Africa, and in 2009 the office for South America opened. Shared Interest now employs representatives in Nairobi, Kenya and Lima, Peru and has an on-the-ground presence in San Jose, Costa Rica.

As a result of the implementation of the overseas offices, our direct lending to producers has been growing and the impact of our work expanding. During 2011 we developed plans for a new office in West Africa.

The Queen’s Award for Enterprise was awarded to Shared Interest in 2008 in the category of sustainable development.

We celebrated our twentieth anniversary in 2010. To mark the occasion, we produced a commemorative book to capture the Shared Interest story.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

2.2 KEY DEVELOPMENTS DURING THE YEAR 2.2.1 Strategic review In October 2010 the Board approved the conclusions of the strategic review undertaken in 2009/10 that will set the priorities for the period 2010 to 2015.

The information collected during the review process makes it clear that the demand for financing among fair trade producers still outstrips supply. Our overall strategy will continue to focus on closing the gap between supply and demand.

a) What we intend to do - Investment Using a variety of methods we aim to increase our invested funds to lend to £50m by 2015.

To do this we will implement some key recommendations from our recent marketing review which include: •

Separating the communications activity of the Society and Foundation in a bid to avoid confusion over the work that we do.

•

Improve the enquiry process for the Society to make it easier for potential members to open accounts.

•

Increase the number of Shared Interest ambassadors and provide training and resources to help them spread the Shared Interest message.

•

Improve our online presence to raise brand awareness, attract new audiences and make more information available and easily accessible to our current members.

b) What we intend to do - Lending •

Increase the percentage of share capital lent from 60% to 80% with more emphasis on direct lending to producer groups as opposed to buyers in order to try and increase our social impact.

•

Extend our geographical reach by opening another overseas office in West Africa.

•

Investigate working with other marks, expanding our product range to South-South lending as well as researching the potential to lend in India, Pakistan and Bangladesh and testing some small (5%) pre-fair trade lending.

2.2.2 Social Investment Fund Shared Interest has been chosen to manage £1.3m of funds on behalf of Comic Relief to lend to farmers and handicraft makers in Africa. During the year we have been agreeing the details and developing plans for the launch of this new Social Investment Fund Pilot Project.

We will report on this very important development in next year’s social accounts.

2.2.3 Lending •

We approved our first facilities for marula nuts and vanilla to producers based in Africa.

•

We continued to extend our lending to banana producers and approved four term loans which enabled some Peruvian groups to improve their infrastructure.

•

In all we approved 20 new facilities this year to both producers and buyers across the globe. This amounted to an equivalent total of £3.75m new lending.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

•

The annualised average of producer lending was £5.7m reaching a peak of £6.6m during the year.

•

We increased our prudential limits for coffee from 35% to 40% of share capital in order to enable us to support our customers during a period of price inflation.

•

We set up African and Latin American producer committees so we could get direct feedback from our producer customers on our service and the products we offer.

•

The Board approved plans to set up a new overseas office in Ghana next year.

2.2.4 Business support provided by Shared Interest Foundation •

Our Rwandan Producer Support Project, funded by a grant of £245,000 from the Big Lottery Fund, completed its third and final year. The improved ability of the groups and the individuals to save money was noted as “the single most significant consequence of the training”.

•

Our three-year Swaziland Producer Support Project, funded by a grant of £502,000 from Comic Relief, commenced in October 2010 with the recruitment of in-country project staff and the setting up of the project office. The initial training started in July.

•

The year-long Livelihood Security Fund pilot came to an end and the evaluation highlighted the smooth operation of the Fund to date and recommended an extension to allow for the building up of a stronger evidence base.

•

Additional producer training took place in South Africa with a view to developing a longer term project there next year.

•

Further research on the training needs of commodity producers in Ethiopia was conducted with a view to developing a suitable training project next year.

2.2.5 Supporter relations •

Total investment surpassed £28m although membership reduced by less than 1% during the year.

•

A full marketing and communications audit was conducted in 2011. The findings have been used to develop a three-year strategy to increase share capital and heighten our profile.

•

We conducted a comprehensive survey of our membership and received 2,506 responses.

•

We introduced a new volunteer policy, a new database and an e-newsletter for volunteers.

•

Our online marketing increased with the inclusion of several Facebook and Twitter accounts, designed to interact with new audiences for Shared Interest.

•

We created a dedicated website specifically for our social reporting.

2.2.6 Partnerships •

Following recommendations made last year we introduced the concept of social capital to evaluate our partnerships and demonstrate their value and purpose.

•

We surveyed our partners on their perceptions of the relationship they have with Shared Interest to ensure we are accurately identifying and distinguishing between partners and other organisations with whom we may have a connection.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

•

We consulted the Council on their other connections to record their social capital and the value of this to Shared Interest.

2.2.7 Internally •

We improved our IT capability with the commissioning of a new server and the development of new databases.

•

We recycled eight old computers and used printer consumables which were disposed of under Waste Electrical and Electronic Equipment (WEEE) conditions with no parts going to landfill.

•

We introduced a revised staff appraisal system.

•

We continued to strengthen our staff team, including recruiting for a number of new positions.

•

We reviewed our salary policy and benchmarked our UK salaries externally.

•

We held full tender processes in relation to our banking and audit services with the outcome being that we retained the Co-operative Bank as our banking partner but moved, after seven years, to PricewaterhouseCoopers to provide audit services to both the Society and Foundation.

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Fair trade buyer organisations with Shared Interest credit accounts

Where the funds of Shared Interest investors and donors areor loans used toInterest support fair trade Producer groups receiving advance payments via Shared Training, capacity building and small grants by Shared Interest Foundation

Fair trade buyer organisations with Shared Interest credit accounts Producer groups receiving advance payments or loans via Shared Interest Training, capacity building and small grants by Shared Interest Foundation

Payments to producer groups analysed by the Human development index High 0.950 and over 0.900 - 0.949 0.850 - 0.899 0.800 - 0.849

Medium 0.750 - 0.799 0.700 - 0.749 0.650 - 0.699 0.600 - 0.649 0.550 - 0.599 0.500 - 0.549

Low 0.450 - 0.499 0.400 - 0.449 0.350 - 0.399 under 0.350 not available

Payments to producer groups via Shared Interest (year ended 30 September 2011) Israel/ Palestine

11

£137,602

Colombia

2

£33,857

Mauritius

2

£629,523

Dominican Rep

2

£367,313

Argentina

1

£6,695

Ecuador

3

Bosnia

1

£3,427

Guatemala

Brazil

4

£399,386

Paraguay

Chile

8

£483,340

Peru

Costa Rica

7

£616,242

14 2

Mexico China

Egypt

2

£36,718

El Salvador

8

£763,226

£98,928

Honduras

4

14

£465,317

Indonesia

1

£205,779

Nicaragua

34

£11,803,746

6

£45,590

India

43

£3,298,301

£635,598

Loas

2

12

£795,036

Cambodia

6

£2,958,358

Cameroon

10

£402,128

Kenya

Philippines

9

£969,788

Sri Lanka

8

£246,378

Pakistan

£3,812,058

Tunisia

1

£272,259

Thailand

7

£164,776

Bangladesh

£10,645

Bolivia

8

£1,306,910

Vietnam

6

£903,018

Haiti

South Africa

Ghana

Madagascar

3

£36,373

Burkina Faso

2

£349,757

Nepal

13

£677,736

Congo (DR)

3

£99,939

£41,135

Nigeria

1

£6,299

Ethiopia

1

£6,412

3

£63,402

Swaziland

8

£144,298

Mali

1

£2,639

2

£53,624

Uganda

14

£609,504

Mozambique

1

£7,308

34

£855,846

Zimbabwe

1

£9,079

Niger

1

£41,887

3

£747,631

Rwanda

3

£175,152

Afghanistan

2

£38,931

15

£1,099,016

Tanzania

10

£1,099,982

1

£178,305

Zambia

3

£11,292

363

£38,203,489

Total

SOCIAL ACCOUNTS for the year ended 30 September 2011

2.3 GOVERNANCE Shared Interest is an independent organisation based in the UK. It employs 27 people in England (25 at its Newcastle upon Tyne office and 2 remotely) and has offices in Lima, Peru, and Nairobi, Kenya, with two local members of staff at each location. Shared Interest Society is owned and controlled by its membership. It has a democratic structure with annual meetings of members. Each member has an equal voice and vote, regardless of the amount invested.

The Board of Directors determines strategy. The Board is currently made up of eight members; two executives and six non-executives. The Board is responsible for setting the strategy for the Society and making sure it is delivered within an appropriate risk framework.

An elected Council monitors the work of the 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, the majority of members have been randomly selected for nomination, while other members apply for their roles.

Further details of the Board and Council can be found on page 61.

Membership of Council and Board of Directors 2010/11 Council

Board of Directors

Jo Bird (resigned June 2011)

Non-Executive:

Executive:

Sue Cotterell (randomly chosen for election at AGM 2012)

Gill Dandy *

Patricia Alexander (Managing Director) *

Ann Hillier Trevor Jones Margaret Newens Malcolm Nunn (from AGM March 2011) Stephen Sanders (Moderator) Jason Watkiss (from AGM March 2011)

Peter Freeman * Ruth McIntosh * David Nussbaum * Kate Priestley (Chair) * Carol Wills * David Buffham (October 2010 to March 2011) *

Claire Wigg

* indicates also a Trustee of Shared Interest Foundation

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Tim Morgan (Finance Director)

SOCIAL ACCOUNTS for the year ended 30 September 2011

2.4 SOCIAL ACCOUNTS The period covered by these social accounts is the year from 1 October 2010 to 30 September 2011.

Drafting this report was undertaken by the Social Reporting Team: Andrew Ridley, Credit and Services Manager; Ruth Taylor, Supporter Relations Officer North East; Andrea van Wagtendonk, Foundation Manager; Sally Reith, Supporter Relations Officer South East; Joanne Tong, Finance Manager; Margaret Woodhouse, HR Manager and Elisabeth Wilson, Business Development Manager.

We have used many of the methods and measures developed for the previous six sets of social accounts and where possible we have tried to improve on these. We have reviewed previous recommendations and this year’s data requirements with the aim of further embedding the process within our existing systems.

Model The model used for these social accounts is that recommended by the Social Audit Network.

For consistency this is a similar model to that used in previous years and is the model generally used by small social economy organisations.

The steps of this model are simple and practical:

Step one – What difference do we want to make?

• • • •

Clarify vision and mission Identify underpinning values Identify objectives and activities Analyse and engage with organisation’s stakeholders

Step two – How do we know we are making a difference?

• • • •

Set up the social bookkeeping systems which collect relevant information (indicators) over a period of time Consult with stakeholders Collect quantitative data and qualitative information Feed into the ongoing management of the organisation and contribute to future planning

Step three – What difference are we making?

• •

Collate and analyse the data Produce a draft version

Step four – How do we prove that we made a difference?

• •

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Have social accounts verified by a Social Audit Panel Report to and inform the organisation’s stakeholders via the Social Report, the Social Audit Statement and our dedicated social accounts website

SOCIAL ACCOUNTS for the year ended 30 September 2011

3

VISION, MISSION, VALUES, OBJECTIVES AND ACTIVITIES

3.1 VISION, MISSION AND VALUES Since 2007, the Society and Foundation have shared the same vision, mission and values.

These were reviewed towards the end of the year and it is likely that next year the Society and Foundation will have different statements of vision. For the purposes of these social accounts the vision, mission and values of both organisations were as follows.

Vision We see a world where Shared Interest provides finance and business support to disadvantaged communities to enable them to trade their way out of poverty.

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 standards

•

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.

A new vision for the Society From October 2011 the Society will be using the following vision statement: ‘A world where justice is at the heart of trade finance.’

The vision for the Foundation will be reviewed next year.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

3.2 OBJECTIVES AND ACTIVITIES We aim to report on the impact that our work has on key stakeholders by closely aligning the objectives and activities in this report with our current vision, mission and values.

Representatives from the Social Reporting Team discuss their section within their own department to ensure that their objective and associated activities are still relevant and valid to the work that the department undertakes. All objectives and activities are then approved by the Management Team and the Board of Directors.

Below you can find this year’s objectives and activities and a description of how, if at all, they have changed from last year.

Objective 1: Provide financial services and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries Key stakeholders: customers 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.

We altered the wording very slightly in Activity 1 to offer ‘fair’ services as opposed to ‘services at a fair rate’; the latter can be subjective. We also removed reference to ‘ensuring … satisfaction’ in Activity 4 as, after a number of years, we felt better able to ‘assess’ it.

Objective 2: Enhance our sustainability by increasing share capital, investing it wisely and ensuring a social return Key stakeholders: members and other supporters Activities: 1. Engaging with and valuing our members and supporters.

2. Assessing our members’ satisfaction with the utilisation of their investment.

3. Growing the membership and supporter base.

We extended Objective 2 to ‘ensure a social return’ to our members also. We have removed mention in Activity 2 to ‘Meeting our members’ expectations’ although we will ‘assess’ rather than ‘ensure’ that they are happy with how we are using their funds.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Objective 3: Provide business support and so make livelihoods and living standards better for disadvantaged communities in some of the world’s poorest countries Key stakeholders: beneficiaries and donors Activities: 1. Providing business support services that are responsive and appropriate to the needs of the beneficiaries.

2. Examining the impact of our business support services in meeting the needs of the beneficiaries.

3. Using donors’ funds wisely.

We have extended Activity 1 to make the support services more specific (‘responsive and appropriate to the needs of the beneficiaries’). We have redrafted Activity 2 to ensure that our services meet ‘the needs of the beneficiaries’ themselves as opposed to their impact on the disadvantaged community of which they form part. Last year’s Activity 3 (Ensuring our beneficiaries are satisfied with our business support services) will be covered in this year’s Activities 1 and 2. Last year’s Activity 5 (Monitoring environmental and social practices) will form part of Objective 1 Activity 3 as last year.

Objective 4: Work in partnership with people who share our commitment to fair and just trade Key stakeholders: partners Activities: 1. Identifying and building appropriate partnerships.

2. Evaluating our partnerships in order to demonstrate social capital.

This year we have been ‘building’ as opposed solely to ‘forming’ partnerships in Activity 1. In Activity 2, rather than ‘Monitoring the effectiveness of partnerships’, we will be evaluating these partnerships whilst introducing the concept of social capital to this Objective following a recommendation from last year’s Social Audit Panel.

Objective 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.

Last year’s Activities 1 and 2 (‘Reducing waste and maximising reuse and recycling’ AND ‘Reducing / offsetting carbon dioxide emissions arising from our operations’) will now fall under the umbrella activity of ‘Minimising environmental impact’. In Activity 2, we have removed the word ‘cash’ but included ‘operating costs’; in this way, last year’s Activity 4 (‘Managing operating costs’) will form part of this year’s Activity 2.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Objective 6: Encourage staff’s talent and commitment in an environment of mutual respect Key stakeholders: employees Activities: 1. Encouraging understanding of different cultures.

2. Offering fair pay and benefits and respecting employees’ work-life balance.

3. Offering job satisfaction, regular reviews and supporting personal development.

4. Ensuring effective communication and participation in decisionmaking.

We reworded Objective 6 to make it more succinct; (it was ‘Work with our people to encourage their commitment, talents and energy in an environment of mutual respect’). Last year’s Activity 5 (‘Respecting our employees work-life balance’) has been incorporated into Activity 2. Activity 3 has been slightly reworded again to make it more succinct; it includes the ‘workload’ section from last year’s Activity 5. We have removed the word ‘transparent’ from Activity 4.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

4 STAKEHOLDERS, METHODOLOGY AND SCOPE 4.1 STAKEHOLDERS Key stakeholders The following are identified as Shared Interest’s key stakeholders by the Social Reporting Team. We consider a stakeholder to be any party affected by, or with an interest in, the work of Shared Interest Society or Shared Interest Foundation.

Number of stakeholders 2010

Number of stakeholders 2011

Stakeholders

Definition

Description

Potential customers

Organisations we strive to or may be able to work with

Fair trade producer groups and buyers that could benefit from becoming customers

N/A

80

Producer group customers

77

71

Buyer customers

39

42

Customers

Borrower organisations that enter into a business contract with Shared Interest Society Other organisations that receive or make payments via Shared Interest Society

Recipient producers*

329

335

Commercial buyers

18

39

Producers trained

138

370

6

4

Not possible to quantify

Not possible to quantify

8,837

8,763

138

70

Beneficiaries

Organisations that benefit from support from Shared Interest Foundation

Producer groups receiving grants Other beneficiaries of the Foundation such as Fairtrade Foundation

Members

Shared Interest Society investors

Members

Ambassadors

Volunteers

Ambassadors

Board of Directors

Non exec and exec Directors

Collectively responsible for the direction and management of the Society

Council

Elected Shared Interest Society members

Body which serves to represent the membership

Shared Interest Foundation donors

Donors

8 6

8

8

Individual Donors

69

Corporate Donors

7

Churches and Other Groups

91

6

Sponsored Event Participants

11

Grant Making Bodies

13

Employees

Staff

Staff

31

31

Partners

Those we collaborate with for mutual benefit

People, groups and organisations we work with and umbrella groups of which we are a member

36

36

*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.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Other stakeholders There are other stakeholders with whom, for reasons of practicality, we have not consulted or measured the impact directly. These include friends and family of staff, 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 2011

4.2 METHODOLOGY A large portion 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 key data, we report on consultations we hold with our stakeholders. The table below summarises the various consultations that have taken place over the last four years.

Consultations with stakeholders over the last four years Stakeholder

Potential customers

2008

N/A

Telephone interviews of small sample (11/33)

Customers

Questionnaire to remaining customers (8/72) Rated response questionnaire to recipient producers (38/308)

Beneficiaries

Evaluation forms completed after each training session Feedback and reports from key beneficiaries

Members

Feedback forms at AGM and members meetings (53/71)

2009

2010

2011

Questionnaire carried out during visit by Regional Development Executives

Questionnaire carried out during visit by Regional Development Executives

Survey sent out to prospective customers

by Regional Development Executives and the BD Assistant (30/80)

Online survey to recipient producers (58/287) and commercial buyers (3/14) Online questionnaire to customers (28/101)

Online survey to recipient producers (81/329) and commercial buyers (0/18) Online questionnaire to customers (29/116)

Online survey to recipient producers (22/314) and commercial buyers (3/39) Online questionnaire to customers (32/113– 6 buyers and 26 producers)

Producer impact study (10/22)

Evaluation forms completed after each training session Feedback and reports from key beneficiaries

Feedback forms at AGM and members meetings (30/82) Questionnaire sent to all members

Evaluation forms completed after each training session Feedback and reports from key beneficiaries

Feedback forms at AGM and members meetings (45/72)

Evaluation forms completed after each training session and by each grant recipient Independent evaluations Interviews with beneficiaries, site visits, stakeholder meetings, steering groups Questionnaire sent to all members who are happy to receive mailings (2,506/8,225)

(2,344/7,401) Board

Questionnaires to Board (7/8)

Consulted as members

Consulted as members

Consulted as members

Council

Questionnaires to Council (7/9)

Consulted as members

Consulted as members

Consulted as members and separately for their partnerships

Employees

Group discussion and feedback and questionnaire (25/26)

Group discussion and feedback and questionnaire (28/30)

Group discussion feedback and questionnaire (30/31)

Questionnaire (29/32)

Donors

Donor case study

Donor case study

Donor case study

Quotes plus two large grant donors consulted

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SOCIAL ACCOUNTS for the year ended 30 September 2011

in partner questionnaire Partners

Questionnaire (6/7)

Questionnaire (15/53)

Quotes

Questionnaire (16/36)

Potential customers The aim of gathering information from potential customers is to find out how they were made aware of Shared Interest, why they might want to become customers and how Shared Interest could do things differently, if at all. The qualitative information was collected from open questionnaires that were sent out to potential customers by email. Eighty organisations were contacted across all regions and thirty responded with completed surveys (seventeen from South America; five from East Africa; and eight from the rest of the world). Data from trip reports and blogs have also been used to illustrate the raising of awareness of Shared Interest among potential customers.

Customers This year we emailed all our customers with a selection of open questions about the service they received. From the 113 customers contacted, 32 responded.

For the second time we sent an online questionnaire to all other producers and buyers we have worked with (but who are not Shared Interest customers) in the past 12 months. A link was sent by email and in all we contacted 314 groups and 22 responded. To encourage a better response rate this questionnaire was incentivised with a chance to win $500.

Last year we carried out an impact study to assess directly the impact of lending on specific customers. The aim of the study was to gauge the direct impact on producer organisations.

This year we incorporated a new range of questions which touched on essential principles for measurement. These were incorporated into the survey sent to producers.

Beneficiaries Our key beneficiaries are the producers who have attended the training conducted by the Foundation. The training evaluation forms completed at the end of each course remain an important input to the social accounts. In addition this year, with the end of the Rwandan Producer Support Project, the consultations undertaken as part of the independent evaluation have been used as a key data source for those producer groups. Equally, with the start of the Swaziland Producer Support Project, the initial reports from the project team have been an important input. Beneficiaries of the Small Grants Scheme and the Livelihood Security Fund are asked to complete grant review forms a few months after receiving a grant to help us assess the impact. The independent evaluation of the Livelihood Security Fund has also been used as an input to these social accounts. Finally, feedback reports from other beneficiaries have been reviewed.

Members This year we conducted a full membership survey, our previous survey having been carried out in 2009. Feedback continues to be gathered through ad hoc correspondence to Head Office. We hosted one members’ event this year which was our Annual General Meeting where members had the opportunity to ask questions of the Management Team and Board of Directors. We also arranged focus groups at the event so that members could discuss specific themes in more detail. These included co-operative engagement, new investor products and our vision for the future.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

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.

Twenty-nine out of thirty-two staff members responded.

Donors Our two largest donors, the Big Lottery Fund and Comic Relief, have both been consulted as part of the partners’ consultation (see Appendix 5). This year we have carried out limited consultation with donors and have simply included quotations from donors and feedback from participants at fundraising events. With the implementation of a donor database now well progressed, we plan to carry out fuller donor consultation next year.

