The Art of Mutuality: People, Purpose, Potential

Rosemary Addis AM

Keynote address by Professor Rosemary Addis to the 2024 Amice Congress in Bilbao, Spain.

Introduction

Thanks to Amice and Sarah and colleagues for inviting me to participate.

I’m delighted to join you here in Bilbao for this Congress. As you can tell from the accent, I come from Australia, a country with a rich history of cooperatives and mutuals.

When I sat down to design this keynote, the themes of the Congress struck me as a particularly precient frame.

I will speak to Setting the Stage for Green Investment through the prism of those themes – and with the aim of setting the stage for the panel to follow – and for what comes next – after we leave this place.

Context

We live in interesting and challenging times. It is fitting to be here in Bilbao – a city that faced into challenging times with courage and conviction and re-imagined its future.

We are in a defining decade. What’s at stake is clear. We are all feeling the effects of a changing climate, health threats including potential for more pandemics and antimicrobial resistance which require coordinated global action and regional conflicts that test our visions of a global peace.

We are only starting to appreciate the implications of new technologies like generative AI.

We’re in the midst of a rapidly changing environment in every sense – the signs are too big to ignore. The IPCC designed the threats we face as cascading, compounding and aggregating. In their words:

‘Multiple climate hazards will occur simultaneously, and multiple climatic and non-climatic risks will interact, resulting in compounding overall risk and risks cascading across sectors and regions…’

The kind of extreme turbulence that can result – literally in recent weeks – certainly has my attention. And all scientific projections are we haven’t begun to see the full effect.

Even some of the most experienced players are finding the operating context has changed. The FT headlines read recently:

“Buffett sounds wildfire alarm as utilities industry enters new era Berkshire Hathaway ‘will notknowingly throw good money after bad’, billionaire says as damages pile up”.

Our patterns of consumption and production, increasing demographic pressures, as well as persistent unsustainable use and management of land, ocean, and water have real consequences:

  • food systems face dual challenges of increasing demand and competition for resources;
  • loss of ecosystems and their services has cascading and long-term impacts on people; and
  • Climate is the leading health risk, according to the World Health Organisation.

That all sounds ominous enough. However, its effects that have received less attention in climate first strategies that call for our focus. The effects on people and communities are profound.

  • Climate effects widen and exacerbate gender inequalities with women disproportionately affected across multiple dimensions.
  • Stranded assets are stranded communities and jobs and people’s livelihoods and retirements.

Growing awareness of this was evident at last year’s COP in Dubai. Multiple transition paths that a company or country could tread highlighted the importance of anticipating the broader socio-economic implications of each potential pathway.

Climate change is a risk amplifier across food, energy, water and the economy. If we do not address it with justice and equity, we should anticipate community reaction beyond backlash.

Add tightening fiscal conditions, cost of living pressures, and it makes for a socially and politically potent cocktail.

Colleague and social innovator, Indy Johar, positied recently that social tipping points may destroy us before climate change does.

Pope Francis’ excellent, profound even, 2023 encyclical put it another way:

‘Our care for one another and our care for the earth are intimately bound together.’

All the signposts are for a massive transition. Never in our lifetimes have we faced challenges of the urgency and enormity ahead of us today. As we heard yesterday, stability can no longer be the objective.

The response so far includes trillions pouring into ESG and climate investment and more in commitments.

In the same period, we’ve seen the greatest decline in development outcomes in decades.

The biggest shifts in regulation and, accounting and reporting standards and expectations since WWII are underway. We’re engaged in noble debates about materiality and finance and quantification of risk.

Regulators are moving, most clearly here in Europe. However, globally many of the frameworks and practices in policy and markets being applied in response are still catching up with the major insights of modern economics. Economists from Michael Porter to Joseph Stiglitz to Kate Rayworth and Marianna Mazzucato have highlighted the misalignment of social, environmental and economic factors.

I was in the room at Oxford in 2012 when Michael Porter said when we left the social and environmental out of the economic picture it was a huge mistake.

So far, not enough of this is adequately setting the stage for the green investment needed, let alone investment in community resilience and addressing social inequities and exclusion. We are not yet directing capital sufficiently away from harm and into solutions.

Legacy practices are heightening the risk of litigation for organisations that overstate their ESG or impact credentials. Litigation has raised the stakes of the debate to such a degree that in many parts of the world, but most notably in the United States, the issue of ESG is politically charged and polarised.

As many of you are aware, industries – including the heartland of this Congress – insurance – face systemic risks that could be exitential. As many of you will be aware, the research indicates that much over 2 degrees of warming the insurance industry cannot be sustained, at least as we know it.

As more effects are being felt, the lobbying gets fiercer and dynamics of fear and distrust grow as vested interests seek to preserve the status quo and leaders search for answers.

