The cooperative capital company, a model for the “world after”

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

The global shock of 2020 demonstrates the absolute necessity of rethinking our economic system. The health and climate emergencies leave no choice. Without structural change, the risks of social, political, and environmental tensions will become greater every day.

We are submitting for collective debate the idea of a socially different business model: the cooperative capital company., a company whose capital remuneration is shared between shareholders and employees thanks to a structure allowing employees to directly receive a portion of the dividends, in the event of distribution. The ownership of capital is a factor of exclusion of populations, particularly with regard to the younger generations, the workforce. 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, shareholders own the capital, while employees provide its exploitation. Their destinies are closely intertwined, yet no direct link truly exists between them. We believe it is possible to bring them together by establishing a convergence of their interests, thanks to new rules where employees become usufructuaries of a portion of the company's capital. Shareholders provide the funds, workers deliver the added value. And ultimately, everyone deserves their share.

The idea is there, it may seem iconoclastic but it is fundamentally realistic: that of a company whose dividends are now shared between shareholders and employees in a fundamental way by granting employees a share of the capital.

This is what we call a cooperative capital company. To become one, the company includes a special provision in its statutes that allows employees to receive a share of the profits in the event of dividends being triggered. It thus grants them the position of beneficial shareholder.. As for them, shareholders remain holders of the capital and are owners of the securities, with the difference that they decide to become bare owners of a specific portion of the capital, the yield value of which they transfer to the workforce. To do this, they accept a reduction in the nominal value of their share—for example, through a capital increase by issuing securities—and transfer the difference to those who "create growth," the employees. Idealistic? Surprising? Bizarre? No, far from it.

Of course, the shareholder-investor must bear a "cost." They are asked to pay a sort of "access ticket" to productive capital. But this is in no way confiscatory. Without losing ownership, they choose to invest in another form of value: people. Their bet is that, driven by stronger cohesion, the company will be able to grow better and increase its value in the long term. This is an entrepreneurial approach of dynamic reconciliation.

Such a system has many advantages. For employees, it clearly provides direct access to a new channel of value redistributed in a spirit of socially just cooperation. This is essential in a global context where the gap between the richest and the middle classes has continued to widen in recent decades.

For shareholders, there is an innovative role to be preempted here, that of making it possible to include the value of labor in the creation of capital wealth, thus giving investment an entrepreneurial and societal dimension beyond its financial purpose. It has been demonstrated that investments managed in environmental, societal, and governance terms (ESG criteria) have performance potential. And, above all, a future.

Finally, for businesses, particularly those whose projects are part of a corporate social responsibility mission, this represents a vector of resilience. They are putting themselves in a position to no longer consider employment as an adjustment variable, but rather to establish it as a legitimate and structuring gene. By agreeing to place shareholders and employees on the same level, a new balance, a promising dialogue, will be established. It is, in a way, the City entering the Company.

The cooperative economy has long represented a response to the excesses of the eras it has lived through. Its longevity is explained by its capacity for adaptation and hybridization. It has developed many branches. Our proposal is a current translation of this, a step aside, a bud on the tree.

The cooperative capital company goes well beyond profit-sharing and employee participation mechanisms, which consist of paying a bonus linked to the company's performance or representing a share of its profits. Cooperative capitalism acts on the cornerstone of the company, its capital, by co-responsibility of stakeholders. The employee collective rises to the rank of shareholder who, without losing its prerogatives, inscribes its governance in an approach of openness and convergence of interests. Transparency, in terms of social and environmental impact, is an imperative for the cooperative capital company: the measurement and control of so-called extra-financial performances as well as their publication will be the instrument.

In the social enterprises or mission-driven companies in which we work as managers or directors, we observe to what extent 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 in contact with livestock farmers and agri-food sectors. Economic inclusion is undoubtedly a path to pursue to give human societies back the enlightened paths, the hope they need. There is no utopian idea in this, but the liberal and civic conviction that the world cannot be built otherwise than with and for each other.

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Éric Campos is the Managing Director of the Grameen Crédit Agricole Foundation, a foundation specializing in microfinance and social entrepreneurship, and Director of CSR at Crédit Agricole SA. Bagoré Bathily is the founding Chairman and CEO of Laiterie du Berger, a social enterprise promoting the dairy sector in Senegal.

(Co-edited by: Julien Foulc)