Shared Interest Society Limited is a
fair trade financial co-operative based in the United Kingdom formed in 1990. Today it provides
credit
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
and financial services to fair trade producers, retailers, importers and exporters throughout the world. Shared Interest works with both
Fairtrade International
Fairtrade International, or Fairtrade Labelling Organizations International e.V. is a product-oriented multistakeholder group aimed at promoting the lives of farmers and workers through trade. Fairtrade's work is guided by a global strategy fo ...
(formerly known as
Fairtrade Labelling Organizations (FLO)) and the
World Fair Trade Organization
The World Fair Trade Organization (WFTO), is a global association of 401 organizations who are committed to improving the livelihoods of economically marginalised producers. WFTO has members in 76 countries. Members are primarily fair trade enterpr ...
(WFTO). In 2004, the Shared Interest Foundation was formed as a charitable subsidiary, providing training and support services to producers, complementing the financial services offered by the Society. Shared Interest received the
Queen's Award for Enterprise
The Queen's Awards for Enterprise is an awards programme for British businesses and other organizations who excel at international trade, innovation, sustainable development or promoting opportunity (through social mobility). They are the highest ...
in 2008.
History
The idea that led to Shared Interest was the creation of
Mark Gerard Hayes, then an investment banker with
3i, now an academic economist at
Cambridge University
The University of Cambridge is a Public university, public collegiate university, collegiate research university in Cambridge, England. Founded in 1209 and granted a royal charter by Henry III of England, Henry III in 1231, Cambridge is the world' ...
, who was the first managing director from 1990 to 1999. Inspired by the success of
Traidcraft
Traidcraft is a UK-based Fairtrade organisation, established in 1979. The organisation has two components: a public limited company called Traidcraft plc, which sells fairly traded products in the United Kingdom; and a development charity c ...
in harnessing
socially responsible investment for the finance of
fair trade, Hayes approached Traidcraft founder
Richard Adams in 1986, beginning a collaboration that culminated in the formation of Shared Interest in 1990 as a special form of co-operative saving and loan society.
The initial £100,000 funding (subsequently repaid) for the launch of the Society came from Traidcraft,
Joseph Rowntree Charitable Trust
The Joseph Rowntree Charitable Trust (JRCT) is a philanthropic grant making trust that supports work undertaken in the UK and Ireland, and previously South Africa. It is one of three original trusts set up by Joseph Rowntree in 1904. The Trust ...
, and a similar co-operative established in 1975 in the Netherlands, now called
Oikocredit
Oikocredit (in full Oikocredit, Ecumenical Development Cooperative Society U.A.) is a cooperative society that offers loans or investment capital for microfinance institutions, cooperatives and small and medium-sized enterprises in developing coun ...
. However the creation of Shared Interest was finally made possible by the action of SIAL (Scottish Churches Action for World Development Investment Association Limited), an Oikocredit Support Association, who provided the first 200 members and £300,000 of capital in the form of shares in Oikocredit. Oikocredit was Shared Interest's main channel for lending in its first five years.
Once Shared Interest had reached a capital of £4 million (1994), a planned transition took place to establish its own lending business by the creation of a
clearing house
Clearing house or Clearinghouse may refer to:
Banking and finance
* Clearing house (finance)
* Automated clearing house
* ACH Network, an electronic network for financial transactions in the U.S.
* Bankers' clearing house
* Cheque clearing
* Cl ...
with what is now the
World Fair Trade Organization
The World Fair Trade Organization (WFTO), is a global association of 401 organizations who are committed to improving the livelihoods of economically marginalised producers. WFTO has members in 76 countries. Members are primarily fair trade enterpr ...
, to finance directly
fair trade between the
Global North
Global means of or referring to a globe and may also refer to:
Entertainment
* ''Global'' (Paul van Dyk album), 2003
* ''Global'' (Bunji Garlin album), 2007
* ''Global'' (Humanoid album), 1989
* ''Global'' (Todd Rundgren album), 2015
* Bruno ...
and
Global South and increasingly within Southern markets themselves. Shared Interest continued to support Oikocredit by the issue of loan stock until 2005, after which Oikocredit established its own UK office.
