In nearly every business model example regarding sustainability, there are two main ways in which we view ethics. The extreme ends of either perspective are that businesses should make ethical decisions for society even at company cost, and the second being that the company should never compromise its bottom line as that action is unethical to stakeholders. Luckily, the middle ground is often a long-term vision that finds a better answer somewhere in the middle of this spectrum.
In the guest lecture with Joel Solomon, Solomon touched on this topic. His belief was that a company’s investments should not conflict or contradict with that company’s purpose. A hypothetical and very simplified scenario would be that an organization like the American Heart Association should not have investments funding in tobacco, even if tobacco gave the most return on investment.
I align with Joel’s philosophy, but it is highly optimistic. Joel said to pick your battles carefully, and I can empathize with an organization like the American Heart Association’s rationalization that how they choose to spend their money, not how they obtain it, is what really matters.
Therefore, in this blog post, I want to examine the co-operative business model, where I believe this battle can gain significant traction. A co-op business model is a strategy that allows leeway for purpose over profits, and by becoming a stakeholder, you at least understand the philosophy that profits are not everything to the business.
REI, a co-op outdoor gear and clothing retailer states that their mission is to be a “consumer co-op rather a publicly-traded company, [which] enables us to focus on the long-term interests of the co-op and our members. We answer to you—our members—and run our business accordingly.”
REI is positioned on environmental stewardship. Therefore, a group appropriately named “REI, Divest!” has challenged REI’s authenticity with a 4200-member strong petition to “divest from short and long-term investments that support the fossil fuel industry, either directly or indirectly. [And] To divest from indirect support, divest from the megabanks funding new tar sands pipelines, such as Wells Fargo and U.S. Bank.”
REI has not responded to “REI, Divest!”, but it is clear that in theory, the values REI has chosen make them more susceptible to consumer pressure and backlash in comparison to non co-op business models. Realistically speaking, the actual company influence of the co-operative member is marginally greater than a consumer at a competing retail store. Still, I believe that if there’s anywhere where consumers can bond together to drive this type of change, it would be most effective at a co-op business model.
Sources:
https://www.treehugger.com/green-investments/members-call-rei-divest-banks-funding-fossil-fuel-industry.html
https://www.rei.com/about-rei.html
https://www.change.org/p/rei-divest-from-banks-that-fund-the-fossil-fuel-industry (Image from here as well)