Partners A partner survey was carried out this year which focused on the motivations and outcomes of partnerships we have from the perspectives of our partners. We also conducted a survey of staff involved in partnerships and how much time they spend on these as well as gathering information from members of the Council on their partnerships.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

4.3 SCOPE Based on the recommendations from previous years we strive to improve the scope of our social accounts and this year we have improved reporting in a number of activities across our objectives.

We have developed additional indicators to measure the impact of our services as covered in Objective 1. Reporting on the activities of the Foundation has been improved following two independent evaluations.

We have also increased the scope of Objective 4 by consulting the members of Council on their involvement and activity as well as incorporating the concept of social capital as a means of evaluating our partnerships (see page 85).

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SOCIAL ACCOUNTS for the year ended 30 September 2011

5

ANALYSIS OF THE SOCIAL ACCOUNTS

5.1 OBJECTIVE 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 objective we review the work we have done with buyer and producer organisations in the fair trade market place. We do this through the analysis of the transactions processed through the Society. We also gather information from the organisations we work alongside to understand the social impact of Shared Interest and the fair trade movement as a whole.

In 2009 Shared Interest celebrated its 20th anniversary. With this amount of time involved in this market place, it places us in a good position to consolidate an expansive range of data relating to the flow of monies, trends of markets and the growth or decline in geographical market strengths.

As with previous years, we make an assessment of the flow of money through Shared Interest, we also consider the work of our regional offices and the opinions of the buyers and producers we have transacted with in the last 12 months.

Activity 1: Providing fair and appropriate financial services Financial products provided by Shared Interest Producer Lending

Buyer Lending

Fair trade export creditÂ

Pre-financing credit facility

Commercial order export credit

Shop loans

Term loans

Term loans

Stock facility

Producer lending Fair trade export credit The purpose of this facility is to provide sufficient money to producer groups to enable them to fulfil their orders, grow their businesses and increase their social impact, by providing sufficient working capital to complete and deliver new orders. Customers are provided with a facility enabling them to borrow a maximum of 80% of the value of any order received (60% for some commodity orders). Repayment is made on delivery when the buyer pays for the order via Shared Interest. We deduct the amount borrowed and any interest due. To access this facility, orders must be made with a fair trade buyer who has a Shared Interest account.

The service has helped us greatly in ensuring that we are pre-financed and therefore able to process orders faster than before. Complaints of late and half deliveries have greatly reduced because the artisans are kept busy throughout the year. Their livelihoods have also improved greatly over the years.

Pamella Kyagera, NAWOU, Uganda Commercial order export credit This facility is for fair trade producer groups who are selling goods to commercial firms or fair trade buyers who do not have an account with Shared Interest. Where a buyer does not provide pre-finance, we can step in and assist a producer group in financing an order which

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SOCIAL ACCOUNTS for the year ended 30 September 2011

otherwise they might not be able to fulfil. Repayment of lending is made when orders are delivered. On delivery of an order the buyer pays the full value of the order to us and we deduct the amount borrowed and any interest generated and then transfer the remaining money for that order to the producer group.

Term loans We offer producer groups term loans for the purchase of assets such as machinery, buildings or vehicles. Borrowing is for between one and five years and repayments are set depending upon the circumstances of the producer group. Loan sizes are determined by the financial situation of the producer group and its ability to repay the loan.

Mpanga acquired assets through Shared Interest funding that has made the organisation an economically viable business entity. We have also received training which has improved management skills.

Rogers Siima, Mpanga Growers Tea Factory, Uganda Stock facility We offer producer groups a short term revolving loan for the purchase of stock. Borrowing is for up to a 12-month period and repayments are set depending on the circumstances of the producer group. Facility sizes are determined by the financial situation of the producer group and its ability to repay the loan.

Lending to producer groups over the last five years 2007

2008

2009

2010

2011

63

59

63

77

71

125

183

140

237

217

Value of fair trade export credit out on loan**

£380,386

£652,852

£940,660

£1,120,151

£1,786,743

No. of commercial order export credit payments*

95

136

165

218

223

£582,589

£1,515,203

£2,051,420

£2,506,068

£3,311,143

24

31

31

26

14

Value of term loans**

£1,042,767

£1,263,091

£1,225,904

£1,154,710

£603,643

Total producer borrowing**

£2,005,742

£3,431,147

£4,217,985

£4,780,929

£5,701,530

No. of producers groups with credit/loan accounts* No. of fair trade export credit payments***

Value of commercial order export credit out on loan** No. of term loans***

* ** ***

At 30 September The average total of money drawn on any one day Total no. of payments/loans made during the year

A total of 71 producer groups had accounts with Shared Interest at the end of September 2011, six fewer than in the previous year. During the year 10 new accounts were opened and 16 were closed (see Activity 3, page 37, for more detail).

Direct lending to producer groups continued to increase in 2011 with the average lending per day being £5,701,530 (19% more than in 2010). In the last five years we have increased our lending direct to producer groups by 184%.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Most of the growth has been in lending against commercial contracts, which has increased by ÂŁ2,728,554 or 468% over the last five years. In the last 12 months we made payments against 223 fair trade contracts from 39 different commercial buyers. Of those contracts 79% were coffee, 12% were cocoa and the remaining 9% was a mixture of nuts, spices, garments and sugar.

We have also experienced good growth in lending against contracts between producers and buyers who do have an account with Shared Interest, known as fair trade export credit. Over the last five years lending in this area has increased by ÂŁ1,406,357 or 369%. We financed 217 contracts in the last 12 months from 14 buyers who have an account with Shared Interest. Of those 217 contracts once again coffee was the largest proportion with 39%, however 36% of the contracts were for the purchase of handicrafts; 8% was for the purchase of fruit and 7% for nuts; the remaining 10% related to cocoa and other food stuffs.

The staple of our lending to producers historically has been in the handicraft market. Our increased lending in the coffee market is a reflection of how the fair trade market has moved in the last five years. It is however encouraging to see that a sizeable proportion of our lending continues to go to the handicraft market. One area which has seen a steady decline since 2008 is term loans although this remains a focus area for the business. We paid out 14 new term loans in 2011 (compared with 26 in 2010) and six of these were for less than ÂŁ13,000. We also received some sizeable repayments against existing loans in 2011.

Buyer lending Buyer pre-financing credit facility Fair trade buyers often want, or are required, to provide producer groups with pre-finance when placing an order. However, buyers can find themselves struggling to provide sufficient pre-finance from their own cash reserves. We assist by offering fair trade buyers a facility which can be used to pre-finance orders with their producers. In addition a buyer can also benefit from a further credit period after the order is received enabling them to sell their product and receive an income prior to repayment of the amount borrowed.

Shared Interest facilitates pre-harvest financing for groups of small-scale farmers who will later deliver their products to us at Equal Exchange.

Brian Albert, Equal Exchange Inc, US Buyer shop loans Shop loans are specifically designed for retailers of fair trade products. They enable a business to finance its fair trade stock purchases with repayment in an agreed period. We agree the loan amount in consultation with each applicant.

Buyer term loans We provide buyer term loans generally for the purchase of assets and for website development or working capital. Borrowing is for between one and five years and repayments are set depending upon the circumstances of the buyer. Loan sizes are determined by the financial situation of the buyer and their ability to repay the loan.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Lending to buyer organisations over the last five years 2007

2008

2009

2010

2011

41

43

38

39

42

£7,028,709

£8,854,579

£10,825,817

£10,010,089

£9,653,791

26

26

31

25

1

£449,713

£680,398

£1,664,107

£1,784,403

£1,646,658

Total buyer borrowing**

£7,478,422

£9,534,977

£12,489,924

£11,794,492

£11,300,449

USD/GBP exchange rate

1.97

1.84

1.62

1.55

1.55

No of buyers with accounts* Value of pre-finance** No of loans*** Value of loans**

* ** ***

At 30 September The average total of money drawn on any one day Total no. of loans made during the year

The lending figures in this table are calculated in the same way as the previous table, using annualised monthly moving averages. There are, of course, very substantial peaks and troughs at various points in the year depending on the lending product and type of goods.

We lend money in four major currencies with the largest amount being in USD; the exact proportion changes depending on customers’ requirements. The borrowing figures have been converted into GBP at the year end exchange rate and thus the total GBP value is affected by variations in exchange rates. The USD exchange rate shown in the previous table indicates how the USD has moved in the last five years and this has a significant impact on the income when converted to GBP. Although the number of buyer organisations with accounts increased by 3 to 42 in 2011 the total amount we lent to buyers continued to decrease due to their ability to access other sources of finance.

The average value of pre-finance paid in 2011 fell by £356,298 or 3.5%. This is due to two main reasons. Firstly, one of our larger buyer customers significantly reduced their utilisation. They continue to maintain an account however they have access to a cheaper source of finance therefore always ensure that they repay their balance on a monthly basis.

To alleviate this slightly we charge a monthly account management fee to consolidate some of the lost income and cover the cost of running the account. Secondly, we converted a large buyer facility into a £625,000 term loan as part of an arrears arrangement. This was the only new loan made to a buyer organisation in 2011.

Our total lending to buyers has declined in the last two years. The results from our online customer survey indicate that our buyer customers see our rate of interest as being very high in comparison to what they can access locally. Although we recognise that this may well be the case we also stress that the lending we operate is in the majority of cases unsecured and very specialised with a very minimal fee structure. Many buyers also value not only our ethical position but our expertise in the fair trade marketplace. We consider ourselves to be sensitive to the needs of customers and in the first instance try to work with those in tough financial positions rather than to force through any default closure demands.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Total lending 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

2007

2008

2009

2010

2011

Producer

£2,005,742

£3,431,147

£4,217,985

£4,780,929

£5,701,530

Buyer

£7,478,422

£9,534,977

£12,489,924

£11,794,492

£11,300,449

Although our lending to buyer organisations fell there was a rise in our lending to producer groups. The net result was an increase of £426,558 in our overall lending.

It is important to remember that these figures are calculated using annualised monthly averages which iron out the peaks and troughs.

The next graph shows actual amounts that were approved, committed and drawn at the end of each month over our last financial year.

The top line shows the total value of credit facilities and loans we have approved. This reached £31.5m in December 2010, £718,000 more than the maximum last year.

This year we approved significantly fewer term loans to both producers and buyers. Notably there were no new shop loans to buyer organisations in North America due to a lack of demand. The number of loans outstanding at the end of the year was 40, 12 to buyers and 28 to producers.

Once we have approved a lending facility the customer has to meet certain conditions (eg supplying documents) before the sum is committed. The graph shows that throughout the year there was very little difference between the amounts approved and committed which demonstrates the efficiency of our handling of new accounts.

The total amount drawn is, of course, significantly less than the total amount committed (because different customers need credit at different times) but in September 2011 it reached a peak of £20.1m.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Lending approved, committed and drawn, 2010/11

£35,000,000

£30,000,000

£25,000,000

£20,000,000

£15,000,000 Approved

£10,000,000

Committed

£5,000,000

Drawn

£0 Oct-10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Requirements to work with Shared Interest As with any lending organisation the analysis of the borrower’s ability to repay is fundamental. When we receive a new application we ask for particular information in order for us to conduct our due diligence; this differs between buyer and producer organisations.

For example we would expect a buyer to produce management accounts and audited annual accounts (or be working towards them). We do not expect all producer groups to do this as they may not have the skills or capacity to undertake such a task. Shared Interest Foundation continues to provide producers with training in bookkeeping and business skills thus improving the data they are able to record and report.

Every lending application, whether from a new or existing customer, has to be approved by one of three parties: •

Managing Director – A proposal up to a certain value can be presented to our Managing Director at any time to be approved.

•

Credit Committee – This comprises four directors who have the authority to approve any proposal within our credit policy. During the year we had four Credit Committee meetings by telephone.

•

Board of Directors – The Board of Directors can agree to variations in the policy and during the year we held six Board meetings.

If a proposal is approved the successful customer is then sent a credit notification. This outlines the agreed credit limit, credit period, interest rate and conditions of lending. We have general conditions which must be adhered to during the period of lending and conditions precedent which must be met before the facility can be committed. We aim to

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SOCIAL ACCOUNTS for the year ended 30 September 2011

send a credit notification to the customer within a week of the facility being approved. It is the responsibility of the customer to collate all the required paperwork and return it to us in order to utilise their facility. The offer made remains available for 30 days from the date on the notification.

Charging a fair rate One of the principles of fair trade is payment of a fair rate. Translating this to our business we consider whether our lending is done on fair terms. There are two main considerations: •

Are our interest rates fair?

•

Are our lending terms and conditions fair?

Interest rates The interest rate we charge a customer is a combination of: •

Prime rate: This is calculated from the cost of borrowing the relevant currency plus a margin to cover our operational costs. Prime rates differ by currency lent and are affected by changes made by the central bank that controls monetary policy for that region/country. Shared Interest raises capital from members in GBP and borrows foreign currency as required to meet customers’ lending requirements. The turmoil in the financial markets in the past 18 months resulted in significant movements in interest rates even though there had been no change by the relevant central bank.

We use judgement to determine the level of margin on each currency necessary to achieve sufficient income in order to meet our yearly budget targets. Any change in the cost of borrowing is communicated to the customer by email usually seven days before it takes effect.

•

Risk premium: We consider the risks of every proposal and we also conduct risk assessments as part of each customer’s annual review. We assess a number of criteria including turnover, profitability, balance sheet, financial ratios, market reputation and, for existing customers, the manner in which they manage their accounts. We use a pricing matrix, which has clearly defined bands for each risk criteria, to calculate an individual risk premium for each customer.

Lending terms and conditions Almost all of our lending is made on an unsecured basis. Often our customers’ assets have already been pledged to other lenders. In the small number of cases where we do have security it is in the form of debentures and guarantees. We do not hold any mortgages over land and buildings.

Comparisons with other available sources of credit The question of whether our interest rates are fair needs to be balanced against the requirements placed on customers by other lenders both in terms of the application process and whether some form of security is required. We have carried out an analysis of our buyer and producer customers and the type of borrowing facilities that are available as well as the interest rates and these are summarised in the following table. This information was gathered at the time of each customer’s review and these took place throughout the year.

Consequently a direct comparison of interest rates charged can be affected by a change of interest rates during the year.

The tables show the number of external loans held by our buyer and producer customers and how many of those loans are the subject of security. They also show an average of the

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SOCIAL ACCOUNTS for the year ended 30 September 2011

minimum, mean and maximum interest rates charged in that currency. The same information is then shown for their loans with Shared Interest.

We lend money in four currencies however we have shown data for just three currencies.

This is because for the other currency (Australian Dollars) we have only one customer.

Producer customers borrowing from other sources, 2010/11 Number of loans

Secured

Minimum

Mean

Maximum

USD

228

161

0%

8.78%

23.5%

EUR

5

3

4.0%

8.4%

10.0%

GBP

5

4

0%

6.6%

9.0%

Currency

Producer customers borrowing from Shared Interest, 2010/11 Number of loans

Secured

Minimum

Mean

Maximum

USD

68

0

8.0%

9.9%

11.5%

EUR

3

0

11.25%

11.33%

11.5%

GBP

2

0

9.0%

10.0%

11.0%

Currency

The loans where the rate of interest is at 0% will in the majority of cases be through family, close friends or development organisations. Shared Interest cannot offer a 0% rate of interest. There are 16 loans where the rate of interest is 0%; these skew the average rate data. If these loans were to be removed then the rate of average interest in USD for instance would be 9.1%.

71% of the loans provided in USD were secured whereas none of the loans through Shared Interest are formally secured. We do use payments against other contracts to repay those which have defaulted, however this is not a formally agreed source of security. Of the 228 loans in USD, 21 of them exceeded the maximum rate offered by Shared Interest with the average being 15.45%.

Buyer customers borrowing from other sources, 2010/11 Number of loans

Secured

Minimum

Mean

Maximum

USD

47

22

0%

5.31%

14.9%

EUR

48

22

0%

4.6%

10.5%

GBP

41

19

0%

4.74%

15.0%

Currency

Buyer customers borrowing from Shared Interest, 2010/11 Number of loans

Secured

Minimum

Mean

Maximum

USD

20

5

6.25%

9.10%

11.25%

EUR

10

1

4.23%

8.82%

12.0%

GBP

14

4

7.0%

9.73%

11.5%

Currency

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SOCIAL ACCOUNTS for the year ended 30 September 2011

It is important to note that where the minimum interest rate is 0% it is predominantly unsecured and funded by family or close friends. Of the 136 loans from other sources 21 of them are 0% interest rate and none of them are secured.

Forty-two buyer organisations are currently borrowing from Shared Interest. Collectively they have a total of 136 other forms of external credit. Of those 136 forms of credit 63 are secured or 46%. Some buyers through Shared Interest have more than one facility with us.

For instance they may have a line of credit and also a term loan, these are however fairly rare. We have a total of 44 forms of internal credit and of those, 10 (23%) are secured.

The negative response towards the rates of interest we charge compared to the rates buyers can access elsewhere is well founded. Our average rate of interest in all three currencies is significantly higher than the average available through other sources. However this data is skewed somewhat by the 21 loans at 0%. A much higher proportion of the loans through other sources are secured. Also, in all instances aside from EUR, the maximum rate from Shared Interest is lower than the maximum rate charged elsewhere.

Ensuring our sustainability The operating costs of Shared Interest Society are covered by income from two sources: interest on cash held on deposit with our bank and charges on money lent to customers.

Shared Interest lends money in an unsecured manner in 35 countries to more than 100 customers and for many we provide a vital source of finance that may not be available locally. We pay our investors an interest rate that is 4% below UK base rate and when the base rate is lower, then nil interest is paid to members.

We review our lending rates on a regular basis and in more stable times we have been able to make changes broadly in line with alterations made by central banks. However, the fall in UK interest rates has reduced our income substantially with an impact on our overall business and it is important to ensure our sustainability so that we can continue to operate and provide funds to fair trade around the world.

Many customers, especially buyers, are now in a position where they can access rates lower than those provided by Shared Interest. However, even where they can access lower rates, some choose to work with Shared Interest due to our expertise in pre-finance and export credit and our links to other fair trade organisations.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

OBJECTIVE 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 Business Development Team Our Business Development Team now operates from three offices in Peru, Kenya and the UK. A mutual decision to close our office in Costa Rica was taken during the year as the region is dominated by coffee lending and we are limited as to how much we can lend to coffee producers. We continue to have an on-the-ground presence in order to look after our existing customer accounts. In July 2011 the Board approved plans to open a fourth office, in Ghana, during the next financial year. Each office is staffed by people from the country and the team uses a variety of methods to increase awareness of Shared Interest’s services.

Setting up overseas offices has allowed Shared Interest to get closer to prospects and customers which has allowed a better understanding of the issues facing the producer groups. The producers welcome the opportunity to converse with an RDE (Regional Development Executive) of a similar culture in their own language.

During the course of the year, the overseas-based members of the Business Development Team made a number of trips to attend conferences or visit potential customers. These trips were usually of between one and two weeks duration and enabled the RDEs to meet face-toface with approximately 85 producer groups and fair trade organisations.

In July 2011, the RDEs from Kenya and Peru, as well as the consultant from Costa Rica, came to the UK to visit the Newcastle office to spend time with their UK-based colleagues.

Likewise, trips are made from the Newcastle office to the regions in order to ensure that an acceptable level of general organisational awareness is maintained. This year also saw the first Shared Interest Producer Committee meetings held in-region and hosted by the RDEs. (More detail can be found in Activity 3, page 40.)

The RDEs and other members of staff usually attend important regional or international industry conferences. Rachel Ngondo attended the FTA (Fairtrade Africa) Conference in Zimbabwe in November 2010 and the WFTO Conference in Mombasa in May 2011. In April 2011, Paul Sablich took part in a webinar organised by Fair Trade Colombia, an organisation based in Canada, to raise producer awareness of WFTO and the fair trade principles. During this, Shared Interest was specifically mentioned as an alternative source of finance within the fair trade arena.

Aside from the trips, events and conferences already mentioned, members of the Business Development Team make short trips locally to meet producers, other social lenders and partners such as FLO. The team has estimated that direct communication with producers, including Skype and telephone calls, accounts for 30 to 40% of their time.

The ‘Borrow’ section of the Shared Interest website (www.shared-interest.com/borrow), which provides information, regional contact details and a route to apply for prospective customers, was revised in September 2011. French and Spanish versions will be launched in 2012. This is intended to echo the printed literature and provide access to producers and buyers outside the regions within which we have a direct physical presence.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Survey of potential customers Following on from last year, we have continued and developed the use of surveys to gather qualitative data from potential customers on how Shared Interest is perceived. The questions relate to how producers and buyers heard about Shared Interest, the level of product knowledge they had and what they look for in potential lenders.

Across all regions, 80 surveys were sent out and 30 were returned (a response rate of 37.5%). The key observations were as follows: •

Response rates varied regionally: 29.4% (5/17) from East Africa; 38.6% (17/44) from South America; and 42.1% (8/19) from the rest of the world.

•

Of the 30 returned, 23 (out of 62 sent) were from producers and 7 (out of 18 sent) were from buyers.

•

Seventeen of the respondents were made aware of Shared Interest in the first instance through referrals or recommendations from other fair trade organisations or regulatory bodies; five through conferences and workshops; five through direct contact from Shared Interest; and three via internet searches.

•

After first finding out about Shared Interest, the time taken to contact us varied from immediate responses to five years later. The majority of contact was made one to six months after first hearing about Shared Interest.

•

In terms of looking for potential lenders, thirteen respondents were primarily attracted to competitive interest rates and low operational costs, followed by an understanding of their individual operation (ten respondents), the ability to form long and trusting relationships (six respondents), flexibility and responsiveness to requests (six respondents) and aligned social values (four respondents).

•

When asked why they would like to work specifically with Shared Interest, eleven respondents highlighted the aligned social values and fair trade focus, with nine mentioning operational understanding, eight the rate of interest, seven the working relationship and five the flexibility and responsiveness.

•

Prior to direct contact with Shared Interest, 12 respondents said that they knew nothing at all about the organisation or its products. Ten respondents mentioned that they were familiar with the organisation but not what it offered product-wise, or vice versa. Four potential customers highlighted the website as their only source of information with a further one making the assumption that we were similar in structure and product-offering to the other social lenders. Only one respondent advised that they felt well-informed.

