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About 3,000 members of the global cooperative movement descended upon Québec City this past October

Nearly 3,000 of the world’s top cooperative sector stakeholders exchanged ideas, boosted professional development and did business at the three-day biennial International Summit of Co-operatives, which took place in Québec City this past October.

Known informally as the “Davos of Cooperatives,” the Summit attracted participants from more than 100 countries. These included top government officials and financial co-op stakeholders, as well as such acclaimed thinkers as Joseph Stiglitz, Jeremy Rifkin and Robert Reich, among others.

The Summit’s rising star was Guy Cormier, the new CEO at Desjardins Group ($260.7 billion in total assets, more than seven million members and clients). Desjardins is a major backer of the event, which is one of the Quebec-based cooperative’s major corporate and social responsibility initiatives.

“Current political and socio-economic trends are providing huge opportunities for the cooperative sector,” says Cormier. “Our efforts to help each other and to push for better sustainable development and governance models are just what the world needs. The summit gives participants the chance to compare best practices, build relationships and position the sector for the challenges ahead.”

Innovation in the advancement of policy ideas was a key priority. For example, organizers claim that the Summit’s post-event declaration of support for the United Nations’ 17 Sustainable Development Goals (including the eradication of poverty, protection of the planet and prosperity for all), which resulted from broad discussions on the final day, represents the first time that an international economic group has made such a commitment.

Stiglitz: Cooperatives provide a major alternative

The Summit also gave sector stakeholders the opportunity to step away from their gruelling day-to-day responsibilities to refocus on core cooperative and social responsibility goals. For example, the growing gap between the rich and the poor, within most of the world’s major economies, was a recurring theme that was highlighted by Stiglitz, a Nobel Prize-winning economics professor at Columbia University in New York and the event’s keynote speaker.

“Cooperatives have an embarrassment of riches that they are not taking advantage of” – Jeremy Rifkin

“Trickle down economics, lower taxes and regulatory barriers are producing not only greater inequality but lower growth, more instability and overall poorer economic performance,” says Stiglitz. “Incomes of the top one percent of the population have been growing exponentially for the past three or four decades, while those in the bottom 90 percent have stagnated. We have more money at the top, more people in poverty and the middle class is being eviscerated. The United States provides the worst example. But countries following the US model are moving in the same direction.”

Cooperatives and other non-profits provide an alternative to the “for-profit model, based on selfishness,” says Stiglitz, who once advised former US president Bill Clinton. That’s particularly true in the financial sector where cooperatives are equipped with incentive structures that enable them to better tackle future challenges.

“Leaders of the big banks are paid a significant portion of their salaries in the form of stock options,” Stiglitiz says. “This gives them a strong incentive to prioritize short-term goals. Credit unions, which offer more balanced compensation, don’t have that problem.” The upshot has been what Stiglitz calls the “over-financialization of the economy.”

Last year McKinsey & Company, a global management consulting firm, calculated that world household, corporate, financial and government debt had grown by $57 trillion since the last financial crisis in 2008. Combined, these now equate to 286 percent of global gross domestic product.

Growth potential in the broader economy

That said, the cooperative model has big potential in the broader economy, notes Stiglitz. “The best performing institutions in the US are its not-for-profit universities. Among the worst performing are its for-profit universities.” Stiglitz cites numerous examples of financial cooperatives making big differences in peoples’ lives. These include micro-credit schemes in Bangladesh, which Stiglitz claims have brought tens of millions of people out of poverty.

There are also signs in the US that a “sharing economy” would perform better than the existing model, Stiglitz says. “Based on a wealth of evidence, firms with profit-sharing plans actually perform better,” says the former World Bank chief economist. “That’s especially true for workers, particularly when measured across the entire business cycle.”

This year the Summit benefitted from support and high-level participation by financial services cooperative sector leaders from across Canada and around the world. Cormier highlighted impacts made by such players as Scott Banda, of Federated Co-operatives Limited (FCL), Lucie Moncion, president of Co-operatives and Mutuals Canada, and leaders from The Co-Operators Insurance and Financial Services and the International Co-operative Banking Association (ICBA).

Indeed, Cormier, like Monique Leroux, his predecessor at Desjardins, is so convinced of the forum’s importance that Canada’s largest credit union has invested key resources in the event. These include a sponsorship deal, recruitment of nearly 150 volunteers who staff the summit and participation by hundreds of Desjardins employees at the event.


