Research from the UK cross-party think-tank the Social Market Foundation (SMF) shows that the British public largely thinks that business is falling short on its social responsibilities and putting profits ahead of purpose. However, polling for the SMF found that people have strongly positive views of the way that mutually-owned firms can prioritise members and employees as well as supporting local communities.
The cross-party think-tank has today published Mutual understanding: The modern mutual sector and how to support it. This is a study of Britain’s mutual sector published in partnership with leading mutual businesses Nationwide Building Society and ICMIF member Royal London. The SMF retained editorial independence.
The report finds that despite meeting public appetite for more responsible business, the mutuals sector faces significant challenges. According to the report, politicians should change the rules to make it easier for mutuals to raise capital. The sector itself should step up its work to explain mutuality and its benefits to the public, the SMF said.
There are around 31,000 mutuals in the UK, including cooperatives, insurers, building societies and credit unions. Up to 18 million people are members of at least one such mutual, although a number are unaware of this.
For the report, the SMF commissioned Opinium to ask a representative sample of 1,500 members of the public (GB, March 2023) what they think about business and society.
The poll found significant public demand for business to put social impact ahead of profit: 44% of respondents think businesses should have responsibility for tackling key social issues including the cost of living, climate change and the state of local communities.
Yet the public think that most businesses are failing in their social obligations: only 17% think business benefits workers; 16% see business as good for communities; and 16% think companies are doing a good job of limiting environmental harms.
By contrast, 48% said companies prioritise profits for shareholders.
The SMF found that, because mutuals do not have traditional shareholders, their structure and operations have strong appeal to the public:
- 63% supported the core mutual principle of members benefitting when business does well
- 57% supported mutuals’ role in ensuring sustainable development in local communities
- 57% also backed mutuals’ fundamental commitment to social objectives
The SMF said the gap between business action and what people want could present a key opportunity for mutuals to flourish, as well as encouraging traditional businesses to compete to do better on issues the public cares about.
Liz Green, Executive Vice-President, the International Cooperative and Mutual Insurance Federation (ICMIF) attended a pre-launch event for the report at the Houses of Parliament earlier this week. She endorsed the findings of the report saying: “our experience shows that the mutual sector, and in particular, ICMIF members, prioritise their member customers and their employees as well as supporting wider communities. This is certainly what we see from the 200+ member-owned insurer companies that have joined ICMIF from all parts of the world. These are organisations which are purpose-driven and which are taking some degree of responsibility for tackling key social issues such as climate change and supporting local communities.
“There are, however, challenges for the mutual sector in general. One is a lack of awareness of the mutual/cooperative model amongst the general public, both here in the UK and further afield. To help our members with this we have published reports on how to leverage the mutual model in marketing and communications.
“The second challenge, as the SMF report found, can be difficulties in raising capital in some countries like the UK. We hope that the Co-operatives, Mutuals and Friendly Societies Bill makes its way smoothly through Parliament as this could address some risks that mutuals in the UK currently face,” Green concluded.
Challenges highlighted by the report include poor access to capital which not only prevents mutually-owned organisations from growing, but also heightens their risk of demutualisation – when the organisation can no longer maintain the unique principles of being mutual.
The SMF said whilst the Co-operatives, Mutuals and Friendly Societies Bill making its way through Parliament currently could address some risks that mutuals face, there is a need to go further to empower the sector with access to capital. The Government should introduce better financial regulation that can enable mutuals to access capital without having to sacrifice their principles.
Another key challenge for the sector is low awareness – only 20% of adults in the UK understand what ‘mutuality’ is and what it entails. About 40% have heard of the term but are unsure what it means, and 40% have not heard of it at all. That said, the majority of people (54%) believe that government should do more to help mutuals grow, and that mutuals can make a big difference in society (54%).
Jake Shepherd, Senior Researcher at the Social Market Foundation, said: “The public increasingly want businesses to do better on sustainability, social responsibility, and ethical sourcing, and not just prioritise profits for shareholders. Mutuals are built to satisfy that appetite for a better way of doing business and our research shows that people strongly value the mutual approach.
Kevin Parry OBE, Chairman of ICMIF member Royal London and building society Nationwide (both UK), added: “Mutuals are a valuable part of a thriving economy. They offer genuine consumer choice and a model distinct from shareholder-led companies. The decline in the UK’s mutual sector has left the UK lagging behind other nations where the sector represents a much more significant part of their economies.
“As the report shows, for a more balanced economy and to encourage choice, we need the sector to grow by encouraging smaller mutuals to scale up and larger mutuals to continue to thrive. Ultimately, this can only be achieved through new financing models. We hope politicians from all sides will put their full support behind the mutual sector.”