•

At the time of completing the survey, 18 respondents were in discussion with other lenders as well with the remainder deciding to speak only with Shared Interest.

•

Nineteen respondents already had borrowing in place: six had terms loans; six had credit lines; three had both terms loans and credit lines; and four had mortgages against commercial property.

•

When asked if Shared Interest could do anything differently, the following are some of the suggestions made:

Page 35

o

“Contribution of share capital…”

o

“Provide some guidelines / example criteria on what is likely to be approved; what not … it would be good if we could qualify on my personal guarantee / personal credit rating.”

SOCIAL ACCOUNTS for the year ended 30 September 2011

Page 36

o

“Improve its administrative web site. Make decisions a little quicker.”

o

“The system seems a bit limited in terms of dealing with a number of different accounts for each organisation.”

o

“Be more flexible with its requirements for disadvantaged producers.”

o

“Long term loans to small producers through cooperatives.”

o

“Send brochures with product details.”

o

“Pre-finance for commodities up to 70% of the order value, pre-finance for local order.”

o

“Provide services with training on fund management.”

o

“Speed up deadlines and be more flexible with requirements.”

o

“Commodity purchase loans with an extended grace period.”

o

“A little more urgency on occasions.”

o

“Shorten the processing time.”

SOCIAL ACCOUNTS for the year ended 30 September 2011

OBJECTIVE 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 Shared Interest has been lending to fair trade buyers and producers for over 20 years. At the end of September 2011 we were lending to a total of 71 producer groups. We review each account annually gathering information on how they operate in the market and the scale of their involvement in their wider community. We use this data to make comparative assessments against previous years. These organisations have an obligation to provide us with this information, however given the small sample of data we have in comparison to the number of producers we make payment to we are unable to make a sound judgment on the impact we are having. As a result, in addition to the questions we have asked in previous years on general business information and an assessment of the service we provide, we have also asked broader questions on improvements for instance to working conditions, community facilities and comparisons against national minimum wages and employment opportunities all as a result of the producers’ involvement in fair trade. This is all with the aim of trying to make an assessment of the social impact Shared Interest is having within the fair trade market place.

The results of both questionnaires are shown below and hopefully provide an indication of the impact our financial services are having on disadvantaged communities.

Analysis of producer group customers by region over the last three years 2009 27

2010

2011

26

25 22

25

22 20 15

3

Africa

3

Asia

16

3

2

Central America

South America

1

1

Middle East

The number of producer groups holding an account with Shared Interest fell by 6 this year, from 77 to 71. The region with the largest fall was Africa with a net reduction of four.

Although we approved three new accounts in Africa we also closed seven accounts. The accounts were closed as a result of non-utilisation, full repayment of a loan or poor account management. We are planning to open an office in Ghana next year with the intention of generating new customers in West Africa.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

There was a net reduction of two customer accounts in Central America. Although we closed our office in Costa Rica during the year, we still manage these accounts via a consultant in the region.

For the first time this year South America is the region with the most Shared Interest customers, 25 in total. We approved five new accounts and closed five.

We have few customers in Asia or the Middle East. This is partly due to lending restrictions in the Indian sub-continent. For this reason we have concentrated our resources for overseas offices on Africa and Latin America.

Analysis of lending committed to producer groups by region over the last three years £7,000,000 £6,000,000 £5,000,000 £4,000,000 £3,000,000 £2,000,000 £1,000,000 £0

Africa

Asia

Central America

South America

Middle East

2009

£1,579,797

£34,966

£2,812,282

£4,148,640

£459,343

2010

£1,301,616

£22,608

£4,215,213

£6,138,457

£334,935

2011

£1,184,567

£23,823

£3,985,632

£6,282,720

£201,081

This graph shows similar trends to the previous graph. The only difference is in South America where the overall value committed increased by £144,263 although the number of accounts remained the same. The greatest reduction in lending was in Central America where it fell by £229,581. In Africa, where there was the biggest reduction in customers, lending fell by £117,049.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Product mix of the producer groups to whom our lending is committed 1%2%

4%

Coffee

5%

Cocoa

2%

Tea 38%

Sugar Fruit Handicrafts

24%

Honey Nuts Olive Oil Herbs & Spices 8%

9% 3%

4%

Other

The graph above clearly indicates that the predominant product we lend against is coffee, with 38% of our portfolio. The proportion of our lending committed to handicrafts remains high although it declined from 27% to 24% this year. The total value of our lending to handicrafts did not fall, this is simply a reflection of the increase in our lending in coffee.

This year we increased our lending for bananas by approving four term loans to banana cooperatives in Peru to enable them to improve their infrastructure. We also approved facilities for two new products: marula nuts and vanilla. We are aiming to increase our lending relating to cocoa, fruit and nuts in the next few years.

Coffee Lending The amount of money we lend against coffee has gradually increased over the past few years. The price has also increased with the market price rising to over USD 3/lb in the last year - nearly double the Fairtrade minimum price. This increased price was a problem for the coffee co-operatives; it meant that they had to find twice as much cash to secure the same volume of coffee. Previously we were allowing coffee co-operatives to borrow up to 60% of the contract value based on the Fairtrade minimum price. This represented a major shortfall in the amount of pre-finance they needed to secure coffee from their members.

Unable to receive sufficient pre-finance meant that the members were looking to sell their beans elsewhere, typically to a large commercial organisation. To alleviate this problem we altered our operational activity to allow 80% borrowing against orders, but only for longstanding producers.

Unfortunately these measures had limited success and coffee lending this year was lower and later than predicted. One of the main reasons for this was that each co-operative has a certain number of contracts against which they must secure as much finance as possible in order to secure the coffee. Other social lenders were offering a higher percentage of

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SOCIAL ACCOUNTS for the year ended 30 September 2011

borrowing and using market prices to calculate the contract value. As the finance is sought so early in the season they seek the best option. We calculated that on average we were offering around USD 50,000 less in finance per contract compared to other social lenders.

In July 2011 our Board of Directors approved a change to the way in which we calculate the advances made to producers. We plan on using the market price as a reference point, but we are still to decide the percentage of the contract we are willing to lend.

As mentioned, our lending in coffee has been a real area of growth for Shared Interest. As coffee is a commodity traded in international markets, the fluctuation in prices represents a risk to the Society. Therefore we operate prudential limits which limit the amount we can lend overall as well as split by region. In the past year we reached a point where we had reached our limit. However, we are confident in our lending in this market and feel that the proportion of lending we provide against each contract leaves a sufficient amount to allow for any significant fluctuations in the market price. As a result our Board of Directors agreed that we could increase the overall limit we lend against coffee from 35% to 40% of share capital.

This should allow us to approve a further ÂŁ2m against coffee facilities.

Analysis of routes to market by producer group customers over the last three years 2009

2010

2011

90 80 70

(%)

60 50 40 30 20 10 0 Fair Trade Export

Other Export

Local

The sum of each year totals 100%.

Many of the producer groups we work with rely entirely on the fair trade market but others do not. The graph above shows the proportion of sales in fair trade and other markets made by all the producer groups that borrow from Shared Interest. This year 68% of their goods were sold through fair trade channels. This data has been skewed slightly by the coffee producers, who sell large proportions of their coffee labelled with alternative certifications, not necessarily fair trade. This is considered by Shared Interest to be the conventional market and given the volume of coffee financed it increases the other export proportion.

Producer committees One of the recommendations in last year’s social accounts was that we should introduce producer committees in order to get more feedback from the people with whom we are working directly in the regions.

It was decided that these would be held in Kenya and Peru where we currently have regional offices. Terms of reference were agreed and suggested lists of attendees were considered, encompassing as wide a representation of our customer portfolio as possible. An agenda

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SOCIAL ACCOUNTS for the year ended 30 September 2011

was also suggested to enable us to get feedback on matters such as customer service, the issues currently affecting the regions and the financial products required.

The meeting in Kenya was held on 28 July in Nairobi. It was chaired by Rachel Ngondo, RDE, and attended by representatives of five producer groups: Pauline Ntombura, Salom Enterprises (handicrafts); Allan Bussard, Ten Senses Africa (macadamia nuts); Margaret Komen, Mace Foods (chillies); Pamella Kyagera, Nawou (handicrafts) and David Mochama, Nyabigena (handicrafts). All these groups are based in Nairobi except Nawou which is based in Uganda.

The one in Peru was held in Lima on 12 August and was chaired by Paul Sablich, RDE. This meeting was attended by seven representatives: César Rivas, La Florida (coffee); Fernando Reyes, Cepicafe (coffee/cocoa); Isaac Zuñiga, Naranjillo (cocoa); Gonzalo Ríos, Acopagro (cocoa); Moner Lizana, Intercrafts Peru (handicrafts); José Lecarnaque, Cepibo (bananas) and Gastón Vizcarra, Candela (brazil nuts). All producer attendees are based in Peru.

In brief, the main issues in East Africa currently included consolidated or delayed shipments; final sale prices; unreliable utility services; climate change and capacity building. The main challenges in South America included making the producer group more self-sustaining, efficient and competitive; the global reduction in handicraft sales and the constant need to develop new products and available volume of quality product, manpower and funds both before and during harvests.

In East Africa, the group felt that our service had been good but that the quality has deteriorated with regard to the speed of approval and disbursement of funds and the frequency of communications. We are seen as not being sufficiently flexible regarding the time and method of repayments: “Shared Interest is taking a banking approach yet it is not a bank.”

“Shared Interest should give a report on what they think about their producers after the Annual Review. It is important for us to know how we are performing.”

“The review should be set at a suitable time for the organisation.”

Comments from East Africa Producer Committee Conversely, the South America Producer Committee meeting included the following comments: “Shared Interest is one of the best social lenders we have worked with in terms of efficiency and quickness with a good level of communication. However, we would like more visits.”

Fernando Reyes, Cepicafe, Peru “It all ends with the better quality of life of our artisans. They get better income and also gain empowerment and the possibility to organize and find new markets.”

Moner Lizana, Intercrafts, Peru In both regions, producers felt that the products currently offered are good but that they are not adequate.

“Shared Interest still has the same old dress for long and needs to move with style and get new clothes.”

Comments from East Africa Producer Committee A number of possible financial products were suggested: an insurance element to the facility (eg, for failed crops, delayed/damaged shipments and buyer defaults); finance for local and

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SOCIAL ACCOUNTS for the year ended 30 September 2011

regional contracts (south-to-south trade); fixed rate lending; loans of up to 15 years and finance to cover certification fees. Other suggestions included more business and technical support; a better correlation between the level of risk and the interest rate and more involvement in the buyer/producer relationship.

The producers were happy to have been involved and were keen to participate in further meetings. We plan to hold a face-to-face meeting of these committees once a year.

Minutes of both meetings have since been circulated to our Board and Management Team to enable all feedback to be considered at a strategic level.

Analysis of risk The analysis of risk is an integral part of our assessment of a lending proposal. We consider a number of different areas to make an overall assessment of the risks associated with each customer.

One area we always consider is the risk element of the country in which we will be lending our members’ investments. We currently use a free website (www.trading-safely.com) that is regularly updated with political and economic factors and provides us with a profile and riskranking for each country. We use this information to categorise countries on the following basis: 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 2011

Number of producer group customers in each risk category 2009

2010

2011

28

36

21 1 8

28

19

11

21

19

18

13 19

18

11 13

11

11

8

A

B

C

9

D

Amounts committed to producer groups in each risk category 2009

2010

2011

£9,000,000 £8,000,000 £7,000,000 £6,000,000 £5,000,000 £4,000,000 £3,000,000 £2,000,000 £1,000,000 £0 A

B

C

D

The main reason for the shift in exposure from B to A is the re-categorisation of Peru within the country risk assessment whose main focus is trading environments. We have 19 customers in Peru and in 2011 this country was reassessed as risk category A. 51% of our producer portfolio is now in category A. This shift in the assessment of Peru is now also reflected within the Human Development Index (HDI) as Peru is now considered to be in the top category of the medium risk section on the HDI. We have experienced a net reduction of three producers within categories C & D combined.

There has not been a conscious effort to move our lending into the higher categories; more so the fact that we have an office in Peru has driven the volume of customers in this country.

We still continue to have a large amount of money lent in countries we consider to be high risk, C and D. The amount lent was £3,283,020 compared to £3,042,578 last year, an increase of £ 240,442.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

We also operate a limit on how much we will lend in total to category C and D. (See full details of our prudential limits in Objective 5 Activity 2.)

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Impact on other producer groups that receive payments through Shared Interest Support provided to producer groups who 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 335 producer groups which is an increase of 6 compared with last year. These producers were based in a total of 65 countries which is a increase of 6 compared with last year.

As well as making payments we provide these producer groups with the following additional services.

Payment and transaction reports We email to each producer group a report showing the details of the payment being requested by the buyer. Once the payment is made we send confirmation to the producer group that the funds have gone with several reference numbers provided by our bank.

Payment queries Occasionally the funds do not reach the intended beneficiary. If this happens our Customer Services Team works swiftly to recover the missing funds and resolve the issue, keeping the producer and buyer fully informed.

Membership payments We are often contacted by producer groups who are required to pay membership fees (eg, to WFTO or FLO) but experience trouble and huge expense in sending the funds. They therefore contact us requesting to split a payment due to them and have Shared Interest make the payment on their behalf.

Reconciliation of accounts Some producer groups with a high volume of transactions can occasionally have difficulty maintaining records of all of their accounts. If required we will send them details of all of the payments that have been made to them in a given period of time.

Survey results In last year’s social accounts we received a good response to our online survey of these producer groups (81 responses from 32 countries). Unfortunately this year was not as successful despite using the same incentive of a prize draw to win $500 towards the operation of the producer group. We sent the survey to the 314 producer groups and only received a response from 22, a 7% return. This is a disappointing result and we will try a different approach next year.

Page 45

SOCIAL ACCOUNTS for the year ended 30 September 2011

Response to survey of recipient producers by country and region Africa 23%

4.5 4 3.5

Asia 54%

3 2.5

Central America 23%

2 1.5 1 0.5

et na m Vi

ta n Ph ilip pi ne s Sw az ila nd

o

Pa kis

ex ic M

na ad ag as ca r

Ch i

M

Th ai la nd

In do ne sia

G ua te m al a

ad or .

Sa lv

El

Ke ny a

In di a

0

The graph above shows that we received the most responses from producer groups in Asia.

This is as expected because we make far more payments to producer groups in Asia, particularly in India, than to any other region. Due to lending regulations in several countries, we are unable to lend directly to customers in large parts of Asia.

Responses to selected questions from survey of recipient producers Question

Minimum

Mean

Maximum

1973

1993

2008

How many people are employed in your organisation?

4

22

135

What percentage of the employees are women?

5

53

95

How many producer groups are members of your organisation?

1

26

89

How many individuals are involved within those groups?

4

1026

5450

What percentage of the individuals are women?

10

56

100

In what year was your organisation established?

Page 46

SOCIAL ACCOUNTS for the year ended 30 September 2011

Analysis of routes to market from survey of recipient producers

5% 12%

Fair Trade Export Conventional Export 51%

Local Trade Other

32%

Surprisingly, it appears that the producer groups that responded are relying a great deal more on conventional export markets than before. Last year the percentage sold through this market was 15% compared to 32% this year; it has more than doubled. However we must stress that this year’s results are based on a much smaller sample (22 responses compared with 81 last year). It is encouraging that there remains a local market; this will be predominantly for commodities.

Analysis of product mix from survey of recipient producers

4%

6%

14%

1% 1%

10%

Coffee Fruit

2% Furniture Garments Handicrafts Jewellery Nuts 62%

Textiles

As expected with a large amount of response coming from Asia, and in particular India, the greatest proportion of product is handicrafts. This is a greater proportion than last year which was 43% compared with this year’s 62%.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Analysis of affiliation to membership bodies from survey of recipient producers 5%

5%

WFTO

23%

FLO Other None 67%

As mentioned previously, we must ensure that the producer organisations we lend to are members of a recognised body. From the results we can see that 67% of the respondents are members of WFTO. Again this reflects the fact that the majority of respondents were handicraft producers.

Analysis of time involved with Shared Interest from survey of recipient producers

27% 32% 0 - 3 years 3 - 5 years 5 + years

41%

This graph shows that we have been working with one third of the producers who responded for more than five years. Encouragingly 27% have only been involved with us for less than three years which indicates that there are still organisations starting to develop within the fair trade market and suggesting that there remains the potential for growth.

As part of the survey we were keen to understand how the producer groups rated the service we provide and to see if there are any areas for development. This is data we collected last year so we were keen to see if we had made any improvements.

As part of the service we email each producer group with a report informing them that funds are being sent. This year 100% of the respondents said that they received reports which is an improvement on last year when 14% of the respondents said they did not receive them.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Only 1 of the 22 respondents said that they did not find the report useful although they did not indicate why.

We advise our producers that it can take up to 10 working days to receive a payment from the day it is sent. Of the respondents 64% said that they received their payment within five days of it being sent. This is an improvement of 5% on last year. 27% said that they received it within 5 to 10 days and the remaining 9% received their payment in excess of 10 days from when it had been sent.

Unfortunately not every single payment we make to a producer group reaches their account.

An Account Manager from our Customer Services Team acts as the liaison between the producer, the bank and the associated buyer. The Account Manager works as swiftly as possible to resolve the issue and gain confirmation from the producer that the funds have reached their account. We asked the producers how efficient they thought we were at dealing with these occasional issues. 64% of the respondents believed that we were either very responsive or responsive. This is an improvement of 14% on last year. No one said that we were slow, which 2% said last year. The remaining 36% had never experienced a problem.

Finally we asked the producer groups how they would rate the overall service provided to them by Shared Interest. 91% said that the service was very good compared with 60% last year. The remaining 9% felt that the service was good. Last year 5% said that the service was satisfactory and 2% felt that it could be better.

Following recommendations from previous social accounts we have tried to make an assessment of the contribution Shared Interest makes towards social development in the producers’ communities. Although the link could be considered to be somewhat tenuous we do feel that we are helping to facilitate this development, no matter how small that contribution may be in the bigger scheme of international exportation.

We have asked a selection of questions which cover some key principles of development for measurement. The responses to the questions were so very vast that it is hard to consolidate so in an effort to make it clearer we have included some quotations.

Could you please tell us what price in local currency (please state the currency used) you pay to a producer individual and for how many units?

The response to this question related to many different volumes and quantities so unfortunately it was not possible to provide a broad conclusion to this question. In next year’s survey we will need to consider an alternative approach to collating this data.

Producers are paid per piece rate and it differs according to the type of the product. Smaller pieces average kenya shillings 25/= per piece to kenya shillings 4000/= per piece for larger ones, eg a chess set 40 cm square.

Frederick Masinde, Undugu Fair Trade, Kenya Could you tell us what monthly salary is paid to a producer individual relative to a monthly national minimum wage?

Again this was a difficult question to consolidate. What was apparent was that those individuals who were working for a fair trade organisation were receiving a salary that was above the national minimum salary. For instance Conserve HRP in India pays its artisans an average salary of 6,500 INR (£84) per month compared with the national minimum which is 4,500 INR (£58). Artisans at KISAC Fair Trade in Kenya receive a monthly salary of 7,800 KSH (£48) compared with the national minimum wage of around 6,500 KSH (£40).

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Our average salary is USD 230 per month compared to the national minimum which is around USD 208.

Arnoldo Ruffatti, UCA Ruffatti Manufacturas, El Salvador As a result of your involvement in fair trade could you tell us what improvements have been made to working conditions for your producer individuals? For example, improvements to safety / toilets / equipment etc.

The prominent response to this question was that being involved in fair trade has resulted in creating a safer place to work. They have been able to purchase more efficient tools and safety equipment while also making improvements to the general working environment, for instance shaded areas and good toilet facilities.

Interestingly one response which stood out is that it simply provides employment on a regular basis: Most importantly it has led to employment on a sustained basis and resultant improvement in quality of life. Other improvements have been safer and cleaner working conditions, improved and efficient production processes, improved quality of product etc.

Arjun Adya, CFM Market Linkages, India As a result of your involvement in fair trade could you tell us what improvements have been made to your community facilities? For example, improvements to health / education / utilities etc.

The fundamental improvements being made to community facilities are in education, not only for children but adults too, and in health care, be that through a medical facility within the community or access to a private health scheme. Great emphasis is also placed on personal hygiene and sex education. Also mentioned regularly in response was providing a clean source of drinking water and electricity. One answer simply read as a good sense of purpose.

Complete health coverage for our employees and artisans. Children’s education is covered by us and we run three schooling projects providing free education to almost 300 children.

Also running clean drinking water projects for artisans and employees.

Samuel Masih, Noahs Arc International, India Could you please describe the role of the organisation in the community? For instance how many other employment opportunities are there or sources of revenue?

Many of the groups are based in rural locations and as a result the only real alternative for employment is either labouring on a farm or selling surplus vegetables. It is apparent that without these organisations in place that many communities would be very poor and likely disband to cities in the search of employment.

Apart from subsistence agriculture, most of the communities have few, if any other local employment opportunities. Most need to migrate to find work causing splits and strains on normal extended family life. Craft production enables those involved to stay in their communities and also often engage in pursuing their cultural traditions, which are in danger of dying out in today's ultra-materialistic society.

Stephen Salmon, Thai Tribal Crafts, Thailand

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SOCIAL ACCOUNTS for the year ended 30 September 2011

OBJECTIVE 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 This year we again invited our customers to take part in an online survey (in English and Spanish). We received six replies from our buyer customers, the same number as last year (though a lower proportion – this year we had 42 buyers, last year 39) and 26 replies from 71 producer customers – a better response than the 23 from 77 last year.

In recent years we have requested completion of a survey every year. We may have overdone our requests. Next year we will consider whether we should conduct another annual survey or whether we could incorporate some questions into each customer’s annual account review.