International Co-operative Alliance preaches “inter-cooperation”

For her part, Leroux was so inspired by the success of previous summits that she agreed to become president of the International Co-operative Alliance after her term as Desjardins’ CEO ended earlier last year. As she was at the Summit two years ago, Leroux was a highly visible presence throughout the event. One of Leroux’s most effective talking points relates to the summit’s value as a business venue, particularly to financial sector players. “One of the best things we can do to grow the cooperative model is to cooperate more with each other, what I call inter-cooperation,” says

Leroux. “There are more than one billion members of cooperatives world wide. That is a lot of potential customers who can buy products and services from each other.” Leroux pointed out that, because almost all of those one billion cooperative members use financial services, that credit unions are among the biggest potential winners from inter-cooperation and should thus take a leadership role in promoting it.

American economic and social theorist Jeremy Rifkin, gadfly author of more than 20 books, agrees. “Cooperatives have an embarrassment of riches that they are not taking advantage of,” says Rifkin. “If you have more than a billion members and you are not properly selling to each other then there is something wrong.”

Rifkin echoed Stiglitz’s call for a new economic model, citing not substandard performance but the challenges posed by environmental despoliation as the key call to action. “Scientists are telling us that we are in the sixth extinction of life on earth,” Rifkin says. “In the next eight decades, based on current projections, we will lose half the species of life on the planet. The last time that happened was 54 million years ago.”

However, for cooperatives to contribute more they need to better-leverage existing assets. Rifkin cites the .coop domain extension, a huge potential brand identifier, as one example. “Suffixes like .com, .net, .org, are not easy to get,” says Rifkin. “You have the .coop — now you need to use it to bring together people not just globally but nationally and regionally as well.”

The good news is that numerous secular trends, including the rise of services such as Uber and Airbnb, which are increasingly being used by more than three billion young people who are active online, are providing huge momentum for the sharing economy. This, says Rifkin, will lead to the emergence of new digital co-ops that will gradually spread to other sectors.

Attracting depositors in a low-rate environment

One of the clearest signs of the importance that the global cooperative community assigns to the Summit relates to the quality of the personnel who attend. While not all are public figures in Canada, many are major players back home. One example is Jean-Louis Bancel, president of France-based Crédit Coopératif (45,000 members, 15.9 billion euros in assets) and a board member of the International Co-operative Alliance.

coopsummit3Bancel shared tips with other conference participants about how co-ops can succeed in a low interest rate environment. For example, Crédit Coopératif had to find fresh ways to attract new depositors, in an era where there are few incentives to save. Three years ago the co-op introduced a traceability model that enables depositors to ensure that the funds they place will support education, the environment or job-creation projects in their regions. The program is still in its early stages but progress is brisk. Crédit Coopératif has also supported more than 60 crowdfunding campaigns, with more than 3,000 donors contributing more than $5 million.

Bancel, citing the growth of worker cooperatives in France, is another big believer in the model’s secular prospects. That’s particularly true of the growing number of independent workers who are banding together to improve their working conditions. “They have to,” says Bancel, “otherwise they will become the new slaves in the modern economy.”

While the cooperative sector’s long-term outlook remains positive, there might be challenges in the medium term, due to signs of sluggishness in the economy. The good news, says Stiglitz, is that financial services cooperatives appear to be well positioned. “Cooperatives weathered the last financial crisis better than the big banks because they were invested in the real economy and not involved in predatory loans,” says Stiglitz. “There is less incentive to do that sort of stuff when your customers are your owners.”

The future also looks good at Desjardins, which is ranked by Bloomberg as the world’s fifth strongest financial institution and No. 1 in North America. However, Cormier isn’t sitting around congratulating himself on his good luck. In September he was forced to make some tough decisions regarding the credit union’s organizational chart, which had not been upgraded since 2009. Eighty-three senior director and executive director posts were abolished, as were 28 of 128 vice-president positions. The changes did not affect caisse-level operations, which had already undergone streamlining.

The moves position Desjardins well to continue its growth trajectory in coming years. Quebec, where the credit union holds a dominant share, continues to present opportunities, as does the rest of Canada. “We announced three priorities,” says Cormier. “Invest in our members, invest in our employees and invest in our financial network.” If Cormier accomplishes this, he’ll have even more to talk about at the next International Summit of Co-operatives event in 2018. ◊

Getting heard in Basel

One of the cooperative sector’s biggest challenges is getting its voice heard on the regulatory front, notably on issues such as upcoming Basel 4 requirements. Jean-Louis Bancel, who chairs the International Co-operative Banking Association (ICBA), used the Summit to rally co-op sector support to make sure that regulations aren’t slanted to further the interests of the systemically important financial institutions — at the expense of cooperatives — that already maintain large capital reserves.

Basel regulations are also a high priority for Cormier. “Cooperatives have different governance models than other financial sector players,” he says. “For example, because our members’ shares aren’t traded, we aren’t under as much pressure to make short-term moves to boost quarterly earnings. However, we are also not able to raise capital by issuing stock. These differences need to be taken into account.” Proposed revisions to the Basel III framework are due to be released at the end of this year.