Al Gore and David Blood said in this year’s Generation Partners trends report: ‘We find ourselves caught between hope and fear.’

Caught between hope and fear – where many of us are – and many in communities.

It resonated for me when a leading scientist said: we’ve gone from ‘Is climate change real?’ to ‘It’s too big and challenging’ and missed the steps between where it’s ‘all hands on deck’.

The IPCC raised collective inability of our institutions and governance systems to adapt and respond, quickly and effectively enough to its own global risk.

Corporations and investors are working through how to be responsive to a wider range of voices that have legitimacy, power and urgency calling for action to address social and environmental issues, for example, in supply chains and from the community – recently from students.

Leaders are dealing with the reality that boundaries can no longer be drawn neatly at the organisation’s front door.

As has been the case through other periods of great change, discovery and progress – even enlightenment, the new information and insights available can also inform and inspire a more multi-dimensional appreciation of risk and of solutions and breakthroughs within our grasp or for which we can reach.

This is an invitation for bold, proactive leadership to reinvent and reimagine the future. Or perhaps, in this company, illuminate a way back to the future.

A few years back, I worked with one of Australia’s former mutuals to assess its future strategic choices. One of the country’s best recognised brands with a history steeped in innovation and community value, now 30 years post de-mutualisation had hit a form of extreme turbulence; some of its own making. Yet, it was remarkable the uniformity and depth of resonance still around its origins as a sure friend in uncertain times. Tapping into this kind of sentiment is the sure footing we need to take the leaps of faith necessary for transformation.

That is the power in the sense of connection in and to organisations like yours; it provides a platform for action and holds the potential to mobilise and lead.

It could be each of us positioned to tap into that sentiment and capacity that and help guide and navigate the way forward.

Mutuality at its best – rooted in purpose, focused on people and had the potential to provide valuable leadership – in structure and in substance.

Mutuality for People, Purpose & Potential

In preparing to be with you today, I reflected on how few institutions can provide the type of anchor in community, and in practice, that’s so needed now. So few organisations can hold the space for possibility and action grounded in track record.

The art of mutuality – your way of doing business holds the key to some of the challenges that are most pressing now.

While it emerges as many things, the threads weaving your version of social economy together and give it dynamism and reveal patterns that can illuminate the way forward.

The potential goes further than leveraging EU initiatives and United Nations support for a social and solidarity economy.

This community’s contribution to addressing sustainability issues and inequality can give sure footing, shape and form to what it means in practice to accelerate progress toward the SDGs and promote decent work and develop and invest in localised solutions.

To demonstrate proactive leadership and moral courage drawing on its deep roots, re-combine ways of working known to cooperatives and mutuals and amplify and make them more visible in ways that benefit others.

The reciprocity and interdependence by design in mutuality and cooperative culture is built to integrate impacts on people and our planet with robust business models. There will be many areas of opportunity responsive to need in the manner we heard of from Mondragon.

Much of what gets lost in current ESG practice is that sustainable business and investment is in essence a negotiation of the relationship between business, finance and society. My colleague David Wood is exploring this in a hostroy of sustainble investment.

This negotiation invites us to interrogate and find meaning in that relationship. It is a negotiation cooperatives and mutuals engage in actively. Can the changes underway help make that value more explicit?

Values based models grounded in put you in the box seat, enhanced with some of the insights from climate action and impact this could translate to a next genration of leadership in delivering, demonstrating and amplifying more effective, equitable and just outcomes.

Right at the time more organisations and their boards are expected to be able to explain how they have considered their company’s influence on the social and environmental impacts, your organisations are the ones attuned to doing this and can set a new bar for what good looks like.

This is where my colleagues and I spend much of our time and we see many experienced leaders get stuck – stuck in conceptions of ESG that are not impact, stuck because they are not yet bridging social and environmental factors and stuck because the are not fully realising the power of effective governance as a lever of change.

You can bring governance to the table that encourages more leaders to adopt a wider lens for how decisions are made, whose voices are heard, and what gets done as a result.

These are the foundations at the core of effective governance – 21st Century governance.

Your organisations can show others what we mean to engage more people in timely climate action and keep the focus on the real economy, quality jobs, and resilience for communities as you sharpen focus on sustainable development.

Could this community showcase the potential of drawing a more ‘direct connection between the investment of capital and the creation of a material change in our communities and ecosystems’ our colleague Jed Emerson has written and spoken about.

Investing for sustainability is more than words, more than transactions; it’s a practice of ecological, human, and economic health and vitality.

Beyond Strategy to Purpose

It draws out alignment between your models of business and enables social progress, environmental regeneration and prosperity.

You have the power and the stories and data to show that the relationship between profit and purpose is not a necessary or unitary trade-off. Each of us are pioneers of a frontier for purpose driven innovation that manifests in products, services, partnerships in service of better outcomes can deliver on a broader conception of value.