Buyer customers – survey results Respondents Name

Organisation

Country

Simon Grant

Traidcraft

UK

Cheryl Musch

Partners for Just Trade

US

Brian Albert

Equal Exchange Inc

US

AnnCatherine Carlsson

The House of Fair Trade

Sweden

Peter Fawcett

Fullwell Mill

UK

Christophe Labesse

Township Patterns

South Africa

How is the service provided to you by Shared Interest helping you to improve the lives of disadvantaged producers?

The predominant theme in the responses was the provision of pre-finance. All but one of the respondents used the terms ‘pre-finance’ or ‘producer advances’. This is identified as being integral not only to the operation of their business but also how essential it is to the producer groups.

By pre-financing some of our largest contracts, Shared Interest has enabled us to secure these contracts and continue to create employment in South African township communities.

Christophe Labesse, Township Patterns, South Africa In what way do you feel Shared Interest could offer more support?

The conclusion is that the buyer organisations feel that the rate of interest we charge is too high. Four of the respondents believed that we were offering a good enough service and that we could not offer anymore. The speed at which we approve accounts was also mentioned.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

What are your main considerations when looking for new finance?

All but one of the respondents felt that the rate of interest they will be charged was the main consideration. However, this is not the only thing they desire. It is also clear that the ethical motivations and mission of the lender were also an important factor.

Do you consider the ethical motivations of a lending organisation when you are sourcing new finance?

All of the respondents consider the ethical motivations of the lending organisation when sourcing new finance.

Yes, we are willing to pay slightly higher interest rates to an entity whose ethics are aligned with our own.

Brian Albert, Equal Exchange Inc, US Do you currently have an environmental policy?

Half said they have an environmental policy whereas the remainder said that they operate towards environmental principles but do not have a formal policy.

No. We do embrace fair trade principles of environmental sustainability and do our best to address them but we have not formalized this into a policy.

Cheryl Musch, Partners for Just Trade, US Do you understand how we arrive at our interest rates and how do they compare to those available to you elsewhere?

The general response to this question was that the respondents have a general understanding of how the interest rates are compiled but do not understand how we reach our risk premium specific to each customer. This calculation is an internal process and is not for wider circulation. Following on from a previous question, those who answered feel that the rates offered by Shared Interest are higher than they can access elsewhere.

What has been your experience of our renewal / application process? How do you think we could improve this?

Of those who completed the survey all felt that the renewal / application process was a straightforward one. There were no recommendations on how we could make improvements.

Has working with Shared Interest opened up any new markets / networks / business opportunities?

Four buyers felt that working with Shared Interest had created new opportunities. One of the others said that the relationship was too new to make a comment.

By funding Mountain Fruit Company in Pakistan for a specific product it has enabled us to supply into a major ice cream brand.

Peter Fawcett, Fullwell Mill, UK When was the last time you were visited or met with Shared Interest and do you feel it was of benefit?

50% of the respondents said that they had met with a member of the Shared Interest team and that the meeting was beneficial.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Are you satisfied with the overall service provided by Shared Interest?

All the respondents said they were happy with the service provided by Shared Interest.

What benefits do you take from being a member of FLO / WFTO or regional body?

There was a mixed response to this question and not all respondents are members of these bodies. Some of the respondents felt that they weren’t best placed to answer this question effectively. Only one customer provided a positive response to this question.

Our membership is in FTF in the US. Their package of benefits makes a small organisation like ours more visible, and gives us credibility in Fair Trade.

Cheryl Musch, Partners for Fair Trade, US Our vision is to see a world where Shared Interest provides finance and business support to disadvantaged communities to enable them to trade their way out of poverty. In your opinion do you think we are achieving this?

All of the respondents felt that we were achieving our vision, there was only one customer who felt that there was still room for us to improve.

You are getting there. Trade is only possible if the producer has access to markets. If the indirect and overhead costs of the Buyer are too high this may well stymie the vision.

Peter Fawcett, Fullwell Mill, UK We could fill pages of anecdotal stories of just how Equal Exchange, in partnership with Shared Interest, is changing the standards of living for scores, maybe hundreds, of farming communities.

Brian Albert, Equal Exchange Inc, US

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Producer group customers – survey results Respondents Name

Organisation

Country

Pamella Kyagera

NAWOU

Uganda

Novi Kusuma Wardhani

Java Ixora

Indonesia

Clemens Fehr

Gourmet Gardens

Uganda

Evelyn B Benbinuto

Much in Little

Philippines

Rogers Siima

Mpanga Growers Tea Factory

Uganda

John Pearce

Swazi Indigenous Products

Swaziland

Marcelo Oliveira

Gebana Brasil

Brazil

Jose Fernando Reyes Cordova

Asociacion Central Piurana De Cafetaleros - Cepicafe

Peru

Yenchi Geraldo Lopez Saavedra

Cac Oro Verde

Peru

Karen Rodríguez Araya

Cooperativa Cañera de San Ramón

Costa Rica

Pablo Granados Mora

Asoc. Alianza de Familias de CR

Costa Rica

Carlos Miguel García Villatoro

Cooperativa Integral de Producción Apicultores de Cuilco, CIPAC R.L

Guatemala

Sixto Bonilla

CESMACH

Mexico

Pablo Prieto Barriga

Sapriet, Cimexpriba

Ecuador

Alexander Flores

APRAINORES

El Salvador

Oscar Diaz Rojas

Cooperativa Agraria Cacaotera Acopagro

Peru

Miguel Jimenez

CIAPEC

Bolivia

Cesar Rivas Peña

Corporacion de Productores Cafe Peru

Peru

Pedro Quezada Valladolid

Asociacion Bananeros Organicos Solidarios Salitral

Peru

Abimilech Elias Fabian Rojas

Cooperativa Agraria Cafetalera Satipo

Peru

Jorge Sanchez Ulate

Fundacion Proagroin

Costa Rica

Casildo Quispe Nina

COINACAPA

Bolivia

Gaston Vizcarra

Candela Peru

Peru

Jhyson Moreno

UCPCO RL

Nicaragua

Alexis Cavero Ledesma

Cooperativa Agraria Cafetalera Valle Rio Apurimac

Peru

Moner Lizana

CIAP - Intercrafts Peru

Peru

How is the service provided to you by Shared Interest helping you to improve the lives of your artisans / farmers?

There was a very broad response to this question because the producer groups that responded are very diverse and have different needs. One response that did come through more than most was that being provided with pre-finance enabled them to purchase raw materials, secure product and meet deadlines for shipment. We also received responses from producers who have term loans with Shared Interest. The response from these groups is that without this investment for the purchase of assets they would not be able to guarantee the long term sustainability of their co-operatives. Our loans have also enabled them to improve efficiencies and productivity resulting in a more positive bottom line and more income for the producer families as well as improved infrastructure in their communities.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Yes the loan has been invested in improving the process of BOS to increase our production and reduce costs for small producers to achieve a sustainable commercial success, social and economic.

Pedro Quezada Valladolid, Asociacion Bananeros Organicos Solidarios Salitral (BOS), Peru In what way do you feel Shared Interest could offer more support?

There were many suggestions as to how we could improve the service we provide, some of which we are able to influence and some we are not. There was no emphasis on any one area. Our producer customers would like to see us reduce the time it takes to gain approval on a lending decision. Some customers would like us to provide them with a larger facility.

Some producers felt that we could offer a lower interest rate.

What are your main considerations when looking for new finance?

The two main considerations mentioned were the rates of interest they would be charged and how long it would take to receive a decision. Some respondents expressed concerns over the application process being too complicated and excessive requests for securities against lending from commercial lenders.

Flexibility and attractive interest rates on payments and the knowledge of the market which sells them to believe in our work.

Alexander Flores, Aprainores, El Salvador Do you consider the ethical motivations of a lending organisation when you are sourcing new finance?

All but one of the respondents said they considered the ethical motivations of the lending organisation when looking for new finance. They felt that this helped to create trust and establish a longstanding relationship. However it was mentioned that there are few lending organisations who share a commitment to social justice.

Do you currently have an environmental policy?

All the respondents said they managed their business in an environmentally sustainable manner even if they did not have an environmental policy in place. Many of the coffee producers who responded produce organic coffee therefore ensuring that they maintain their land and use non-toxic fertilisers are essential to maintaining this certification.

No, but we do comply with what the government has issued regarding re using, reducing, recycling of products and reforestation.

Evelyn P Benbinuto, Much in Little, Philippines Sure, we are leaders in sustainable and organic production in Costa Rica.

Jorge Sanchez Ulate, Fundacion Proagroin, Costa Rica Do you understand how we arrive at our interest rates, and how do they compare to those available to you elsewhere?

We are pleased to note that many of the respondents said that they were aware of how we calculated our interest rates.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

What has been your experience of our renewal / application process? How do you think we could improve this?

There are a lot of positives to take from the responses to this question. There was of course some criticism. Some felt that the process can sometimes take too long and that some of the requests for information can be quite complicated. Many however recognised the process and reasoning behind why we have to gather so much information, they also saw it as a learning opportunity for themselves as it helps them to identify specific areas they should be considering when looking at the performance of their business.

I believe that the process of analysis is right; I think it would be very interesting for our account manager to visit our facilities, plantations, and partners to verify the impacts that we have, challenges and the problems and to propose alternatives for joint solutions.

Jose Fernando Reyes Cordova, Cepicafe, Peru Has working with Shared Interest opened up any new markets / networks / business opportunities?

There was a mixed response to this question. Half of the respondents felt that being involved with Shared Interest had not created any new opportunities, whereas the remainder felt that our involvement could be seen as a huge bonus and generator of positive results.

Yes, we have been able to go ahead with our printed fabrics enabling us to start our fashion business segment and open our first boutique in Cape Town.

Christophe Labesse, Township Patterns, South Africa.

They felt that through involvement with Shared Interest producers have been able to acquire new customers, as a result of improved quality of product, projecting a more professional business model and proving strength and sustainability.

Yes, it has brought us into better streams of contact with the wider fair trade movement.

John Pearce, Swazi Indigenous Products, Swaziland When was the last time you were visited or met with Shared Interest and do you feel it was of benefit?

Not all of the customers who have responded have been visited by a member of the Shared Interest team. 12% of the respondents said they had not been visited by a member of the team. Those who had been visited felt it was of great benefit as it allowed them to explain better their operations and plans for the future. It also helped to cement the relationship for the long term.

Are you satisfied with the overall service provided by Shared Interest?

The majority of the respondents said that they were very satisfied with the service being provided to them by Shared Interest. There was not one respondent who was disgruntled in any way.

What benefits do you take from being a member of FLO / WFTO or a regional body?

Preferential sales prices, access to markets, the opportunities for training and development these were some of the many examples provided as benefits of being involved with either FLO or WFTO. However three respondents said that they did not benefit from being a member of either.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

More contacts, relationships with similar organisations, participation in conferences and other meetings, SFTMS system implementation, support of designers, etc.

Moner Lizana, CIAP – Intercrafts Peru Our vision is to see a world where Shared Interest provides finance and business support to disadvantaged communities to enable them to trade their way out of poverty. In your opinion do you think we are achieving this?

Resoundingly all of the respondents said that we are achieving our vision.

I think this fully achieved and thank you. Cepicafe and their partners and the families of small producers are a viable alternative to developers. Thank you, organised small producers sell quality products and improve our living conditions.

Jose Fernando Reyes Cordova, Cepicafe, Peru

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Commercial buyers (from our customers with COEC facilities) – survey results We also conducted a similar survey of the commercial buyers who place orders with our producer customers who have COEC facilities (ie, where we provide the pre-finance which is deducted from the buyer’s payment on delivery – see page 25 for full explanation) Three of the 39 commercial buyers contacted responded to the survey. This is a low response rate but it was to be expected since the commercial buyers have no obligation to Shared Interest.

It is also better than last year when none responded.

Respondents Name

Organisation

Country

Udo Reinhardt

GAFPRO (Good African Products)

Germany

Dirk Dunlap

MB Sport

US

Frank Kraaijkamp

A Van Weeley

Netherlands

What is your understanding of the service being provided to your producer groups and the impact pre-finance has for them?

The respondents recognised that in order for the producers to be able to fulfil their fair trade orders, the provision of pre-finance in most cases is essential. They also recognised the work that Shared Interest is undertaking and the positive impact it has on their business operations.

It is vitally important to them to have a possibility where they can get pre-financed money as we are still in the situation of bringing their products to a wider market in the EU. Udo Reinhardt, GAFPRO (Good African Products), Germany In what way do you think we could improve upon the methods of communication and our requests for information to yourselves? Do you think the requests made are appropriate?

Generally the response to this question was positive. There was an understanding of why we ask for the detailed information we do, although there were some suggestions for ways in which we could improve our communication regarding balances and purchase orders.

Would you benefit from a report showing which contracts your producers have borrowed against? If yes, what would you like to see on the report?

Two of the three respondents felt that such a report would be useful and provided us with suggested information which could be included.

Has your experience in dealing with fair trade producers been any different to those involved in the commercial market? If yes, please expand.

Overall the experience was one similar to that of the commercial market.

Fair trade producers remain a higher risk supplier when market prices are high. As in the mid ‘90s. Overall fair trade producers have been able to gain market share in the specialty market segments.

Frank Kraaijkamp, A Van Weeley, Netherlands Are you satisfied with the overall service being provided by Shared Interest? If no, could you please indicate how we may make improvements?

Overall the respondents were very happy with the service being provided by Shared Interest.

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5.2 OBJECTIVE 2: ENHANCE OUR SUSTAINABILITY BY INCREASING SHARE CAPITAL, INVESTING IT WISELY AND ENSURING A SOCIAL RETURN The Shared Interest Society is owned by its membership, giving it a democratic structure where each member has an equal vote irrespective of size of their investment. On 30 September 2011, we had 8,763 members who had invested a total of £28.2m.

Share capital and membership in the last three years 2009

2010

2011

Share capital

£26,006,924

£27,675,694

£28,207,927

Membership

8,743

8,837

8,763

We have a diverse membership which includes predominantly individuals, but also faith groups and organisations, each investing anything from £100 up to £20,000 into an Ordinary Share Account.

A network of ambassadors proactively help us to raise our profile and ultimately raise share capital for the Society and donations for the Foundation.

In addition, we have developed a strong partnership network of organisations that share our commitment to fair trade and can help us to promote our work.

We must invest our share capital wisely if we are to maintain our sustainability. That is, our share capital must be invested on deposit and we must adhere to prudential limits when providing financial services to our customers (see Objective 5, page 95). We also have to cover the fixed costs of running the organisation although we are a not for profit entity.

We need to ensure that we use our members’ share capital to ensure a social return that is in keeping with our vision, mission and values.

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OBJECTIVE 2 CONTINUED: ENHANCE OUR SUSTAINABILITY BY INCREASING SHARE CAPITAL, INVESTING IT WISELY AND ENSURING A SOCIAL RETURN Activity 1: Engaging with and valuing our members and supporters Shared Interest has a duty to engage with its investors and does this through a variety of means.

Regular publications Each financial year, Shared Interest produces key documents covering both the Society and the Foundation: Annual Review, Directors’ Report & Accounts and Social Accounts; members have access to all three.

Our Annual Review provides an overview of the year’s results and highlights financial and social achievements. The Directors’ Report & Accounts deliver our statutory financial reporting, including finances, investments and shares held by Directors and Council members, Directors’ remuneration and consolidated salary information for the staff. The Social Accounts expand on our impact.

We also produce a members’ magazine called Quarterly Return. QR covers new lending, reports from our overseas offices, articles about the wider fair trade movement, a summary of our full and half year results as well as feedback from our AGM. Members can write to the editor of QR on any topic they would like to draw attention to and a selection of these letters and responses are printed in QR. We also introduced a ‘Council Column’ this year to allow the Chair of the Council to engage more effectively with the membership base.

Social accounts online This year we created a new website for our social reporting. It contains the same information as this document but presented in a more accessible format which allows readers to search for keywords, ask questions and make comments. It also includes the detailed results from the surveys and other source material used in the social accounts.

Meetings Members are invited to our AGM at which the progress of the Society and Foundation is discussed. Attendees are encouraged to ask questions and gain feedback on our work.

They can also exercise their democratic rights voting on issues either in person or by proxy and taking part in the postal ballot to elect Directors and Council members. The meeting was held in March and attended by over 70 members. Addressing this year’s meeting was Ed Mayo, Secretary General of Co-operatives UK and the minutes of the meeting are available on our website. Two promotional films were launched at the AGM, one from each of the countries where our regional offices are based. We featured Monda, a handicraft producer group in Kenya, and Candela, a brazil nut producer group in Peru.

Attendees of this year’s AGM participated in focus groups where they were asked about new financial products, member engagement and participation and feedback on our vision statement as part of our strategic review.

Discussions as noted in the minutes included: Q. What is our recent experience of bad debts and what have we learned from the management of risky accounts?

A: Tim Morgan (Finance Director): Across the life of the Society, the charge for bad debts is about 7% of our top line income. There is a trend of bad debt being higher over

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SOCIAL ACCOUNTS for the year ended 30 September 2011

the past three years (costs about double the long-term trend) although there is no discernible pattern. We probably have to expect a higher risk of lending losses in the current worldwide recession and its aftermath but we do have rigorous prudential limits in place. The Board is keeping its lending policies under review and a watchful eye on follow-up procedures in this difficult climate.

Q: The Fairtrade label is so complex that some small farmers may be losing out due to the costs involved. Should we therefore be supporting riskier lending to those not certified fair trade?

A: Tim Morgan (Finance Director): There is a recognised concern that the Fairtrade label has become difficult to acquire because of cost and that the emphasis on different parts of the standards varies from one part of the world to another. Shared Interest remains open to considering alternative ways of verifying that a customer is ‘fair trade’ but the Fairtrade certification system of FLO (Fairtrade International) is widely respected and internationally credible. We certainly intend to continue using this for the foreseeable future.

Ambassadors and other volunteers Since the ambassador scheme was launched in 2006 the goal has been to recruit and maintain the motivation of 150-200 active individuals. We had 138 registered ambassadors at 30 September 2010 but we have since experienced some turnover of our volunteer base.

With the appointment of a new Volunteer Manager, a full audit of the volunteer scheme was undertaken this year and we found that this number had fallen to 70 at 30 September 2011.

We have developed a new database this year which should help us to maintain and work more effectively with a motivated group of ambassadors. Shared Interest ambassadors give their time and effort on a voluntary basis to help raise the profile of the Society with the specific aim of recruiting new members and increasing investment.

In accordance with nationally recognised good practice guidelines we introduced a volunteer policy in June 2011 (please see Appendix 4) to monitor the way that we engage with and manage volunteers. Our volunteer policy is underpinned by the principle that we will ensure that volunteers are properly integrated into Shared Interest’s organisational structure and that mechanisms are in place so that they can contribute meaningfully and be supported in doing so.

Members taking an active role in the governance of Shared Interest Shared Interest Board of Directors The Board is made up of eight members; two executives and the remaining six being nonexecutives. The Board is responsible for setting the strategy for the Society and making sure it is delivered within an appropriate risk framework.

The relevant rule is as follows: Rule 36: “Subject to any discretions given by resolution of a general meeting, the business of the Society shall be managed by the Directors who may exercise all the powers of the Society which are not by statue nor by these rules nor by resolution of a general meeting conferred solely upon a general meeting.”

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Shared Interest Council The 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 organisation and then delivers this strategy to meet the expectations of members.

Vacancies on the Shared Interest Council are advertised in QR. The Society also operates a random selection process which provides an opportunity to be on the Council for those who would not have otherwise considered standing for election. Many Council members have commented on the effectiveness of this process, saying that it allows the views of the ordinary, everyday members to be represented.

The relevant Society rule relating to the Council is as follows: Rule 33: “A Council may be appointed from among members who are not otherwise officers, employees or representatives of the Society and who have expressed publicly their wholehearted endorsement of the Society’s object.

“The Council may require the Directors to give a report to a meeting of the Council on the progress of the Society’s business and to answer questions as any aspect of the Society’s business other than matters confidential to particular persons. The Directors shall take due account of but not be bound by the views of the Council.”

Shared Interest Foundation Trustees All the non-executive Directors and the Managing Director of the Society also serve as Trustees for Shared Interest Foundation. They are Directors of the charity and they are responsible for setting the strategy for the Foundation and making sure it is delivered within an appropriate risk framework. In their dual role as charity trustees they are also bound by charity law.

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OBJECTIVE 2 CONTINUED: ENHANCE OUR SUSTAINABILITY BY INCREASING SHARE CAPITAL, INVESTING IT WISELY AND ENSURING A SOCIAL RETURN Activity 2: Assessing our members’ satisfaction with the utilisation of their investment Understanding membership This year we increased our understanding of membership and share capital by including more key performance indicators (KPIs) in the Board reports. We started work on a new database which will provide more detailed information on member transactions.

Membership Account Distribution 45% 3501

3424

40% 35% 30% 25% 20% 15%

938 10% 410

492

5% 0% £100 -£999.99

£1000 -£4999.99

£5000- £9999.99

£10000 - £14999.99

£15000 - £20,000

Share Capital Distribution 35%

£9,334,004

30% £7,107,943 25% £5,868,390 20% £4,556,461 15%

10% £1,324,896 5%

0% £100 -£999.99

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£1000 -£4999.99

£5000- £9999.99

£10000 - £14999.99

£15000 - £20,000

SOCIAL ACCOUNTS for the year ended 30 September 2011

It is interesting to note that while 40% of members have less than £1,000 in their accounts, one third of our share capital is made up of investments in accounts with a balance of between £15,000 and £20,000.

Membership survey This year we carried out a full membership survey which was sent to the 8,225 members who receive regular statements from us by post. The last one had been conducted in 2009 (and previously 2007, 2005 and 2001).

We sent out questionnaires to all members as part of the quarterly mailout and 2,506 responded (30% response rate). This year’s membership survey was significantly longer than in previous years. We tried to find out more from our members, particularly about their attitude to risk and democratic participation. We also used this opportunity to find out more about the demographic profile of our members.

A full copy of the survey, report and results can be found in Appendix 3.

Our Members 60% listed their employment status as retired and 87% were between the ages of 45 and 84 years. Over 68% of respondents stated that they were Christian (including Church of England, Catholic, Protestant and all other Christian denominations).