Structure
Shared Interest Society Limited
The Society is registered under the Co-operative & Community Benefit Societies Act 2014. Its membership is almost entirely composed of UK individuals (some 11,500 in 2018), who invest withdrawable share capital (£43 million in 2019), which is used to provide credit facilities to organisations engaged in
fair trade. The society had 34 staff (2012), mostly in the UK, with established regional offices around the world.
The Society is unusual in having a council of ordinary members as well as a Board of Directors. Both bodies are elected; the Council acts as a select committee which scrutinises the work of the Board. Furthermore, a majority of the members of Council are nominated for election by a process of random selection, similar to jury service, in the interests of wider participation.
How it works: by opening an account, a person becomes a member of the Society and buys non-transferable withdrawable shares to the value of their investment. £1 buys one share and people can invest between £100 and £100,000. Shared Interest is the only accredited open share offer to have received the Community Shares Standard five years ago. It is very different from a charitable donation as, once your account is open, a person can withdraw money from their account as well as add to it. All members have an equal voice regardless of the amount in their account.
Shared Interest Foundation
In 2004, Shared Interest Society Ltd. established a subsidiary
charity
Charity may refer to:
Giving
* Charitable organization or charity, a non-profit organization whose primary objectives are philanthropy and social well-being of persons
* Charity (practice), the practice of being benevolent, giving and sharing
* C ...
, to provide business and financial management training for
fair trade organisations, as well as grants to support individual organisations and the
fair trade movement as a whole. To date, the Foundation's work has been funded largely by donations from the Society's members.
The nature of the financial requirement
International trade and production involves long processes which take much time. For example, many months elapse between the sowing of a crop in the tropics and the final purchase by a consumer of a finished product in a European supermarket. The money laid out at each stage of production and distribution is called working capital. For smaller producer organisations to access international markets on terms consistent with their independence, if at all, requires access to working capital, by both producers and
fair trade distributors, beyond what is available from banks. Normally this extra working capital would come from profit-maximising shareholders in some form or from accumulated past profits. Shared Interest provides unsecured finance, similar to
trade credit
Trade credit is the loan extended by one trader to another when the goods and services are bought on credit. Trade credit facilitates the purchase of supplies without immediate payment. Trade credit is commonly used by business organizations as ...
. Shared Interest can do this only because its own members are prepared to accept the risk of loss on their investment in Shared Interest, and to accept the limited and currently lower financial returns resulting from the high costs of dealing with emerging organisations in the
Global South.
In 2018, Shared Interest lent money to 363 organisations representing 470,421 individuals. They worked in areas where other lenders are less keen to operate in order to deepen impact and support those farmers in greatest need. Very few social lenders operate with smaller lending facilities or more vulnerable groups. Shared Interest works primarily with organisations who are certified as fair trade as they believe these producers align with their own values. The fair trade movement aims to promote fair and equal trading terms for producers in developing countries. It is based around ten key principles:
• Creating Opportunities for Economically Disadvantaged Producers
• Transparency and Accountability
• Fair Trading Practices
• Payment of a Fair Price
• Ensuring no Child Labour and Forced Labour
• Commitment to Non Discrimination, Gender Equity and Women's Economic Empowerment, and Freedom of Association
• Ensuring Good Working Conditions
• Providing Capacity Building
• Promoting Fair Trade
• Respect for the Environment
The finance mechanism
The diagram illustrates the lending process:
# The order is placed by a
buyer
Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or serv ...
(e.g. a coffee importer) with the producer (e.g. a coffee farming
co-operative)
# Shared Interest makes an advance payment on behalf of buyers to the producers
# The producer is able to borrow an additional amount against that order to cover their expenses
# The goods are delivered
# The final payment is made to the producer; the buyer re-pays the credit provided by Shared Interest
References
External links
Shared Interest Society LtdFairtrade InternationalThe World Fair Trade OrganizationCoops UKShared Interest Society: fair lending for fair trade{{Fair trade
Fair trade organizations
Co-operatives in the United Kingdom
Economy of the United Kingdom
Ethical banking
Organizations established in 1990
1990 establishments in England