Many leaders and organisations still presume a trade-offs between profit and purpose or are constrained in short-term reactiveness and lack of meaningful connection to the sustainability context.

You can demonstrate the power in a broader conception of the environment to include goals that are social and transformational. For this, purpose provides the focus to go beyond notions of trade off; go beyond looking at sustaianble development goals as selective add ons to what is done and place them at the centre of how business and finance is done.

Market leaders will be those making decisions to deploy products, services and resources that not only consider but contribute to solutions to address significant issues affecting people and the planet. This is your playbook.

Each of us can ask how we can go deeper in interrogating whether and how the purpose of our organisations responds to the changing context in which we’re operating?

Then, are we focused on the extent to which our strategy responds to the implications of the changing context and advance our purpose? Are our goals ambitious enough? Where are the opportunities for purpose to optimise our commitments to act to avoid harm, deliver more benefit and contribute solutions?

The insights available into social and environmental effects can drive innovation that expands new horizons for value. Another leaf out of your playbook.

For those who are insurers, for example, looking to what it takes to make people healthier and enhance and protect their lives.

Where might the focus on purpose enliven more and different opportunities for investment in climate action, adaptation and new solutions?

My colleagues and I have applied this lens of purpose and impact across everything from climate to energy and place-based initiatives and housing and gender and road safety.

The power of this is evident when we see aspirational organisations and with profit driven structures adopt this approach as a growth strategy.

Discovery Insurance out of South Africa, for example, one of the fastest growing and most profitable health and life insurance companies in the world: Dominant market share in South Africa and leader in UK with 20 million lives insured and a global franchise in 25 countries.

In an age of growing chronic disease, and health costs, Discovery combines health coverage with wellness programs (Vitality membership), enabling better health results and lower premiums 15% lower medical costs and 8-10 year longer life expectancy. They are ‘guided by a clear core purpose – to make people healthier and to enhance and protect their lives.’

Strength in Cooperation

Implies a stewardship that stands for something, charting a course with a clear view of what and who the organisation is for, steering toward a vision that is shared by the organisation and a broader set of stakeholders.

The potential lies in tapping into that understanding. As we interrogate purpose, is there a sense of common purpose in the vision for the future?

In as much as there is new value in products and services there is potential for new alliances and partnerships. This can be among peers in pre-competitive collaborations and with a broader set of stakeholders, including non-traditional partners.

The need for capability and experience in partnership facilitating coalitions is huge. This community has that.

As organisations with deep roots in community, you have a role to bridge different parts of the economy and foster conditions for collaboration to counter the pull that climate action could become a finance-only story.

I’m talking here too of cooperation beyond the boundaries of this movement, to build confidence and momentum for ways of working that look beyond the zero sum game.

Our changing context demands a sort of allied effort to reimagine – the confluence of deep experience of different business models, and you are well placed here in Europe, where you have the most progressive policy environment – notwithstanding that the politics are getting messy.

I Chaired a climate-ready initiative, and surveys found that while 74%+ of people believe climate change is occurring and fully 60% + have been affected or know someone close who has – only 15% thought it was urgent to act.

A slant on the political dilemma in a nutshell.

As institutions close to community there is opportunity to raise awareness in support of your own goals and collective impact. There is opportunity to give Governments cover to act, which can assist in achieving pro capital formation policies that build momentum in the right direction.

This is a moment where you can define and assert the strength and lessons of mutuality and cooperation, even in a challenging and turbulent environment.

Transition is key to longevity and relevance – for individual organisations or even the whole industry and for collective action across sectors – towards our collective future.

Infrastructure for a Stable Society

Climate change and associated challenges across food, energy, water and the economy will not be addressed without justice and equity.

Each person in this room has a clear role to play in helping others understand the interconnectedness of the climate and social issues, navigate complexity, demonstrate approaches that develop social licence and help others anticipate and avoid community backlash.

How will we help more people see the way forward is climate action and greener energy systems, meet the health imperative and build resilience to geopolitical shifts; harness this next tech revolution, unlock human potential and address the crisis in trust and transparency?

All in a day’s – or decade’s work – back to all hands on deck!

Infrastructure for a stable society will be hard and soft. We need to build – a lot – energy infrastructure, adapt cities and structures. We also need to set behaviours and expectations and clear objectives and then measure, manage and communicate progress.

All organisations will need to engage with which impacts matter – positive, negative, intended, unintended and whether we headed in the right direction.

Smart organisations will build and strengthen their fitness to respond.

Visionary leaders will seize the value creation opportunities for their organisations to differentiate and build resilience for strong performance and invest in strengthening the ecosystem and infrastructure needed to build into the future.

I’m talking about the potential that is more profound and transformational – it’s reshaping our understanding of performance – and shifting norms in the process. Paul Romer, Nobel prize-winning economist, called the integration of impact a ‘very important idea to reshape and save our economic system.’