Age profile overview from membership survey 1% 5% 1%

6%

17%

25-34 16%

35-44 45-54 55-64 65-74 75-84 85+

29%

25%

Would rather not say

Our communication with our members Over 87% of the respondents were happy with the level of communication they received from us although 90% said they rarely contacted the Membership Team. We have received very positive feedback about QR. Although 75% said they thought an online facility would increase new members, only 17% of respondents said they would like to use an online account facility. Of these members 77%

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SOCIAL ACCOUNTS for the year ended 30 September 2011

said they would like to access statements, 62% would like to update their details online and 63% would like to do transactions.

75% of respondents stated that they never use our website which suggests that currently our website is for profile-raising rather than engagement with current members. We are aware that in the future, our online presence is crucial to the profile of the Society and will ultimately help to encourage new investment. We are planning to commission a new website next year.

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. 99% of respondents stated that they had not considered serving on the Shared Interest Council. When asked if they would accept a place on Council if they were chosen by random selection 62% of respondents said ‘no’ but 32% indicated that they would consider it if they knew more about what the role entailed.

The chart below shows what our members thought about the level of engagement in this year’s Society AGM. At the AGM 2011 we received approximately 1000 votes by post and by proxy and over 70 members attended our AGM. As a percentage, approximately 11%* of membership was engaged in this year’s AGM and voting process. Do you think this is:

7%

More than expected Fewer than expected 53%

40%

As expected

* Approximately 12% of membership was involved in the 2010 process showing that there has been little movement with the level of member engagement.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Do you think Shared Interest should be doing more to promote member engagement?

6.6%

7.3%

Yes – significantly

25.9% Maybe – although I do not consider it to be crucial About the same as now

No, it is not important to the running of the society

60.2%

Only 7.3% of respondents felt that we should be doing significantly more to improve member engagement.

Attitude to risk It is important for us to examine members’ attitude to risk to ensure that we have communicated sufficiently the risks associated in investing with the Society. Due to the nature of our lending and the fact that we are not regulated, investing in Shared Interest does carry a risk but in the history of the Society bad debts have so far never affected members’ funds.

When the responses were analysed we found that regardless of investment level, the majority of respondents thought that investing in Shared Interest presented a low risk.

When asked about perceived risk, 77.4% of respondents indicated that they thought the risk to their investment was ‘low’ but 8.1% considered the risk to their investment to be ‘high’ in view of the customers to whom we lend.

We asked members hypothetically how much they would be prepared to lose if we had to use members’ funds to write off producer debts. 31.2% of respondents said they were prepared to lose up to 10% of their funds and 23.8% were prepared to lose 10-25% of their funds.

Members’ satisfaction with the utilisation of their investment 95% of respondents stated that they were either ‘very satisfied’ or ‘satisfied’ with the utilisation of their investment.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Strategic direction As reported in last year’s social accounts, we surveyed a sample of members and asked if they would be willing for us to loan money to non-fair trade registered producers. This year we felt that it was important to open up this question to all members.

82% of respondents stated that they would be willing for funds invested in Shared Interest to be loaned out to non-fair trade businesses that were trading ethically. There are currently no plans to pursue this in the near future; it would require much more research and we would most likely consult with membership on the full details before proceeding.

Membership development One of the most effective ways of recruiting new members is by word-of-mouth through our current members. We asked our members what they think we should be doing to recruit new members. Here is a selection of the responses: “Approaches to organisations i.e.churches and faith groups who have a lot of members who may share the aims of Shared Interest and would back it if their organisations were supportive.”

“Advertising on local radio.”

“Develop a schools’ programme.”

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OBJECTIVE 2 CONTINUED: ENHANCE OUR SUSTAINABILITY BY INCREASING SHARE CAPITAL, INVESTING IT WISELY AND ENSURING A SOCIAL RETURN Activity 3: Growing the membership and supporter base This year we have continued to use a variety of methods to engage with new audiences.

Publicity As in previous years, the focus of our activity falls around Fairtrade Fortnight. This year we worked on a campaign with GMG Radio (Real Radio North East) and Newcastle Fairtrade Partnership. We benefited from on-air coverage with advertising and a series of events through which we supported a Fairtrade T-shirt design competition for local schools. The evaluation of the project estimates that several thousand people heard about the campaign.

Online coverage We have continued to use online social media including Twitter, Facebook and YouTube to reach new audiences. We also maintained the Shared Interest blog, which received over 31,000 hits this year, made up of 12,000 unique visitors.

Events Members of staff and Ambassadors attended various events this year. Highlights included: •

Ethical investment event in partnership with Ecumenical Council for Corporate Responsibility (ECCR) and Oikocredit

•

Fair Trade on the Fringe

•

Ecumenical World Development Conference

•

Co-operative Congress

•

European Association of Development Research (EADI) / Development Studies Association (DSA) triennial conference in York.

Partner publications We secured a piece in the new Fair Trade Towns Guide produced by the Co-operative College, encouraging towns to invest and promote the work of the Society.

Insert campaigns This year we conducted insert campaigns with Amnesty International, The Big Issue, The Green Parent and Resurgence magazine.

Development of marketing materials This year the Supporter Relations Team developed a new enquirer pack which is due to be launched next year. This should help to encourage a greater number of enquirers to the Society to convert to members.

Monitoring and evaluation In order to plan more effectively and evaluate the success of our marketing activity we started reviewing the coding of activity and began developing a policy to improve consistency. In addition, the Supporter Relations Team will introduce more rigorous budget control and post event analysis next year.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

0%

6%

16%

5%

26%

Advert Ambassador Insert Other Supporter Relations Officer

16%

Web Word of Mouth

31%

Due to various factors, including the absence of a team leader for several months, there has been less promotional activity this year which has meant we have received fewer enquiries and thus fewer new accounts.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

5.3 OBJECTIVE 3: PROVIDE BUSINESS SUPPORT AND SO MAKE LIVELIHOODS AND LIVING STANDARDS BETTER FOR DISADVANTAGED COMMUNITIES IN SOME OF THE WORLD’S POOREST COUNTRIES Activity 1: Providing business support services that are responsive and appropriate to the needs of the beneficiaries Overview Shared Interest Foundation is the charitable arm of Shared Interest and extends the range of services provided to producers in the developing world. The Foundation offers appropriate assistance to producers through the delivery of training and capacity building projects and by operating grant funds.

We believe that education, training and access to fair finance are essential in maximising business opportunities for communities in the developing world. The Foundation’s training projects remain at the core of our work and indeed we have been encouraged to explore ways of extending this work with WFTO producers in particular. Training enables producers to have a more sustainable livelihood and provide for themselves and their families.

Currently our training projects are all in Africa, where we have developed a strong network of partners. This year saw our Rwandan Producer Support Project complete its third and final year while our three-year Swaziland Producer Support Project commenced in October 2010.

In addition, we were able to respond to producer requests for additional practical environmental training in Rwanda and also developed some sustainable livelihoods training in South Africa (to be delivered in early 2012) with a view to developing a longer term project there. As part of our plans to expand the training scope of the Foundation, we carried out further research on the training needs of commodity producers in Ethiopia.

The year-long Livelihood Security Fund pilot came to an end and an evaluation has been completed highlighting the smooth operation of the Fund to date and recommending an extension to allow for the building up of a stronger evidence base. This year saw the last grants being made under the Small Grants Scheme which provided grants for capital costs and other one-off support. It has been decided to close this scheme and concentrate on the Livelihood Security Fund.

As a member of the Fairtrade Foundation, we again made a donation of £5,000 to support its work promoting Fairtrade. This year our donation enabled the production and distribution of cotton bunting packs to Fairtrade Foundation supporters following the campaign to decorate Fairtrade cotton flags as part of a successful Guinness World Record attempt in Fairtrade Fortnight 2011.

We collaborate with various local non-government organisations (NGOs) to ensure our projects are appropriate to the local context and engage experts who are familiar with the needs of the beneficiary group. This also assists in building the capacity of local NGOs. Indeed the external evaluation of the Rwandan Producer Support Project identified this as good practice and commented: “The ethos and approach of partnerships working across a broad range of stakeholders … has led to some significant and sustainable relationships between partners.”

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SOCIAL ACCOUNTS for the year ended 30 September 2011

In 2010/11 the Foundation collaborated with the following local NGOs: Partner organisation

Country where the NGO is based

Project

Fetola

South Africa

Sustainable Livelihoods Training

Swaziland International Fair Trade Association (SWIFT)

Swaziland

Product Development Training

WFTO Africa (previously known as COFTA)

Kenya

Rwandan Producer Support Project

Rural Environment Development Organisation (REDO)

Rwanda

Rwandan Producer Support Project

Producer training - summary During the year we trained producers in two countries: Rwanda and Swaziland. Although they are not all fair trade registered producer groups, the majority are working within fair trade principles and are run as socially responsible businesses. In each case a needs assessment was carried out prior to the training to ensure that it was appropriate to the needs of the beneficiaries. Collaboration with partner organisations in the design and delivery of business support training leads to projects that closely match the needs of the beneficiaries.

Project/Country

Producers

Co-operatives/Organisations

Rwandan Producer Support Project

100

50

Rwanda Forestation Project

100

50

Swaziland Producer Support Project **

170

135

**This comprises 100 individual traders and 35 co-operatives/organisations (with two attendees each)

In addition to the actual training delivered, we continued to progress two further training projects: •

We continue to seek to increase the impact of Shared Interest Foundation by developing a commodities project and this year further research was carried out to understand the needs of commodities producers and the potential role for the Foundation. The needs assessment included desk research and field research with producers in Ethiopia.

•

Continuing our collaboration with Fetola, a specialist enterprise development and accredited training organisation in South Africa, we have developed a Sustainable Livelihoods Training programme. This will be delivered in October 2011 and learning and producer feedback from this (and our previous South Africa courses in fair trade awareness) will inform the development of a suitable longer term project within the extensive crafts sector.

Rwandan Producer Support Project This project to deliver training and capacity building to 50 producer groups working mainly in the handicrafts sector completed its third and final year. Funded by a grant of £245,000 from the Big Lottery Fund this was the Foundation’s largest project to date. The project design was based on extensive in-country research that enabled the training approach to be context-appropriate. By using the ‘training of trainers’ methodology, we ensured that training

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was culturally appropriate by training local business advisers. These local trainers will form a pool of business support services that will be permanently available in Rwanda.

The model of training of trainers, and particularly the participatory methods promoted, is perceived to have worked very well and successfully built the capacity of trainers.

The selection of trainers was rigorous and resulted in the choice of committed trainers, who were dedicated to the business development of producer groups (this is reflected in their willingness to continue supporting producer groups, without charging a fee, once the project is finalised).

The emphasis on continual communication between the producer groups, trainers and the main project stakeholders constitutes an example of good practice.

The emphasis on building capacity and the time taken to develop a tailored training of producer groups, including a comprehensive training manual, constitutes good practice.

From external evaluation of the Rwandan Producer Support Project From the project inception it was agreed to include training in environmentally sustainable production by a local charity, Rural Environment Development Organisation (REDO).

However within the original project scope, there was only provision for classroom-based training in subjects such as forestation, energy conservation, sustainable production and consumption methods, and water catchment. Responding to the requests of producers, and funded by additional grants and fundraising, the Foundation extended this to include practical training in the Muhanga District in a year-long nursery and tree-planting project.

The project involved planting 10,000 seeds in handicraft producers’ farms with technical assistance from REDO. Producers were trained to develop nurseries in their villages. The main objectives of this project extension were: •

Producer knowledge - how to make a tree nursery to enable them to plant trees themselves, giving ongoing benefits to the 410 co-operative members and the wider community (the 1,640 residents of Muhanga District).

•

Reduced deforestation which is partly caused by producers taking raw materials from the forests.

•

Forest biodiversity and wildlife habitat protection (including for snakes, monkeys, birds and jackals).

•

Soil conservation through erosion control.

Discussions with communities and project stakeholders as part of the external evaluation of the Rwandan Producer Support Project revealed a number of examples of the project responding directly to producers’ needs: Project participants received additional external business (accounting) support from an international charity AFID - Accounting for International Development which assigns accountants to work with small businesses in developing countries. This was achieved as a result of the exposure producers gained through their involvement in the project and was leveraged in by Shared Interest Foundation, who recognised at an early stage the value of accounting training for participating producer groups.

Project participants acquired knowledge of their rights, government obligations and an understanding of how to abide by the law. This occurred through helpful discussions with trainers who, for instance, observed and attempted to rectify the tax-avoiding behaviour of producers.

From external evaluation of the Rwandan Producer Support Project

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Swaziland Producer Support Project This year saw the start of our three-year training project in Swaziland, funded by a grant of £502,000 from Comic Relief. The impetus for our work in Swaziland came from producers themselves. We were originally approached in 2007 by the country’s leading handicraft organisations with a request for training. The design for our three-year project was based on extensive research on short and long term requirements of the handicraft sector in Swaziland with considerable input from the beneficiaries themselves and a pilot training project.

Further, the project design was able to benefit from learning from the Rwandan project, particularly in relation to assessing producers’ baseline levels of knowledge and then providing training at an appropriate level to their needs.

Three levels of handicraft enterprises will benefit from training with the most promising businesses graduating to the next level of training at the end of each year. This will provide training to 135 enterprises ranging from small survival enterprises up to significantly more developed businesses which are already exporting.

Following the project start-up in October 2010, work was undertaken to identify the individual artisans and producer groups for the initial training. The artisan recruitment was challenging due to the remote locations involved, gender inequality (women artisans not being permitted to attend by their husbands) and lack of artisan commitment (zero attendance at some interviews). Having an in-country partner in the form of SWIFT (Swaziland International Fair Trade Association) proved invaluable in resolving such issues speedily. SWIFT is building its own capacity to develop the fair trade sector, partly through mentoring from another more established fair trade country network.

Having a detailed producer selection process in place enabled the project team to understand the needs of those involved right from the outset and consequently the initial training was adjusted to suit best the specific needs and abilities of the participants. This includes planning a gradual transition from using siSwati to training fully in English as this is the recognised business language and we wish to be promoting international trade.

The project design included provision of training in business and financial skills, market access and fair trade, as well as HIV/AIDS in the workplace. Following the initial training the producers requested that environmental training be added to the project scope and we will be seeking funding for this.

Small Grants Scheme and Livelihood Security Fund Each year we distribute a small amount of funding under these initiatives to complement our business training programme. The needs of the producer groups involved are assessed using standard grant assessment templates which are completed either directly by the groups concerned or by Shared Interest staff in consultation with the producer group. The potential grants are then reviewed by the Foundation Management Team and, if necessary depending on the value, by the Shared Interest Management team. The details of this year’s grants and their impact are described under Activity 2.

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OBJECTIVE 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: Examining the impact of our business support services in meeting the needs of the beneficiaries Shared Interest Foundation carries out research to ensure that it has a full picture of the needs of businesses before initiating any work, whether it is designing business training or awarding a grant. We then collect a combination of qualitative and quantitative data to assess the impact of our work. This includes producer questionnaires and visits, reports by partners, project managers and independent evaluators and case studies.

We often work in collaboration with partner organisations overseas thereby ensuring the capacity building benefits of our projects remain in the countries, increasing sustainability.

Business support training At the start of all long term business support training programmes, the Foundation carries out a baseline study to provide data against which the value of the training can be analysed. To allow a comparison to be made, producers are asked to complete questionnaires at the end of the training. The value of training is judged by comparing these sets of qualitative data and by collecting quantitative data, case studies and quotes and making evaluation visits to producers’ businesses and conducting interviews. Participant feedback is also used to improve training for the future.

Rwandan Producer Support Project This year saw the completion of our first long term project. In September 2010 we commissioned an independent evaluation of the project with two specific objectives: •

To assess the extent to which the mutually agreed outcomes have been achieved

•

To derive lessons which will enable Shared Interest Foundation and WFTO Africa to inform future strategies, programmes, approaches and set-up.

Two independent consultants from IOD-PARC, specialists in monitoring and evaluation and human and social development, conducted the evaluation from January to June 2011. The evaluation comprised: a review of relevant documentation (eg project reports, monitoring reports, baseline information and case studies), interviews with stakeholders at all levels and a 10-day fieldwork mission conducted in early May 2011 in Rwanda.

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Overall, the project was assessed as having delivered progress against all the outcomes stated in its business plan though to a variable degree: Project outcomes

Progress assessment

Outcome 1: Stronger, more sustainable and better governed fair trade producer groups in Rwanda

Good progress – overall significant progress has been made, only constrained by producers’ challenges in accessing local, regional and international markets

Outcome 2: Raising the socio-economic status of producer groups involved in the project

Good progress – as above, only constrained by lack of information around gains made for people with disabilities and those living with HIV

Outcome 3: Increased networking and alliances between producer groups

Limited progress – constrained by weak development of the national network and low levels of registration of Rwandan producers with WFTO Africa / WFTO

Outcome 4: Increased use of environmentallysustainable production among producer groups

Some progress – constrained by relatively low levels of understanding of environmental conservation amongst producers

All the local stakeholders and project beneficiaries interviewed agreed that the training had been both helpful and useful for producer groups to expand, become better governed and more sustainable. When asked to grade the impact of the project on business development, the average score given was 4.5 out of 5.

The evaluation highlighted: •

an 86% increase in school enrolment rates from the start of the project

•

a 266% increase in income since the start of the project

•

80% of businesses doubled their income

•

1,178 jobs were created over the lifespan of the project.

It is not possible to attribute these gains to the project alone, particularly given the rapidlychanging economic environment in Rwanda. Nonetheless, the producer groups were certain of the link between the project and their own increases in annual income. They explained that trading levels increased as a result of improved product quality, better marketing and financial management. They pointed to the greater visibility and recognition their businesses received as a result of their association with RWAFAT and the project.

The field visit provided some clear evidence of improved socio-economic status for producer groups and their communities and some individual examples are given below: •

Producer group members cited being able to purchase livestock (goats, cows or rabbits) which in turn produce milk or breed and can be sold and thereby profit is generated

•

Payment of mutual health insurance has occurred which was not previously possible

•

Consumer goods have been purchased and new clothes and soap have been bought

•

The nutrition of members has improved as they began to afford sugar and rice. Many of them cited that they are now able to afford two meals a day

•

Houses have been renovated and mattresses purchased

•

Enrolment of children (and dependent siblings) in primary school has increased.

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In one of the participant co-operatives, Works of Art, members have been encouraged by their charismatic President to grow fruits and vegetables in their gardens (“kitchen gardens”) and to share the produce they do not use with poorer members of the community. This was cited as having reduced the levels of child malnourishment in the community. They have also learnt about family planning at the co-operative and begun to teach others in the community.

From external evaluation of the Rwandan Producer Support Project Despite the positive and inspirational stories that emerged during the fieldwork mission, the evaluator observed child malnourishment in two of the producer groups visited and remaining high levels of poverty in several of the handicraft organisations. This served as a reminder that, despite the clearly significant gains in wellbeing being made at individual and community level, the wider context in Rwanda remains one of acute poverty.

The improved ability of the groups and the individuals to save money was noted as “the single most significant consequence of the training”.

In order to sustain and expand on the project achievements, the evaluators made three key recommendations and we are currently exploring the best ways of progressing these: •

Completing the training of all 50 producer groups (groups that joined in years 2 & 3 only completed 1 or 2 tiers of the training modules)

•

Providing external support, including financial assistance, to the fair trade country network subject to delivery against clear and measurable targets

•

Facilitating market access for producer groups by speeding up the process of fair trade accreditation and/or assisting producers in gaining access to credit.

Swaziland Producer Support Project This project started in January with one of the early tasks being artisan and enterprise recruitment and training of the trainers. The initial producer training courses were held in July and August 2011 in a variety of locations (to suit the producers). The facilitators noted an encouraging level of interaction and participation in the training. Debriefing reports have been compiled after each batch of training and these will be used to follow up producer groups and to develop the training programme as appropriate (to both the needs of the attendees and the capabilities of the trainers). In addition field visits to check producer progress, understanding and homework were scheduled for the month following training.

It is too early to assess the impact of the training – these initial sessions are part of an overall programme of training and mentoring. However, by word of mouth the training is already getting a good reputation and “plenty of people want to join the training after hearing from those participating”. At the end of each training session the participants are asked to complete feedback questionnaires as the data below shows.

Results from participants’ questionnaires Questions

Excellent

Good

Not sure

1

How much did you enjoy today’s training?

81.8%

11.4%

6.8%

2

How much does the information in the training apply to your business?

79.5%

20.5%

3

How well do you understand/comprehend the material?

69.4%

17.0%

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13.6%

Poor

SOCIAL ACCOUNTS for the year ended 30 September 2011

“The training has helped me to reach more markets. Now that I am branding my products, people know that I make my products. Someone saw my products at the trade show and contacted me for samples to bring to London.”

Ellinah Nxumalo, participant in initial training course, Swaziland “The training has helped me to understand how much work I actually put into my handcraft after I mapped my production process. I can now better explain to my customers why tapestry can be so expensive – because of how much time I put into the work.”

Juliet Mavimbela, participant in initial training course, Swaziland “We appreciate our facilitators and their concerns. We are grateful for the opportunities. As artisans, we must be grabbing this chance with both hands. We must take the training seriously as it will help us to become better business people.”

Mduduzi Mtsetfwa, participant in initial training course, Swaziland

Small Grants Scheme Small grants are distributed according to strict criteria to ensure the funds provided will make a significant impact. Eligibility is limited to fair trade producers or producer groups and there is a preference to distribute small grants to those who demonstrate the greatest need or for whom the grant will have the most impact. This year we awarded one small grant of approximately £2,000 to SWIFT for sponsorship of a SWIFT marketplace at the annual Bushfire Arts Festival in Swaziland. A portion of the grant was allocated towards a product development workshop for SWIFT members hosted by a renowned South African product developer.

We always ask beneficiaries to report on the grant use and the difference it has made: The Heath Nash workshop was to assist members/product developers in finding ways they can incorporate recycled material into their designs for new innovative designs that would capture new customers. The workshop was a huge success as we work with free available materials which showed artisans how free raw materials are available to create handcraft.

The attendance was 32 artisans for three days.

