28 July 2020

By Éric Campos , CEO, Grameen Crédit Agricole Foundation & Bagoré Bathily, Chairman and CEO, Laiterie du Berger

The global shock of 2020 shows the absolute necessity to rethink our economic system. Health and climate emergencies no longer leave us any choice. Without structural change, the risks of social, political or environmental tensions will become more and more important every day.

We would like to submit the idea of a socially different model of company for the collective discussion: the cooperative capital company, a company whose capital remuneration is shared by and between shareholders and employees thanks to an arrangement under which employees receive part of the dividends directly when there is a payout. The ownership of capital is a factor of exclusion of populations, particularly with regard to the younger generations — the labour force. If we wish to build a sustainable and harmonious future, it is crucial to resolve the issue of a fair redistribution of the value created by growth and therefore by the company.

Today, capital is owned by the shareholders and leveraged by the employees. Their fates are inextricably related, yet no direct link really exists between them. We think it is possible to bring them together by establishing a convergence of their interests, thanks to new rules where employees become usufructuaries of part of the company’s capital. The shareholders provide the funds, the employees deliver the added value. And finally, everyone deserves their share.

The idea is there. It may sound iconoclastic but it is realistic in fact, i.e. a company whose dividends are now shared between shareholders and employees in a fundamental way by giving employees a share in the use of the capital.

This is what we call the cooperative capital company. In order to become one, the company must include a special provision in its articles of association that allows for employees to receive a share of the profits if dividends are triggered. It thus grants them a place as usufructuary shareholder. For their part, the shareholders remain equity holders and owners of the shares, but with the difference that they opt to become bare owners for a specific part of the capital, the yield value of which they transfer to the collective wage earners. To that end, they must accept a reduction in the nominal value of their share – for example through the effect of a capital increase by issuing securities – and transferring the difference to those who “manufacture growth” —  the employees. Idealistic? Astonishing? Bizarre? Far from it.

The shareholder-investor must admittedly bear a certain “cost.” He is asked to pay a sort of “ticket of admission” to productive capital. But there is nothing confiscatory about this. With no loss of ownership, he opts to invest in another form of value: human beings. His wager is that, supported by reinforced cohesion, the company will be able to grow better and be better valued in the long term. It is an entrepreneurial reasoning of dynamic reconciliation.

Such a system has many advantages. For employees, it obviously provides direct access to a new channel for redistributed value in a spirit of socially equitable cooperation. This is essential in a global context where the gap between the richest and the middle classes has been widening steadily in recent decades.

For shareholders, there is an innovative pre-emptive role so that labour value can be included in the creation of capital wealth, thus giving investment an entrepreneurial and societal dimension beyond its financial purpose. It has been shown that investments that are steered in environmental, social and governance terms (ESG criteria) have performance potential – and above all a future.

Finally, for companies, and in particular those whose projects are part of a corporate social responsibility mission, this is an instrument of resilience. They put themselves in the position of no longer considering employment as an adjustment variable but rather as a legitimate, structuring gene. By accepting to put shareholders and employees on equal footing, a new balance and a promising dialogue will be established. It is, in a way, the City that enters the Company.

The cooperative economy has long been a response to the excesses of the times it goes through. Its longevity can be explained by its capacity to adapt and hybridize. It has sprung many branches. Our proposal is a current translation, a step aside, a bud on the tree.

The cooperative capital company goes far beyond the mechanisms of profit-sharing and employee participation, which consist of paying a bonus linked to the enterprise’s performance or representing a share of its profits. Cooperative capitalism acts on the cornerstone of the company and its capital, by having the stakeholders share responsibilities. The wage earners join the ranks of shareholders whose governance is part of a process of openness and convergence of interests, without sacrificing their prerogatives. Transparency in terms of social and environmental impact is imperative for the cooperative capital company, whereby the instrument consists of the measurement and control of what is known as extra-financial performance as well as the publication thereof.

We can see in social businesses or mission-based enterprises in which we intervene as managers or directors the extent to which the concern for economic inclusion pushes the company to combine its interests with those of its ecosystem. This is true in many places around the world where we are involved, particularly in sub-Saharan Africa, where we work with livestock farmers and agri-food chains. Economic inclusion is unquestionably a way to pursue in order to restore to human societies the enlightened paths and hope they need. There is no utopia in such vision, but the free and civic conviction that the world cannot be built otherwise than with and for each other.

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Éric Campos is the General Manager of the Grameen Crédit Agricole Foundation, a foundation specializing in microfinance and social entrepreneurship, and Head of CSR at Crédit Agricole S.A. Bagoré Bathily is the founding Chairman and Chief Executive Officer of La Laiterie du Berger, a social business that promotes the dairy industry in Senegal.
(Co-editor: Julien Foulc)