While the law sets the baselines and puts the lines on the field. The play matters. As we write the playbook for best practice, the good news is we can apply existing tools, engage with those that have developed in recent years and continue to build new ones.

A lot has been achieved in recent years – great strides have been made with developments like new taxonomies and progressive tools, including the SDG Impact Standards.

We have frameworks that are not only good enough to get started; they can enliven – perhaps turbocharge the strengths in this room – clarity about dimensions of impact (Impact Management Platform) – who – what – how much – what contribution each organisation can make relative to its purpose and illuminate impact risk. These tools can be more rapidly socialised. Combined with what is already in the mutual and cooperative wheelhouse, they could represent a significant leap forward.

Data is important and necessary, obviously. Do we have all of the data yet – no. How ever we have more than is sometimes appreciated; it lives in different places. For example, in natural capital, researchers can make calculations with 90%+ degrees of confidence. Supportive infrastructure can bring more of the relevant resources together. And data on its own is not sufficient.

A big shift from measurement to management is part of the work ahead of us. That means embedding impact objectives and risks across strategy and performance expectations and incentives, investment and divestiture, accountability, compliance, reporting and risk management. Fundamentally, into how we make decisions.

The available tools combined with the accumulated wisdom in this room and your wider networks could help drive broader decision-making in the right direction.

In an era of mounting disappointment and frustration with the pace and scope of efforts taken by financial and business actors to deploy resources aimed at addressing the climate and inclusion challenges, how could each of you showcase a moral leadership that draws on the past and points to the future in effective responses to climate change and inequity?

The imprematuer of last year’s UN General Assembly resolution recognises and provides an authorising environment.

This community can leverage and encourage action that promotes and breathes life into a vibrant ecosystem including legal frameworks, breathing life and meaning into new diligence requirements, facilitating access to capital and financial services oriented to reduce harm to our environment and society, deliver more benefit to people and communities and contribute solutions.

In the process, what are the opportunities to make more visible the contribution of social economy organisations to economic, social and environmental progress?

Reimagining Risk & Relationships

Risk is core bsuiness for many of you. As we come to understand the implications of our changing context, we see new dimensions to risk. Dimensions that were unquantified, perhaps not managed as expicitly.

These examples are a call for all of us to revisit key questions and ask new ones.

Assessments and quantifications that were mainly financialised now need to be seen through a wider aperture. It reveals a more complete and complex picture.

Navigating our way through has to be more than a zero sum game so prevalent in markets and politics. Redistributing risks and benefits will not be sufficient. We need all hands on deck.

Many of you bring localised knowledge to the table, closer to community and solutions to inform more holistic and dynamic approaches.

Investing in place, in new solutions for local leaders, in businesses and in infrastructure that build resilience.

In the more complete picture, the less obvious risks become visible. Do we have access to the skills needed – in Australia, for example, we don’t have enough electricians to undertake the transition. Many of you train people and have a vantage point across industries. What skills are needed – within the mutuals and cooperatives and beyond? Where are the opportunities to engage across sectoral and structural boundaries?

As purpose driven leaders how are we re-imagining relatonships with nature and the environment? As more major corporates are recognising the need, where is the natural value this community can offer – including as a businesses meeting newly identified needs. As the Nestle CEO spoke to their clear focus on value chain and effective climate management because ‘no coffee, no cocoa, no business…’.

Some of you will already be bringing this experience to value chains and cooperative action; can that be an even bigger part of the solution? Shared values of sustainability and ethos of solidarity and innovation can accelerate progress across a broader landscape, and in the process widen spheres of influence.

As has been the case through other periods of great change, discovery and progress, new information and insights are informing inspiring a more multi-dimensional appreciation of risk as well as solutions and breakthroughs that represent new opportunities.

I’ve seen examples here in Spain from circular economy to working with groups from the youngest to eldest in society and architecture providing holistic and integrated solutions with nature. Across Europe – indeed around the globe – we can find a colourful tapestry of social economy organisations and social innovations focused on improving outcomes for people and planet, developing new business models and solutions.

Everyone in this room has the capacity to shape and colour a variety of solutions-based businesses and business models and organisational types and legal structures and entities that can pave the way to a brighter future.

You have capaital to shape investment, opportunities to engage with people around how they live and work and with businesses around how they operate.

Conclusion

Securing the future requires a fundamentally different approach to predominant business as usual.

Our focus here in these two days – the art of mutuality – holds concrete potential to ground and inspire this sector and many others in a way forward that systematically places people and planet at its heart.

Centuries of experience and practice harnessed and re-enlivened to set the stage, yes – AND – to lead the way on green and sustainable investment.

As you look toward 2025 as the Year of the Cooperative, mutuality for people, purpose and potential will be up in lights. You can do more than set or even take the stage – you could steal the show.

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