Additionally I can report that the traders under the Shared Interest / SWIFT tent produced sales in excess of 35,000 Emalangeni (approx.£3,000).

SWIFT Feedback Report

Livelihood Security Fund The impact of the Livelihood Security Fund is assessed by completion of an evaluation form by the businesses that have been assisted. Producers are requested to feedback on what they used the grant for and how it has helped the business to survive and recover from the shock it has sustained. This year we made two grants: Organisation

Need

Value and use of grant

CESMACH, Mexico

Hurricane Matthew damaged coffee production, October 2010

£5k to purchase 15,385 coffee plants

Perfection Plus, Kenya

Fire destroyed building and equipment following lightning strike, March 2011

£13k (alongside the insurance money claimed) to replace computers & laser machine

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This year also saw the completion of the pilot phase of the fund and we commissioned an external evaluation in July 2011.

The evaluation found that the fund operated smoothly; grants were considered in line with the process and disbursed using Shared Interest’s systems. The fund had indeed focused on our specific areas of expertise – business support and fair trade finance – and is closely aligned to our vision and mission. The criteria had been tested and evaluated with some proposals being made for their refinement. The overall process had worked well and had been meeting the need as planned. The initial briefing sessions went well and there is now a need for refresher training focusing particularly on shock identification and roles and responsibilities. In general, the grant forms seemed to be working well, although the capturing of financial data needs improvement in both assessment and review forms.

Fewer applications for granted than expected were made but none were rejected. The small sample of grants awarded provided some evidence that the fund has met its primary goal of reducing the impact of shocks on producer groups. There was insufficient evidence within the grant review forms to assess the fund’s overall progress towards its purpose of securing assets, viability and sustainability.

Given the limited evidence base, it was decided to extend the pilot for another year with a focus on: •

Improving post-grant monitoring against the fund’s goals and purpose

•

Speeding up the response time

•

Increasing the funds available to allow more grants to be made

•

Aiming for at least three or four additional grants with good case studies and with some considered and turned down, subject to funding available

•

Capturing lessons learned and changes implemented

•

Strengthening the shock identification process and evidence.

Case Study – CESMACH In early October 2010, Hurricane Matthew crossed over the Mexican state of Chiapas causing severe damage to the land used by Shared Interest customer and organic coffee producer, Campesinos Ecológicos de la Sierra Madre de Chiapas (CESMACH).

The group’s local area suffered landslides and broken bridges. Carlos Omero Velasco López, President of CESMACH, estimated that 70% of the group’s farmlands and coffee plantations were devastated and of the crop produced by the remaining 30% roughly half was likely to have been damaged. The coffee producers and their families rely on their coffee sales to survive, with 75% of their income derived from coffee. This is exactly the sort of ‘shock’ that the Livelihood Security Fund responds to – the aim of the grants being to reduce the impact of shocks on producer groups, securing their assets and/or business base and improving their chances of sustainability after their initial recovery from an emergency.

The grant allowed approximately 15,385 coffee plants to be bought from small-scale organic coffee producers who are members of the co-operative. This funding was complemented by other sources of funds and the organisation’s own resources which will enable the hurricanedamaged land where plants have been lost to be reinstated more quickly.

Grant response form, December 2010

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Disaster relief Following the landslides in northern Pakistan in 2010, we continued channelling donations to Mountain Fruits, a fair trade fruit and nuts producer group affected by the disaster. Mountain Fruits was not eligible for a grant from our Livelihood Security Fund as they are not a customer so our role in this instance has been to launch a direct appeal and to transfer donations, including those raised via Ben & Jerry’s. While no formal impact review of this support has been undertaken, we have received appreciative emails from both the producer group and the UK buyer, Fullwell Mill. It was noted in the evaluation of the Livelihood Security Fund that this example could be built upon, with promotion of the Livelihood Security Fund through fair trade buyers done in such a way as to maximise opportunities to leverage funds from those buyers (and their supporters).

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OBJECTIVE 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: Using donors’ funds wisely The Foundation continued to receive income from a variety of sources including grants and fundraising events as well as from individual donors. The fundraising environment has become very challenging over the last year. As donors feel the effects of the recession, inflation and cutbacks, charitable giving is becoming less of a priority. Understandably, people are demanding more information on how their donated funds are utilised so unrestricted income is becoming increasingly hard to secure as more people select a specific route for their money. In light of this, a number of actions relating to communication with our donors and potential donors and improving accountability have been taken with the aim of being able to continue to develop the Foundation’s work in this challenging climate. This section will report on the funds raised, the ways these are managed and the feedback given to donors.

Shared Interest Foundation carries out life-changing work in developing countries and endeavours to ensure that producers’ needs are at the centre of its activities. It has had success in recent years raising funds for large-scale projects but in order to arrive at the stage where major funders will support a three-year project, research trips and pilot projects need to be carried out and running costs paid. The work described in social accounts would not be possible without the generosity and support of all our donors. This is partly thanks to the donations given to the projects and producer groups to which supporters feel a particular connection; however we also receive donations from supporters who believe in our work and know that we will use their donation where the need is greatest. Our project in Rwanda last year reported a tripling of income for participants, however the project could not have started without the time and effort the Foundation dedicated over a number of years on project development, using its own unrestricted funds.

Foundation income Our major project work is funded by institutional donors: the Big Lottery Fund and Comic Relief. The Foundation receives almost 50% of its income from individual donors (many of whom are also Shared Interest members) and 26 of whom support the Foundation with regular donations totalling £6,100 per year. Individual donors will always be vital to our work, particularly in relation to providing the unrestricted income needed for project development.

This year we continued to try to diversify our income sources via corporate support, grants from trusts and foundations and donations from churches and other organisations. We also held fundraising events such as our Coast to Coast cycle challenge.

Shared Interest Foundation income over the last two years Income source Institutional funders Individuals (inc donations, event sponsorship & gift aid etc) Corporate Trusts and foundations Total

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2010 £387,880 £185,497 £2,266 £6,000 £581,643

2011 £31,123 £74,937 £12,626 £31,925 £150,611

SOCIAL ACCOUNTS for the year ended 30 September 2011

Corporate support In addition to substantial support from Ben & Jerry’s in Ireland, Sweden, the Netherlands and the Czech Republic (all in support of Mountain Fruits following the flooding in Pakistan), we were delighted to receive donations from three other companies including two ethical suppliers. We plan to explore opportunities to build on this support.

“We at Fair Ground were delighted to make a donation to Shared Interest Foundation. We support the intrinsic values of the work they do and realise the importance of giving in order to bring dignity and empowerment to some of the world’s poorest communities.”

Margaret Pearce, Fair Ground, a co-operative fair trade shop in Dorset that donated £5,000 Trusts and foundations We continued to approach trusts and foundations and this year received valuable support from a larger number which enabled us to progress significant project development work.

Further work will be undertaken next year with the aim of building on-going relationships with some of these trusts where appropriate and to take learning from their support into future applications.

Donations by trusts to Shared Interest Foundation, 2011 Trust

Amount

Project supported

Allan & Nesta Ferguson Charitable Trust

£8,000

Sustainable Livelihoods in South Africa

The Ashmore Foundation

£5,000

Sustainable Livelihoods in South Africa

Rothley Trust

£800

Sustainable Livelihoods in South Africa

Tisbury Telegraph

£500

Sustainable Livelihoods in South Africa

WE Southall Trust

£2,000

Sustainable Livelihoods in South Africa

Eleanor Rathbone Charitable Trust

£2,000

Rwanda Forestation

£500

Rwanda Forestation

Blanford Lake Trust

£2,125

Rwanda Forestation

Education Services

£10,000

St Mary’s Charity

£4.5k for research in Ethiopia and £5.5k unrestricted

Dorema Trust

£500

Unrestricted

Fundraising Media

£500

Unrestricted

Churches and other organisations It was encouraging to receive donations from four churches as well as from a school and from Soroptomists International. While still a small proportion of our overall income, this valuable support has prompted us to work on plans for engaging with similar organisations to develop this income stream.

Events Events are a good way to raise additional funds from individuals and at the same time to promote our work to a range of supporters who would otherwise not easily come across us.

In August 2011 we held a Coast to Coast cycle challenge which raised over £2,000. Four staff cyclists and two staff support drivers were joined by seven of their friends and family.

The sponsorship raised was driven through the friends and family of those taking part with some promotion of the event through Twitter.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

“This was a great opportunity to take on a sizeable physical challenge whilst raising funds for Shared Interest Foundation. Overall the weekend was a great success - by the end of the ride the group had a great sense of camaraderie and pride knowing that we had all cycled the 140 miles together to raise money that will be put to really good use.”

Andrew Ridley, group leader, after dipping his front tyre in the sea at Tynemouth £1,000 challenge In February 2009 we launched a £1,000 challenge whereby all those who raised or donated £1,000 would be entered into a draw for a ‘Meet the People’ tour arranged by Traidcraft and donated by specialist tour operators, Saddle Skedaddle. The challenge was a good opportunity to raise our profile. It raised £9,000 for the Foundation, with a good proportion of this coming from new supporters who will now be encouraged to continue their support. The winner of the prize draw was John Ling of Huddersfield.

Financial management The Foundation Management Team meets regularly, monitors financial results and makes decisions on expenditure, maintaining an overview of the level of reserves and ensuring the sound financial management of the organisation. The Shared Interest Management Team and the Board of Trustees review the Foundation’s 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 the Foundation) in accordance with UK law and accounting standards.

We endeavour to keep running costs of the Foundation as low as possible. To ensure the most cost-effective use of resources the Foundation uses (and is charged for) the Society’s central services such as HR, IT and Finance. In a year when raising funds to spend on unrestricted projects has been very challenging, we have spent 21p on overheads to run the Foundation for every £1 spent on charitable projects. This compares to 15.5p in the previous year.

Shared Interest Foundation expenditure, 2011 Expenditure

Rwandan Producer Support Project Rwandan Forestation Swaziland Project Ethiopian Coffee Project South Africa Project Producer Training Small Grants Scheme Comic Relief Organisational Grant Livelihood Security Fund Fairtrade Foundation Support Other projects – (project development) Operations Governance and Fundraising

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£68,460 £7,452 £131,755 £2,425 £17,518 £5,530 £2,318 £7,000 £32,185 £5,702 £11,778 £57,495 £38,495

SOCIAL ACCOUNTS for the year ended 30 September 2011

Donor communication and accountability Website The Foundation section of the Shared Interest website was improved during the year to include more information about our projects and how we use the money we raise. As part of the evaluation trip for the Rwandan Producer Support Project, two films were made with personal stories of some of the producers involved (one short and one longer). These can be viewed via our website and will add valuable feedback to the existing blog reports online and will also be used at events to explain the Foundation’s work and encourage supporters.

The Foundation accounts can also be viewed online (previously they were only available on request or from the Charity Commission website). Our website also provides links to online donation platforms.

Database Work has been progressing on the launch of a new Foundation donor database. This will provide the central point for information on donors and their donations and will substantially improve our ability to manage our relationships with donors. The new database has the capacity to generate reports and correspondence. When complete, it will substantially ease the process of ensuring that supporters are thanked and then kept up-to-date with the Foundation’s work including simplifying the circulation of the Foundation newsletter. Up to now, we have only been able to carry out limited consultation with donors to understand their needs and their views on our work and use of their funds. With the implementation of a donor database we plan to carry out fuller donor consultation within the next financial year.

Telling our story We publish a specific Foundation newsletter twice a year. This is circulated to around 1,000 supporters (including individual and organisational donors, ambassadors, Board and Council members). It includes updates on our various projects as well as fundraising ideas.

We are always encouraged by the feedback and donations we receive after the publication of a Foundation newsletter.

As in previous years we also included articles about the work of the Foundation in each issue of QR, which is distributed to all Society members and other supporters. However, next year we will be making a greater separation between the communications of the Society and the Foundation in line with the findings of our strategic review.

Despite this good use of Shared Interest publications, the Foundation has some catching up to do when compared with other similar organisations. We have a low profile outside our immediate network. The Foundation has allocated very little time and resources to marketing. In May 2011 the Society appointed a new Marketing and Relationships Manager who has been developing a new overall marketing plan for Shared Interest which will include a specific plan for the Foundation.

In April 2011, we joined three local infrastructure bodies. These are bringing the benefits of working with others, establishing new contacts and networks and access to information free of charge.

•

Newcastle Council for Voluntary Service – fundraising advice and newsletter; general information regarding local voluntary sector activity and the opportunity to advertise.

•

Voluntary Organisations Network North East (VONNE) - the regional policy-making network for the voluntary and community sector. Networking events and information.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

•

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Community Foundation Serving Tyne & Wear and Northumberland - manages over 200 funds on behalf of corporate bodies, companies and individuals. Membership allows us to move into the circle of Community Foundation supporters to raise the profile of Shared Interest Foundation.

SOCIAL ACCOUNTS for the year ended 30 September 2011

5.4 OBJECTIVE 4: WORK IN PARTNERSHIP WITH PEOPLE WHO SHARE OUR COMMITMENT TO FAIR AND JUST TRADE Introduction Partnerships continue to play a key role across all areas of Shared Interest; they are vital to the sustainability and capacity of projects and activities across the organisation.

Building on the progress made on this objective last year we conducted a full partnership survey this year and the results of this are included in the analysis below. This survey was emailed to 36 partners and 16 responses were received. For full results of the survey see Appendix 6.

We also developed Activity 2 which involves the evaluation of our partnerships and, following guidance from the Social Audit Panel last year, we have interpreted this using the concept of social capital.

Social capital is a concept which refers to the value of social connections (for our purposes partnerships) and the means of their creation. It is a widely used concept and the OECD defines it as ‘networks together with shared norms, values and understandings that facilitate co-operation within or among groups’.

For the purposes of these social accounts we are defining social capital as ‘relationships with others which enable us and these organisations to act together more effectively to pursue shared objectives’.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Activity 1: Identifying and building appropriate partnerships The organisations we have identified as partners are those with whom we work in our collective commitment to fair and just trade and a full list of these partners can be found in Appendix 7. This also lists last year’s partners and indicates where partners are in agreement with our observation that they are our partners. Shared Interest has partners across a variety of themes including, fair trade, co-operatives and social finance and we value the diversity and multiple connections this enables us to have. As our partners cover all aspects of the organisation they also cover all parts of the world with partners at local, regional, national and international levels.

For the first time we have asked those who we consider to be our partners if they consider themselves to be our partners, this ensures we understand our relationships and can report accurately on our true partnerships. Only one organisation, of those who responded to the survey, felt they were not in a partnership with Shared Interest and one organisation was unsure. One other organisation did not complete the survey but contacted us to indicate they did not feel we had been partners this year but were happy to reconsider this view in future years.

This gives us confidence in our ability to identify our partners, although we do not know if non-responses were a result of organisations not considering themselves to be partners or for other reasons, such as email errors or incorrect contact information.

The following graph shows how long our partners have been in partnership with Shared Interest.

6

4

4

2

Within last 2 years

3 - 5 years ago

6 - 10 years ago

Over 11 years ago

Of those responding, six of our partners had entered into partnership with us within the last two years, demonstrating the success of our efforts at building new partnerships. This graph also illustrates that we have several long-term partners, four partners of over eleven years, demonstrating the value this connection offers to both parties as well as our joint ability in sustaining key partnerships.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Building partnerships Key to successful partnerships is the appropriate application of resources, including time and expertise from staff and key stakeholders such as our Council. We recognise the value of face-to-face contact in building connections with others, a vital tool in building trusting and transparent relationships. Some of our staff hold key roles with various partner organisations, this enables us to develop our knowledge and understanding of the networks in which we operate, as well as offering our skills to fulfil the aims we share with these partner organisations.

Partner

Staff member and position/role Malcolm Curtis, European Board

WFTO

Malcolm Curtis, Global Board Patricia Alexander, attended AGM (in Mombasa)

Fairtrade Foundation

Patricia Alexander Board Member / Treasurer Patricia Alexander

UK Fairtrade Leaders’ Forum

Member Malcolm Curtis WFTO Representative Tim Morgan, Representative

Co-operatives UK

Co-operatives NE

Co-operatives SE

Newcastle Fairtrade Partnership

Trade Justice Movement

Time spent on partnership 11 days 18 days 3 days 12 days

3 days 3 days 0.5 days

Sally Reith, Representative (attended Congress in Birmingham)

3 days

Ruth Taylor

4.5 days

Board Member Sally Reith Board Member Stacey Toth Member / Treasurer Sally Reith Representative

6 days

6.5 days

2 days

Our overseas team also play a key role in our ability to strengthen partnerships within their respective regions. In East Africa we have continued to develop our partnership with Fairtrade Africa (FTA), the African arm of Fairtrade International (formerly FLO and a partner of Shared Interest), through Rachel Ngondo’s position on the Board of FTA’s new East African Fairtrade Labelling Initiative. Rachel has also been instrumental in building our partnership with WFTO Africa through supporting their members in accessing Shared Interest’s services. In South America, Paul Sablich has strengthened partnerships with both FLO and WFTO at the regional level through various meetings.

Shared Interest also values the role of other stakeholders in building partnerships. This year Council members were consulted about their connections which they considered may be of value to Shared Interest.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

The three Council members who responded had connections with the following groups and organisations: •

Stony Stratford Fairtrade Group

•

Co-operative Group (Central and Eastern Region)

•

Justice and Peace Group

•

Chuch of England Global Group

•

Traidcraft

•

Christian Aid

•

FareShare

•

Local group of World Development Movement

The connections are diverse as they comprise Fairtrade towns, faith groups, co-operative groups and other campaigning organisations but there is a common theme of fairness and justice. These connections are useful to help us develop partnerships at the local level and build on the partnerships identified in our partner list.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

OBJECTIVE 4 CONTINUED: WORK IN PARTNERSHIP WITH PEOPLE WHO SHARE OUR COMMITMENT TO FAIR AND JUST TRADE Activity 2: Evaluating our partnerships in order to demonstrate social capital Our partnerships demonstrate social capital through shared values creating a sense of common purpose leading to opportunities and the desire to act together for more effective outcomes.

Results from survey of partners What do you consider to be the defining characteristics of a partnership?

12

10

8

6

4

2

0 Mutual Benefit

Communication Common Values

Collaboration

Shared Goals

Trust

Other (please specify)

Our partners identified common values as the most defining characteristic of a partnership, closely followed by mutual benefit and collaboration. These responses reiterate the importance of a solid, shared ground as the foundation of a partnership where outcomes involving collaboration for mutual benefit can be considered one measure of success of a partnership, showing partnerships to be inherently strategic relationships.

Overall, to what extent do you consider that your organisation and Shared Interest have values in common?

14 12 10 8 6 4 2 0 Not at all

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Few shared

Some shared

Mostly shared

Don't know

SOCIAL ACCOUNTS for the year ended 30 September 2011

All 14 partners who responded to this question considered that they did have common values with Shared Interest, with almost 100% saying their values were ‘mostly shared’ with us.

These shared common values include economic justice, positive impact investing, encouraging co-operation and raising awareness of fair trade and show a broad theme around issues of justice and fairness. There were some areas of divergence in values and these largely related to issues of geographical scope and ideological focus. These common values help set the agenda for activities and projects which, as partners, we may wish to collaborate on.

Which other organisations do you consider to be your partners?

The value and benefits of collaboration are identified by many of our partners, as well as ourselves, and this does not just relate to two-way collaboration. Developing partnerships into larger networks cements the sense of belonging we may share with multiple organisations and also adds credibility and legitimacy to our collective actions.

Many of our partners identified other Shared Interest partners as partners of their own and these are indicated below. As this question carried a guarantee of confidentiality it has only been indicated how many partners, not which partners, identified these organisations as their own partners.

Shared Interest Partner

Also identified as a partner

Traidcraft Exchange

by 4 partners

Oikocredit

by 3 partners

Fairtrade Foundation

by 2 partners

WFTO

by 2 partners

Co-operatives UK

by 2 partners

Fairtrade Federation (US)

by 1 partner

What benefits have you drawn from partnering with Shared Interest? What benefits do you feel this partnership may have offered Shared Interest?

The idea that collaboration is a tangible outcome of being in a partnership was widespread among our partners, including the organisation that did not respond to the survey because they did not consider themselves to have been a partner this year as we had not collaborated on any events. In response to the questions around benefits to our partners and to Shared Interest the following were some of the responses: Shared event development ECCR Sharing ideas. A stronger, united voice on trade TJM It has enhanced our self-confidence as a group. It has given more credibility for actual and potential supporters Bexhill on Sea Fairtrade Steering Group

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Sharing resources, increasing links and sharing information…about networks Sunderland Partnership Solidarity Charity Bank These responses demonstrate how acting together, and being able to do so to increase effectiveness over individual activity, are fundamental benefits of partnership. These partnerships are based on common or shared values but require the application of our social capital, forming and building these partnerships, to develop them into something valuable and with practical outcomes.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

5.5 OBJECTIVE 5: CONDUCT OUR BUSINESS IN A MANNER WHICH REFLECTS THE PRINCIPLES OF STEWARDSHIP AND ENVIRONMENTAL SUSTAINABILITY For Shared Interest sustainability is doing the best we can with the resources that are entrusted to us.

We introduced an environmental policy in 2007 and through regular communication of objectives, appraisals and achievements we have helped our staff to understand and implement the relevant aspects of the policy in their day-to-day work (see Appendix 8 for our environmental policy). The environmental team, made up of staff, make use of desk drops, emails and staff sessions to increase awareness of the current environmental issues and what we can do to help.

During this year the team sent out several communications on a range of environmental subjects including recycling, updates on 10:10 campaign achievements and carbon emissions. A presentation was also delivered to all staff covering various issues, aimed at increasing staff awareness and engagement.

During the year we have reviewed and updated the Green Checklist that we use and we now have two Green Checklists in use: one for purchasing and one for events. The former looks separately at the purchase of goods and services and suggests what to consider and what questions to ask of potential suppliers, whereas the latter suggests issues to consider at the planning, during and post-event stages, giving advice on how to make sure events are organised in an environmentally-friendly way.

Where possible, we aim to procure our goods and services from locally-based 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 ÂŁ252,309, (2010: ÂŁ266,515) a decrease of 5%. This represents 45% of our purchases for the year which was the same as 2010.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Activity 1: Minimising environmental impact Reduction, reuse and recycling activities by Shared Interest staff The table below summarises the activities we engaged in throughout the year to minimise our environmental impact: Item/Approach

Volume/Percentage

Waste reduction: Scrap paper and double-sided printing

We used 123,045 sheets of new paper (2010: 134,141) during the year from 132,886 (2010: 161,554) print jobs. 4,159 (2010: 4,523) were printed on reused paper.

Waste recycling: paper collections

A large wheelie bin to collect paper (including shredding) and cardboard is provided for recycling. We have recycled 20 large bin-fulls during the year.

Waste recycling: milk cartons

We recycle all plastic milk cartons (an estimated 1,428 during the year).

Waste recycling: other plastic and glass

Staff are also encouraged to recycle other plastics and glass from personal food and other consumables. Approximately 26 bags (1,040 items have been recycled this year).

Waste recycling: ink cartridges

Waste reuse: IT equipment

All ink cartridges are recycled via Reclaim-it, a UK based company, that uses any funds earned from the cartridges to support many different good causes. We recycled 13 ink and toner cartridges during the year.

Where appropriate we offer redundant computers to staff for reuse via a ballot process. Where possible, we dispose of all remaining redundant IT equipment via Computer Aid International which professionally refurbishes suitable equipment for reuse in education, health and not-for-profit organisations in developing countries. This year we recycled eight PCs, four TFT and one CRT monitors. These were not suitable to be donated to Computer Aid but have been recycled via CRT recycling which ensures that all component parts are either reused or recycled, with none going to landfill.

We have used 11,096 less sheets of new paper (an 8% decrease) this year than we did in 2010.

Reducing / offsetting carbon dioxide emissions arising from our operations The two main sources of carbon dioxide emissions from Shared Interest’s operations are from running our offices and business travel.

Emissions may also arise from staff travelling to and from work however the majority of staff travel either by public transport, walk or cycle to work. In 2008 we implemented the Government’s cycle-to-work scheme which we continue to offer, giving employees the opportunity to purchase a bike in a tax efficient way and paid for in instalments deducted from salary. In 2011, we have increased take-up of the scheme by a further four members of staff.

This year, for the first time, we conducted a staff transport survey. The survey shows that 91% of staff travel all or part of their journey in an environmentally-friendly way (either using public transport, cycling, walking or working from home). 69% of staff use public transport for all or part of their journey to work while only four people use their car for any part of their journey, one of whom cycles part of the way.

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Newcastle office During the year, our office in Newcastle continued our relationship with the green energy supplier, Southern Electric, to whom we switched last year.

We also continued our commitment to the 10:10 campaign with the aim of reducing our emissions by 10% in the year. The results were a reduction of just 1.2%, unfortunately not achieving the 10%, but a reduction all the same. We did this via raising staff awareness, reviewing procedures, recycling, and reviewing our energy consumption.

We continued to monitor our energy usage via the CO2 \ greenhouse gas monitor installed in the office which we use to track month-to-month electricity usage and to measure the success of staff initiatives aimed at reducing CO2 emissions.

Our electricity usage for the year was 38,837 Kwh (2010: 38,240) which is a 1.6% increase on 2010 (this is based on an estimated last reading).

Business travel We continued to log all business mileage (car journeys and flights) throughout the year and to maintain our commitment to offsetting the associated carbon emissions, using the Climate Care website (www.climatecare.org) for calculation purposes.

Carbon offsetting This year our total carbon emissions equated to 42.23 tonnes (2010: 43.43 tonnes) which is a reduction of 3% on 2010.

The calculated cost of offsetting this year’s carbon emissions is £236.00 and we plan to contribute to sustainability by engaging in tree-planting. This will have a multiple effect in terms of our environmental impact / awareness raising as well as offsetting our carbon emissions. It effectively offsets some of our paper usage as well and we also hope that a number of staff will directly take part.

During the year, we also followed through on last year’s commitment to support one of our customers, La Alianza in Costa Rica, with the building of a bio-digester which will be used to process water after the coffee process. The bio-digester system will allow the circulation of processing water without using electricity thereby creating a carbon neutral circulation process.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

OBJECTIVE 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 Managing operating costs Good financial management starts in the critical areas of cash management and bookkeeping which should be done according to certain financial controls to ensure integrity in the bookkeeping process. Financial analysis shows the ‘reality’ of the situation of a business. Financial management is one of the most important practices in management.

Management accounts We produce monthly management accounts (for the Society and the Foundation) containing a balance sheet, a profit and loss account and a commentary which shows the breakdown of each expenditure by department or project. This is analysed against budget and reported to budget holders, senior management and the Board in order for results to be monitored at the appropriate level and any decisions to be made and action taken accordingly. It also helps to ensure that decisions to undertake projects are made with concern for the financial structure and if the project can be carried out within the limits of the adopted budget. The balance sheet gives the Board a snapshot of the financial position of the organisation every month showing the assets and deposits as well as funds advanced to customers, also the liabilities of the Society and the Foundation, eg our foreign currency loans and payments due to creditors.

Budgets Shared Interest adopts a formal budgetary planning process, led by the Management Team with support from both the Board and staff. The strategic planning process begins well in advance of the start of the financial year with the building of a business plan, incorporating key assumptions and objectives. This outline, once approved by the Board, is then developed into a detailed and comprehensive plan and a departmental line-by-line final phased budget which is also approved by the Board prior to dissemination and implementation.

Finance The majority of our share capital is invested 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 facilitated by foreign currency loans which are taken out against the deposited share capital.

The interest received on all our deposits combined with the interest we charge on customers’ borrowing are our two main sources of income. This is offset against the interest paid on the loans and the administration, overheads and running costs of the business. Any surplus is carried forward at the end of the financial year in the organisation’s reserves for future use.

The low interest rates on deposits that have been available in recent years have brought challenges to the way we operate and we have had to consider our lending rates carefully, not reducing them as we would have liked, in order to maintain sufficient income to cover our

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SOCIAL ACCOUNTS for the year ended 30 September 2011

operating costs. At the same time we have monitored costs very closely and made cuts and changes in a number of areas.

Internal 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 fit for the purpose as Shared Interest evolves.

Authorisation procedures We continue to operate authorisation procedures designed to ensure robust financial controls. All staff have clear job descriptions describing their duties and must act solely within these. Duties are segregated so that the person processing the invoice is not the person authorising the expenditure or the person authorising the payment. All purchase ledger invoices or payment requests must be authorised by the budget holder and be within their authority limit. Managers’ limits apply only to their own budgets and area of responsibilities. Shared Interest’s bank mandate and payment procedures are such that two signatories or authorisations are required in order to process any kind of financial transaction (whether this be a cheque, electronic payment, transfer, loan, foreign exchange spot deal or foreign currency request). Furthermore, the key staff who process and reconcile transactions and have access to financial systems (ie the Finance Manager, Finance Officer and Finance Assistant) have no authority, either from a budgetary control or a payment perspective.

Prudential lending limits The Society operates a number of prudential limits on lending in order to restrict the level of risk to our members’ investments. One of the main ones is the limit on the percentage of total share capital that we will commit to lending to coffee producers and buyers. This year we raised this prudential limit to 40% (from 35% last year). There was a strong business case for doing this because there was a big demand for more credit from our customers and potential customers involved in coffee production (this is explained further in Objective 1, Activity 3). It was also very likely that increased lending would have a beneficial social impact in these communities.

The Board is ultimately responsible for ensuring that the Society’s strategy is carried out within an appropriate risk framework and so the case for raising the prudential limits on coffee lending was considered and approved by the Board meeting in July 2011.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

The prudential limits set by the Board are as follows: •

Approved lending - 125% of share capital

•

Country risk: Total exposure o

•

Category C and D: 30%

Country risk: Individual Country o

Category C: 8% (high risk)

o

Category D: 5% (highest risk)

•

Term lending – 20%

•

Coffee lending: Total exposure: 40% of share capital (raised from 35% last year)

•

Coffee lending: Regional limits

•

Page 97

o

Central America 17.5% (increased from 15% last year)

o

South America 17.5% (increased from 15% last year)

o

Africa 5%

Other commodity limit – no more than 10% of share capital against any one commodity (eg tea, cocoa etc)

SOCIAL ACCOUNTS for the year ended 30 September 2011

OBJECTIVE 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.

The current economic climate has had a radical impact on both our customers’ need for cash and our ability to meet this need. We focus on multiple areas to improve the cash and liquidity position while building in plenty of flexibility in order to ensure we can meet the demands of our customers.

Our three main considerations when selecting where to place our money are: •

Safety of the deposits

•

Receiving a good return

•

Working with ethical partners.

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 two main service provisions: banking and audit.

We conducted a thorough review of our main banking relationship and went through a full tender process. This process considered a range of criteria, including ethical positioning, credit rating, term deposit rates, borrowing rates and tariff. All the main UK high street banks were invited to participate and a full tender process was followed in which tenders were submitted and a shortlist selected for interview. The process culminated in the recommendation to the Board that we remain with the Co-operative Bank, which was accepted.

We also revisited our audit service provision during the year through a similar full tender process. A number of reputable firms were invited to tender and our independent Audit Committee made a final selection from a shortlist of four firms. An important factor was to have a local presence as well as the ability to meet our changing needs as the business grows and evolves. As a result, PricewaterhouseCoopers (PwC) were appointed as our auditors in place of Baker Tilly and we have been working closely with them during the latter months of the year prior to their audit of our September 2011 accounts.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Distribution of cash investments at 30 September 2011

1%

7%

1%

19% Co-operative Bank GBP current accounts Co-operative Bank currency current accounts Co-operative Bank 1 year deposits Co-operative Bank 4 year deposits Social Banks (Ecology, Triodos, and Alternative banks)

72%

The chart shows that virtually all (99%) of our cash is held at the Co-operative Bank although this is split into current accounts and different guaranteed investment accounts to maximise the interest we receive. In total 91% of our funds are on fixed term deposit.

We have increased our fixed term deposits with the Co-operative Bank during the year; as well as the interest from our current deposits, we have deposited a further ÂŁ1.5m.

Furthermore, we have also committed a proportion of our funds for four years, all of which is aiming to make best use of our cash assets.

Most of our share capital is invested over periods of one year with the best interest rate available in the current economic conditions. This establishes and implements sound and prudent liquidity and funding policies which enable us to develop effective techniques and procedures to monitor, measure and control the company’s liquidity requirements and position.

The deposit of our share capital acts as security for the currency loans we take out (primarily in USD but also in EUR and AUD) which provide a natural hedge against the funds we lend to customers. We match our assets and liabilities by aiming to borrow the same amount as we have lent so that any exchange gains / losses offset each other and the net effect is minimal.

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 2011

Shared Interest Foundation Shared Interest Foundation has also benefited from the Co-operative Bank’s guaranteed investment accounts during the year, making good use of 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 examined and explained below with examples of the approach taken during the year in agreeing partnerships and contracts.

Fundamentals of Shared Interest’s approach to purchasing

Purpose:

The approach will be used to guide and direct the activities of Shared Interest staff when entering into purchasing decisions.

Scope:

Whilst there is not a significant amount of product and services purchased in the day-to-day activities of Shared Interest, it is considered that all effort should be made to promote and support fair trade, environmentally-friendly products and local producers.

When purchasing products where fair trade options are available all effort should be made to do so.

This currently covers as many food products as possible, mostly through Traidcraft. The LOAF principle (Local, Organic, Animal-friendly or Fair trade) should be followed in as many other cases as possible.

Desirable criteria:

Environmentally-friendly products should be considered in all stationery requirements. The annual spend on promotional literature has reduced this year to ÂŁ32,000 but it is FSC certified. This means it is produced using only material sourced from sustainably-managed forests. Depending upon products required consideration should in addition be given to those sourced from sustainable forests. For kitchen products eco-friendly products should be sourced.

Magazines used for advertising and distribution of inserts should mostly be targeted at titles with ethical positioning.

Where appropriate, in all other products and services, we should use local suppliers.

All of the above criteria should be taken into account when considering placing orders. While we promote all the above it is recognised that financial implications will have to be considered for all purchases.

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 source our energy from an ethical electricity supplier. Information on the relative ethical merits of the major electricity suppliers is readily available.

We aim to support local businesses where possible and usually use local suppliers so long as their prices are competitive (see also Activity 1).

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5.6 OBJECTIVE 6: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT Introduction Methodology This year’s staff questionnaire was completed anonymously using online survey software. It was not compulsory. Responses were collated by the HR Manager and reviewed by the Management Team before being shared with staff. The questionnaire was mainly composed of Likert-style questions with a small number of comments boxes. This allowed for a quantitative overview of the data and comparison with last year’s results.

Results and conclusions A total of 29 completed responses were received (91% response rate compared to last year’s 97%). One person completed the entire questionnaire with the exception of the section on different cultures.

Please see Appendix 9 for the full results.

The results of the survey were shared at an all-staff session. In addition, at another session, staff were asked to review the year and feed back. Further work will include revisiting the initiatives around the ground rules.

Staffing On 30 September 2011, Shared Interest had 31 members of staff. Please see Appendix 10 for a list of all staff during the year.

Shared Interest staff at 30 September 2011 Full-time

Part-time

Female

19

0

Male

11

1

During the year, 10 employees joined the staff team and 10 left. Four of the ten new members of staff were recruited into newly-created roles and the remaining six were replacements for members of staff who left. Reasons for leaving Shared Interest included career progression, further education and pursuit of own business interests.

For a second consecutive year, absence rates remain below the average for the sector.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

OBJECTIVE 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 any 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.

Wherever possible we reflect the population of the appropriate local community. Staff in our overseas offices are all recruited locally and are nationals. Our office in Newcastle currently has four members of staff who were born overseas.

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 eight UKbased staff travelled to eight countries: Kenya, Rwanda, Costa Rica, Holland, France, Peru, Spain and Germany.

The overseas teams have also travelled widely in their own regions sourcing new customers and visiting existing ones. Their trips have included visits to Zimbabwe, Ecuador and the United Kingdom.

After each trip, staff are encouraged to share their experiences with the rest of the staff team via presentations, email or blog.

Staff regularly send emails 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, staff in Peru shared details of the presidential elections held in the country in June and we frequently learn about the origins of public holidays – the Saints’ days. Christmas and Easter are celebrated in the office but we have also celebrated Thanksgiving.

Sharing cultural information is a key element when the overseas team visit the UK office.

During their visit, UK staff are encouraged to spend time with the overseas staff both within and outside work. This provides them all with the opportunity to build relationships and improve cultural understanding. Staff also use email, blogs and Skype to maintain contact throughout the year.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Results from staff survey Shared Interest positively promotes different cultures

1

1 Strongly Agree Agree

6 13

Neither agree nor disagree Disagree Strongly disagree

8

Not completed

The majority of staff believed that Shared Interest positively promotes different cultures. In both 2010 and 2011, 21 staff strongly agreed or agreed that this was the case. As with last year only one person disagreed that this was the case.

Most staff believed that Shared Interest is a truly international organisation and 20 staff strongly agreed or agreed that this is the case compared to 19 staff in 2010. As an organisation, 17 staff strongly agreed or agreed that we are good at sharing information on different cultures.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

OBJECTIVE 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. Following staff feedback our remuneration policy was reviewed this year and changes made. One of these was to move salary reviews from April to January. Three elements are taken into account when considering salary increases. These include the cost of living, performance and salary benchmarking. Despite the prevailing economic climate, the salary review process was carried out in January 2011 and increases were awarded, three months earlier than previously.

As part of the overall review of our remuneration policy we appointed an external consultant to benchmark our UK salaries for us. 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. A further study is planned prior to the salary review process in January 2012. New roles are reviewed by our job evaluation panel using prescribed methodology to rank each role. The ranks are used as part of the benchmarking process within the UK. Despite our size, we aim to provide staff with a pleasant working environment and 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, 33 days holiday (including public holidays), flexitime, maternity, paternity and adoption leave and pay more generously than the statutory requirements. We operate a childcare voucher scheme and a cycle-to-work 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 valuable experience.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Results from staff survey I am fairly rewarded for the job I do

2

2 Strongly Agree

6 Agree Neither Agree or Disagree 13 Disagree 6

Strongly Disagree

As the results demonstrate, 15 staff strongly agreed or agreed that they are fairly rewarded for the job that they do. A further six staff neither agreed nor disagreed with the statement, while eight staff disagreed or strongly disagreed that they are fairly rewarded.

Fifteen staff members strongly agreed or agreed that they understand the salary review process but thirteen strongly disagreed or disagreed.

Despite no changes to the benefits package since last year, 17 staff reported that they strongly agreed or agreed that they were satisfied with the package compared to 21 staff last year. Nine staff neither agreed nor disagreed with the statement and three staff members said they strongly disagreed or disagreed compared with two in 2010.

Respecting employees’ work-life balance 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 2011

Results from staff survey Shared Interest provides appropriate policies and support to promote work-life balance

2

5

4

Strongly Agree Agree Neither Agree or Disagree Disagree Strongly disagree 18

In response to the statement above, twenty-three staff members strongly agreed or agreed (twenty-seven in 2010), four neither agreed nor disagreed (three in 2010) and two disagreed (0 in 2010).

Responses to the statement ‘I have a reasonable workload’ were almost identical to last year: 21 staff strongly agreed or agreed (the same number as in 2010). In both years, two staff members strongly disagreed or disagreed. Six staff members (seven in 2010) neither agreed nor disagreed with the statement.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

I have a reasonable workload

1

1

3 Strongly Agree

6 Agree Neither Agree or Disagree Disagree Strongly disagree 18

We recognise that flexibility regarding working hours is one aspect of employment which is highly valued by staff and the aim of the flexitime policy, introduced last year, is to help staff balance their own personal circumstances with the operational needs of Shared Interest.

Full-time staff work 37.5 hours per week. The office must be staffed during normal office hours Monday to Thursday 9.00am to 5pm and on a Friday from 9.00am to 3pm and one member of each team must be present during these hours. However, the policy provides staff flexibility to work within core hours of 10am to 12pm and 2pm to 4pm Monday to Thursday and 10am to 12pm and 2pm to 3pm on a Friday. They also have the opportunity to build a flexitime credit enabling them to enjoy one full day or two half days flexi per month.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

Results from staff survey Flexitime is a beneficial policy that improves work-life balance

1

Strongly Agree

13

15

Agree

Neither Agree or Disagree

Twenty-eight staff (twenty-seven in 2010) strongly agreed or agreed that flexitime is a beneficial policy that helps to improve work life balance. One person (two in 2010) neither agreed nor disagreed. Twenty-three staff members believe that the flexitime policy has had a positive impact on them. Three disagreed and three neither agreed nor disagreed Our TOIL (time off in lieu of overtime pay) policy enables staff to be compensated for some of the additional hours they may be required to work when overseas or attending events at weekends. In addition, our holiday policies encourage staff to take appropriate breaks from work.

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OBJECTIVE 6 CONTINUED: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT Activity 3: Offering job satisfaction, regular reviews and supporting personal development As an organisation, Shared Interest makes every effort to enhance staff 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 job evaluation panel, the staff forum, the environmental team, the health and safety committee, social committee and the Foundation management team.

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.

Results from staff survey How satisfied are you with your present job?

2 3

8

Very Satisfied Satisfied Neither Satisfied or Dissatisfied Dissatisfied Very Dissatisfied

16

Twenty-four staff were very satisfied or satisfied with their present job compared with fifteen in 2010, while five staff (eleven in 2010) were very dissatisfied or dissatisfied.

Nineteen staff members strongly agreed or agreed that their job is fulfilling. Six neither agreed nor disagreed and four disagreed.

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SOCIAL ACCOUNTS for the year ended 30 September 2011

I find my job fulfilling

4 7 Strongly Agree Agree 6

Neither Agree or Disagree Disagree Strongly Disagree 12

The things staff most liked about working for Shared Interest 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.

“Social lender, good working environment.”

“Like that we are trying to do some good in the world.”

“I like the feeling that I am playing a part in helping communities in the developing world.”

“I like the mandate of Shared Interest; providing trade aid rather than hand-outs to producers in developing countries.”

“The work the organisation does is brilliant and there are some opportunities to learn.”

“Working in a small office environment, being trusted and respected by my colleagues to perform my job and definitely the flexi system!”

The things staff least like about working for Shared Interest can be grouped into the following categories: •

Poor communication

•

The office atmosphere

•

Decision-making process

•

Lack of consistency.

“Sometimes it feels like the communication isn’t as good as it can be and things take a long time to happen.”

“Slow process of information.”

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“I most dislike the lack of manners and communication between some staff members.”

“The working atmosphere.”

“The obstacles, which seem unnecessary, which we seem to impose on ourselves and get in the way of achieving our aims.”

“Difficult to produce internal changes in the short term. % of salary increase.”

Results from staff survey The majority of staff reported that the atmosphere in their team is good with 21 strongly agreeing or agreeing with the statement and only three disagreeing or strongly disagreeing.

The atmosphere in my team is good

2

1

Strongly Agree 5

12

Agree Neither Agree or Disagree Disagree Strongly Disagree

9

However, there was a contradiction to this when we asked if the office atmosphere was good. Results were divided and 14 staff members strongly agreed or agreed that it was and 14 strongly disagreed or disagreed.

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When asked if their own morale is good, sixteen agreed or strongly agreed whilst seven strongly disagreed or disagreed and six neither agreed nor disagreed.

My morale is good

4 8 3

Strongly Agree Agree Neither Agree or Disagree Disagree

6 Strongly Disagree 8

We asked staff to list the top four things that encourage their commitment to Shared Interest and their role. In order they were: •

Interesting work

•

Career development

•

Sense of achievement

•

Making the best use of your skills / Pay / Opportunity to show initiative were all equal fourth.

Appraisals and training and development Following previous negative staff feedback, our appraisal policy was reviewed this year and a new policy developed. The staff forum canvassed staff and provided details of what they liked and disliked about the old scheme and we used this to develop a new system. We decided to continue using a competency-based approach but competencies were simplified, added to, or removed as appropriate. We introduced sections on strengths and career aspirations but decided to remove 360 degree feedback permanently having trialled this approach last year. We also decided to move from six-monthly to annual appraisals which are held in August or September each year. This will coincide with the start of the new financial year.

Once the current appraisals are complete we will be asking for staff feedback in helping us review the new policy.

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Results from staff survey Seventeen staff strongly agreed or agreed that appraisals were worthwhile but five staff strongly disagreed or disagreed that that were the case. Seven staff neither agreed nor disagreed.

Twenty-one staff strongly agreed or agreed that they received constructive feedback on their performance but three staff strongly disagreed or disagreed.

I receive constructive feedback on my performance

1

2 8

5

Strongly Agree Agree Neither Agree or Disagree Disagree Strongly Disagree

13

SMART (specific, measurable, achievable, realistic and time bound) objectives are set every 12 months which tie into the business objectives and which in turn feed into each person’s personal development plan. The majority of staff believe clear objectives are agreed with their manager (23 staff strongly agreed or agreed) while three disagreed or strongly disagreed.

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Sixteen staff strongly agreed or agreed that they have received the training they need to do their job, while thirteen neither agreed nor disagreed.

I have received the training I need to do my job

4

Strongly Agree 13 Agree

Neither Agree or Disagree 12

Nineteen staff agreed or strongly agreed that they are encouraged to attend training courses, seminars and conferences but four disagreed.

All learning and training is captured throughout the year together with cost of time and actual cost. All staff are asked to complete a training request form before undertaking any training and a training evaluation form post training to ensure that objectives have been met. The training budget is generally 5% of salary costs.

Total cost of staff training 2010 and 2011 Description

2010

2011

Training cost (course/trainer fees)

£10,749

£8,492

Staff time cost (whilst on courses)

£13,434

£12,497

Inductions (staff time cost carrying out and attending inductions)

£3,742

£8,311

Management Team away days (staff time, venue and trainer costs)

£6,171

£5,665

£34,096

£34,965

212

230

Total Number of training days

The table shows that Shared Interest continues to invest in staff training and development.

The number of training days has continued to increase year on year. Total costs rose slightly but this increase was wholly attributable to inductions. Although the number of inductions was comparable with last year, our method of calculation has changed and we believe now more accurately reflects the costs. In all other areas, costs were reduced. With the completion of the strategic review process there were fewer Management Team away days and the majority of external staff training was provided for teams or departments which tend to be less expensive than booking external courses for individuals.

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OBJECTIVE 6 CONTINUED: ENCOURAGE STAFF’S TALENT AND COMMITMENT IN AN ENVIRONMENT OF MUTUAL RESPECT Activity 4: Ensuring effective communication and participation in decisionmaking Our information and communication policy is designed to encourage effective communication within the organisation.

Our intranet continues to be used to share information with staff on work-related and fair trade issues as well as being able to update our blog with their news.

Meetings (1-2-1s) are held each week between individual staff members and their line manager. These meetings are an opportunity to agree objectives, provide feedback, support and encouragement and generally improve communication.

Team meetings are also held weekly where possible, eg the Customer Services Team and the Supporter Relations Team, enabling an exchange of ideas and updates to the rest of the team. The Management Team holds a brief meeting at the start of each day to discuss any immediate issues and ensure consistency of decision-making. 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 and new policies. The business plan is presented at this time together with quarterly reviews.

All-staff-briefing sessions are held on the first Monday of each month when the Management Team provide details of activities in the coming month. This includes expected visitors to the office, external meetings, overseas trips and a general update.

Results from staff survey I am satisfied with communication generally

6 9

Strongly Agree

Agree

Neither Agree or Disagree 8

Disagree

6

Fourteen staff strongly agreed or agreed that they are satisfied with communication generally. However, nine staff disagreed with this. Six staff neither agreed nor disagreed.

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Sixteen staff strongly agreed or agreed that their ideas are sought and the same number that their views are listened to. However, in both cases five staff believed this was not the case.

Twenty-one staff strongly agreed or agreed that 1-2-1s with their line manager are useful and productive. Two members of staff disagreed.

Twenty-one staff strongly agreed or agreed that team meetings are useful and productive but five staff strongly disagreed or disagreed.

Twenty-four staff strongly agreed or agreed that they are comfortable raising issues with their line manager but two members of staff disagreed or strongly disagreed.

I feel well informed about Shared Interest’s overall mission, its strategies and its current performance

1

1

9 Strongly Agree

8

Agree Neither Agree or Disagree Disagree Strongly Disagree

10

As can be seen on the chart above nineteen staff felt well informed about Shared Interest’s mission, strategies and performance but two did not.

5-Point survey As a result of feedback from the staff survey two years ago, ground rules were developed around four main areas: leadership, respect, favouritism and communication. As part of this process an anonymous 5-point survey is sent to staff twice a year. Staff are asked to comment on five statements: •

I am treated with respect

•

Staff are treated equitably

•

Communication is good

•

I am comfortable with my line manager’s leadership style

•

I am comfortable with the way the organisation is led

Results from the two surveys completed in June 2010 and February 2011 were compared and showed significant improvement in positive responses in all areas.

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Staff forum A staff forum was developed and implemented to provide staff with another means of communication. 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. This year the forum obtained staff feedback to help the work revising the appraisal scheme.

Results from staff survey Five members of staff strongly agreed or agreed that the staff forum has helped communication in the organisation, but eight staff strongly disagreed or disagreed that it has, while sixteen 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 organised the Thanksgiving lunch, a Valentine’s Day quiz and a lunch and video session for Comic Relief. They have also been responsible for arranging the Christmas lunch.

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5.7 PROGRESS, CONCLUSIONS AND RECOMMENDATIONS Objective 1: 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) •

‘Progress the development of our customer transaction website’ – This project is almost complete and ready to be piloted with a sample of customers. Once this feedback has been received and any requested amendments made, we will switch from the old to the new transaction website.

•

‘Investigate the potential of providing producer groups with transaction and payment notifications via SMS’ – Providing producer groups with reports via SMS remains an opportunity to expand the way in which we communicate. Through an external consultant we are in the process of redeveloping all of the business website elements and this will form part of that project.

•

‘Investigate the potential of providing all producer groups who receive payment from Shared Interest with access to historical payment detail’ – Like the previous point above, providing producers with historical payment detail will form part of the overall business website development.

•

‘Develop a system to automate the collation of annual review data’ – We redeveloped our database to include a workflow system. This system automatically generates time-specific communication to customers requesting information for review.

•

‘Develop additional indicators to show the impact of Objective 1 activities’ – We have not included any new indicators as we still believe that without on-the-ground assessment we are unable to conclude an assessment of impact. We expanded the range of questions in our survey of recipient producers (ie those we make payments to who do not have a Shared Interest account).

•

‘Develop producer committees’ – the first meetings were held in Kenya and Peru and were hosted by our local RDEs during the last quarter of the year. In total they were attended by representatives from 12 different producer groups, covering as wide a spread as possible of commodities and handicrafts. Discussion topics included region-specific issues, suggestions for financial products and our customer service.

•

‘Develop the impact study carried out by the Regional Development Executives’ - as mentioned above, we expanded the range of questions in our survey of recipient producers in order to understand better the impact of our lending. The RDEs also surveyed potential customers to see how Shared Interest is perceived. The questions covered how both producers and buyers heard about us, their prior knowledge of our lending products and what they look for in potential lenders.

Conclusions (from this year’s social accounts) •

Direct lending to producer groups has grown positively in 2011 with the average lending per day being £5,701,530. This is an increase of £920,601 against 2010 or 19%.

•

Overall lending has increased by a total of £426,558 against 2010 or 3%.

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•

We have collated evidence which shows that producers working for a fair trade organisation receive higher salaries than the national minimum and have better working conditions and facilities.

•

Almost all of the respondents to our surveys said that they were satisfied with the service they receive from Shared Interest.

•

The new producer committees were well received and should be continued. The producers welcomed the opportunity to participate and to share their thoughts with us directly.

Recommendations (progress to be reviewed in next year’s social accounts) •

Progress the development of the full business-wide website incorporating the availability of communication for producers, in addition to expanding our range of reporting options.

•

Continue to develop relevant indicators to demonstrate positive social impact of lending.

•

Develop further the automated collation of data for annual reviews of accounts.

•

Review and assess the initial impact of establishing a presence in West Africa.

•

Start to 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.

•

Review how to approach recipient producer groups for feedback.

•

Look to respond to comments from the survey of potential customers.

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Objective 2: Enhance our sustainability by increasing share capital, investing it wisely and ensuring a social return Progress (on recommendations made in last year’s social accounts) •

‘Monitor and evaluate methods to recruit new members’ - We have introduced new key performance indicators in order to understand better the membership. We have analysed marketing campaign results in order to make informed marketing decisions for the future. The improvements to monitoring and evaluation were being introduced at the end of the year.

•

‘Assess the effectiveness of profile-raising activity’ – We have engaged a media monitoring service which allows us to track media coverage of Shared Interest and our competitors in both the print press and online press.

•

‘Implement significant results and findings of the communications audit into the marketing strategy and measure their success’ – The communications audit was completed later than expected making it difficult to act upon the recommendations.

The research and findings have been used as a basis for the new Supporter Relations Plan for 2011/12.

•

‘Consider demographics in recruiting new members’ – This year we did not focus on a different demographic but some campaigns planned for next year will target younger audiences.

Conclusions (from this year’s social accounts) •

There has been a net reduction in members over the year but share capital has continued to increase although at a lower rate than was forecast.

•

95% of our members stated in this year’s survey that they were either ‘very satisfied’ or ‘satisfied’ with the utilisation of their investment.

•

Only 7.3% of our members responding to the survey thought that Shared Interest should be doing significantly more to encourage member participation.

•

Over 87% of the respondents were happy with the level of communication they received from us.

Recommendations (progress to be reviewed in next year’s social accounts) •

Implement the new Supporter Relations Plan which focuses activity on retention of existing members, development of existing members and recruitment of new members through referral and promotion.

•

Improve communications for existing and prospective members.

•

Continue to consider demographics in recruiting new members.

•

Engage with our volunteers better, improving retention and increasing the number of ambassadors. Record hours given and evaluate cost/benefit analysis.

•

Implement robust monitoring and evaluation methods across all supporter relations activity.

•

Review and feedback on the information received via the members’ survey in QR.

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Objective 3: 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) •

‘Conduct an evaluation of the pilot programme of the Livelihood Security Fund’ – The review was completed in August 2011 (see Conclusions below).

•

‘Record the learning derived from the final year external evaluation of the Rwandan Producer Support Project and incorporate the lessons learned in the development of new projects’ – The independent evaluation report has been considered by the Foundation Management Team and lessons are already being used in both the Swaziland project implementation and other project design work.

•

‘Seek to increase the impact of Shared Interest Foundation by developing a commodities project’ – Research has been carried out in Ethiopia. Any implementation will be dependent on securing adequate funding.

•

‘Ensure that the Comic Relief project in Swaziland is underway’ – The project office has been set up, project staff recruited, producers and producer groups identified and the baseline study completed. The initial training has been carried out.

Conclusions (from this year’s social accounts) •

Collaboration with partner organisations in the design and delivery of business training leads to projects that closely match the needs of the beneficiaries.

•

The independent evaluation of the Rwandan Producer Support Project highlighted increased incomes for the producer groups, in many cases more than doubling in the three years, and significant improvements in business planning, financial systems and production planning. The improved ability of the groups and the individuals to save money was noted as “the single most significant consequence of the training”.

•

The three-year Swaziland Producer Support Project commenced in January 2011 and is benefiting from the lessons learned as part of the Rwandan Producer Support Project. Having an in-country partner has already proved invaluable.

•

The evaluation of the Livelihood Security Fund pilot highlighted the smooth operation of the Fund to date and recommended an extension to allow for the building up of a stronger evidence base. In order to focus on the Livelihood Security Fund, this year saw the last grants being made under the Small Grants Scheme.

•

This year we continued to try to diversify our income sources with an increasing level of corporate support, grants from trusts and foundations and donations from churches and other organisations. However we are aware that the Foundation has a low profile outside our immediate network and needs to raise both its profile and level of unrestricted funds.

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Recommendations (progress to be reviewed in next year’s social accounts) •

Continue to work in Rwanda as funding allows, completing the training for all producer groups, supporting RWAFAT and facilitating market access for producer groups.

•

Ensure learning from the Rwandan Producer Support Project is embedded within the Swaziland project and follow up producer requests for environmental training.

•

Progress the recommendations within the Livelihood Security Fund evaluation in order to build up a stronger evidence base, dependent upon the funds available.

•

Continue to carry out activity aimed at raising the profile of the Foundation and build on this to increase the Foundation’s donor base.

•

Develop further the links between the Foundation and the Society.

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Objective 4: Work in partnership with people who share our commitment to fair and just trade Progress (on recommendations made in last year’s social accounts) •

‘‘Develop our reporting on monitoring partnerships and include more quantitative data collected throughout the year as well as information from partners themselves.’ We conducted a partnership survey this year which for the first time allowed partners to identify themselves as partners. This year the activity relating to monitoring partnerships was developed to cover the concept of social capital.

•

‘Increase input on partnerships from our overseas team and develop reporting on the impact of partnerships for our financial and business support.’ Input from RDEs was gathered and included. The impact of partnerships on financial and business areas was not covered in these social accounts but will be considered in future activities.

•

‘Include details of partnerships from other stakeholders including the Shared Interest Board and Council’. Members of Council were consulted on their connections. As this was a new process we decided to consult the Council this year and consider responses before looking at consultation with Board.

Conclusions (from this year’s social accounts) •

Partnerships continue to play a key role in supporting and enhancing the work of both Shared Interest Society and Foundation.

•

Following feedback from last year we have incorporated the concept of social capital within this objective to evaluate our partnerships.

•

Through a partnership survey we have increased our understanding of the meaning and value of partnership to our partners.

Recommendations (progress to be reviewed in next year’s social accounts) •

Include details of partnerships from the Board and ambassadors and develop our understanding of staff time given to partnerships.

•

Develop our understanding and use of the concept of social capital as a means to evaluate our partnerships.

•

Evaluate the merits of local level connections, such as those with key individuals, to develop our partnership list.

•

Utilise partnerships to develop further the work of both the Society and the Foundation.

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Objective 5: 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 update procedures for the Society and Foundation’ – Seven new or modified financial procedures were introduced during the year.

•

‘Continue to use wherever possible environment friendly products’ – We continued to source fair trade and environment friendly products where available including green electricity for the Newcastle office.

•

‘Aim to reduce our carbon emissions by a further 10% and report on our progress’ – We only managed to reduce our carbon emissions by 3% but we achieved this despite an increase in business travel.

•

‘Continue to explore ways in which Shared Interest can help promote and inform the staff team about the environmental issues that are faced’ – Our environment team held a staff briefing and workshop to gather and share ideas.

•

‘Develop a metric for managing operating costs’ – We did not progress this and it is not seen as a priority since operating costs are continuing to decline.

Conclusions (from this year’s social accounts) •

We managed to reduce our carbon footprint again, even after the large drop achieved in the previous year. Making further reductions will be harder especially when we open a new overseas office in West Africa.

•

We reduced paper usage in our Newcastle office by 11,000 sheets.

Recommendations (progress to be reviewed in next year’s social accounts) •

Set new overall targets for carbon emissions taking into consideration the opening of a new overseas office. This may mean that we aim to limit any increase in emissions to less than a certain percentage rather than striving for an unrealistic reduction.

•

Consider what incentives we could offer our customers to make environmental improvements.

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Objective 6: Encourage staff’s talent and commitment in an environment of mutual respect Progress (on recommendations made in last year’s social accounts) •

•

•

•

•

•

‘Conclude flexitime trial and make a decision’ – The trial was successfully concluded and the policy has been adopted into staff terms and conditions on a permanent basis. It continues to work well enabling staff to balance their own personal needs with the operational needs of Shared Interest.

‘Conclude re-assessment of the appraisal system and make recommendations’ – The scheme was reviewed and a new policy and appraisal form was implemented. This included specific reference to objectives, new and amended competencies and the opportunity to explore future aspirations. Appraisals were moved from six-monthly to annually. They will take place in August/September to enable new objectives to be agreed in preparation for the new financial year.

‘Re-launch the staff forum’ – The forum was re-established with several new members. Meetings are being held monthly. The forum has facilitated staff consultation in a number of areas including office collections for staff and the likes and dislikes of the old appraisal system. The feedback provided by the forum was used to produce the new appraisal system.

‘Redraft the Remuneration Policy and communicate’ – The policy was reviewed and a new one drafted, implemented and communicated to staff. As part of the process the date for salary reviews was moved from 1 April to 1 January. A salary benchmarking and analysis exercise was carried out by an external provider and new salary bands were provided.

‘Continue team-building activities’ – All staff were involved in the Fairtrade Foundation’s world record attempt for the longest piece of Fairtrade cotton. We also held an Easter egg competition. A number of team-building events were arranged throughout the year for individual teams. For example when the Regional Development Executives were over from Kenya and Peru, the Business Development Team took the opportunity to have a team-building day.

‘Continue trying to find ways to improve communication and staff morale’ – Monthly update sessions have been implemented when the Management Team update staff on what is happening in their area and what is planned for the next month, including any expected visitors and trips. These have proved successful. We worked with a workspace design company to look at ways of improving the office environment and work has started to implement the new work-space layout.

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Conclusions (from this year’s social accounts) •

The response rate to the survey was over 90%.

•

The perception is that communication continues to be an issue although initiatives such as the monthly staff updates have helped.

•

More staff reported that they were satisfied with their current job than in 2010.

•

Staff were very positive about our role as an international organisation that promotes different cultures.

•

The majority of staff believe they have a reasonable workload and that Shared Interest has appropriate policies in place to promote work-life balance.

•

There are still issues around the office atmosphere.

Recommendations (progress to be reviewed in next year’s social accounts) •

Conclude current round of appraisals and review feedback.

•

Continue team-building activities.

•

Continue trying to improve communication.

•

Review the impact of the office changes.

•

Review the effectiveness of the staff forum and the social committee.

•

Review the staff survey results identifying areas for improvement and implementing initiatives where practical.

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6

COMPLIANCE

6.1 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 12). This established a regular routine of reviews to be carried out either by an internal team or by external auditors.

Update for 2011 •

Money laundering – requirements and regulations are reviewed and discussed by Management and appropriate communication is put in place to ensure that those affected are informed. The procedure of including a money laundering awareness session into the induction programme for all new employees remains in place. The procedure of review of applications for membership using a sub-contracted identity and financial check has been very successful and will continue.

•

Bribery Act 2010 – this has been enacted in 2011. Specific training has been provided for all staff and documentation and procedures updated accordingly.

•

FSA / Treasury regulation – the FSA remains the registrar of Shared Interest Society and is also its supervisor for money laundering purposes. We await information about who will be the Registrar of Industrial & Provident Societies after the FSA is restructured in 2012. 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 2010. No non-compliance issues were raised in the audit report from Baker Tilly for either the Foundation or the Society. During the year an audit tender was carried out and PwC have been appointed to replace Baker Tilly from 2011.

•

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 July 2011.

•

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 – a review of Shared Interest’s data protection register was undertaken in January 2010. Staff awareness is maintained with the introduction of a monthly data protection email bulletin and data protection update sessions for staff.

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6.2 LEGAL STRUCTURE AND REPORTING Shared Interest Society is incorporated with limited liability under the Industrial and Provident Societies Acts 1965 to 1978 and is registered in England, Number 27093R. The Society submits annual returns to the Financial Services Authority (Mutual’s division).

Shared Interest Foundation is registered as a company registered 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 2011 were submitted on: •

Shared Interest Society Limited – 27 April 2011.

•

Shared Interest Foundation – Charity Commission 24 March 2011 and Companies House 25 July 2011.

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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7

SOCIAL AUDIT STATEMENT

SHARED INTEREST SOCIAL ACCOUNTS 2011 The Social Audit Panel has examined the draft Social Accounts submitted to us and discussed them in detail with Andrea van Wagtendonk, Andrew Ridley, Elisabeth Wilson, Patricia Alexander, Ruth Taylor, Sally Reith, Tim Morgan of Shared Interest at the Social Audit Panel meeting held on 16th November 2011. 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, social, environmental and economic objectives and the views of the stakeholders who were consulted.

In the notes of the Social Audit Panel meeting 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) A tailored consultation with Board and Council about their views on SI’s performance against the stated values and objectives. ii) Revision of the wording of activities to express more actively what they are trying to achieve. iii) Continuing the search for more keenly relevant indicators, particularly in relation to reaching disadvantaged producer groups. iv) Developing the exploration of social capital, especially by examining how best to use that capital.

The members of the Social Audit Panel were: •

Judith Brown, Cooperatives NE

•

Margaret Wightman, independent consultant

•

Patrick Boase, Just the Business—Panel Chair

Signed:

Dated: 6th December 2011

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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8

NEXT STEPS

We will publish this document as a PDF file that can be downloaded from our website, as in previous years.

A summary will be contained within our annual review publication and will be circulated to members and other stakeholders. We will issue a link to this document in electronic form to all our customers. We will present the social accounts along with the financial accounts at our AGM on 16 March 2012.

Recommendations will be prioritised and converted into an action plan (with identified people and timescales) which will be reviewed regularly by the Management Team to ensure progress. These will be presented to the Board mid-year as we did in May 2010 for the first time. 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.

WEBSITE In early 2011, for the first time, we created a dedicated website specifically for our social reporting. This website includes the same content as the pdf file as well as additional information (eg data previously included in appendices, case studies, photos and videos).

Shared Interest staff have been able to update the website on a limited, ad hoc basis (eg progress on implementing recommendations) but our intention remains that social reporting becomes an ongoing activity rather than an annual event.

In the longer term the website could be expanded to source selected data directly from databases, as part of a wider company website project.

The website presentation has made the social accounts more accessible to our members, supporters and customers although to date there has been little interaction with them on the site. Whereas the PDF file is designed to be read from beginning to end, online readers are able to read overviews of each section and then drill down to more detail if they wish.

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