Shared Interest

Shared Interest

File:Shared interest logo.JPG
Company type	Public Limited Company
Industry	Financial Services (Fair Trade)
Founded	1990
Headquarters	2 Cathedral Square, Groat Market, Newcastle, NE1 1EH, Tyne & Wear
Key people	Patricia Alexander (Managing director)
Revenue	1,643,643 United States dollar (2016)
Total assets	14,330,122 United States dollar (2022)
Number of employees	26
Website	www.shared-interest.com

Shared Interest

Shared Interest Society Ltd. is a UK based fair trade financial co-operative which began in 1990 and today provides credit and financial services to fair trade producers, retailers, importers and exporters throughout the world. The initial work of the Traidcraft, an alternative trading organisation (ATO) founded in 1979, showed the requirement for socially responsible investing under the fair trade system. Shared Interest is now independant of Traidcraft and works with both the widely recognised Fairtrade Labelling Organisation (FLO)and the International Fair Trade Association (IFAT). Recently the Shared Interest Foundation was launched, a charitable wing providing training and support services to producer, complimenting the financial services offered by Shared Interest Society.

Shared Interest History

The Shared Interest Society Limited was set up in 1990 by a group of fair trade pioneers, in particular Traidcraft founder Richard Adams, and also through the Netherlands-based ecumenical organisation Oikocredit. Shared Interest issued loan stock to support this work until two years ago. It also initially developed a clearing house with IFAT, to directly finance fair trade projects between the Global North and Global South and increasingly within Southern markets themselves.

A selection of fair trade goods

Shared Interest Structure

Shared Interest Society Ltd.

The aims of Shared Interest Society Ltd. are:

• Lending to producer groups
• Increasing producer capacity building through loans
• Supporting the fair trade movement by providing credit facilities and loans to buyers

Shared Interest is an independent organisation with 26 staff members located in 3 countries. Shared Interest Society is owned and controlled by its membership (i.e. those who invest money in the company). It has a democratic structure, with annual meetings of members. Each member has an equal voice and vote, regardless of the amount invested. Shared Interest has an elected Council which monitors the work of its Board of Directors. The Council has the power to question the Directors and management and if it sees fit, to address the membership independently. To ensure the Council is a representative body it is comprised of a majority of members who have been randomly selected for nomination and other members who volunteer for the role.

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Logo for Shared Interest Foundation, charitable arm of Shared Interest

Shared Interest Foundation

In 2004 Shared Interest Society Ltd. established a subsidiary charity, Shared Interest Foundation, with a mission to support disadvantaged producers in using fair trade as a sustainable solution to poverty. Shared Interest Foundation offers:

• Training and support to aid in increasing producer capacity
• Grants for producer groups
• Support to the fair trade movement by grant support (eg, to the Fairtrade Foundation)

The Foundation is owned and controlled by the Society, and to date the Foundation’s work has been funded largely by donations from the Society’s members and by sponsored activities. Shared Interest Foundation does not require membership of the Society for donations and has recently been attempting to diversify the funding base. The Foundation is able to concentrate on very specific charitable activities that support the Shared Interest Society Ltd. and is able to engage and develop partnerships with NGO partners that find it is easier to work with another charity. The Foundation’s projects focus on providing education and training, particularly in business and financial management, thereby developing capacity within producer organisations and assisting them in improving their business performance. Other work includes widening access to fair finance and supporting the development of the fair trade movement.

Why Fair Trade?

A useful definition of fair trade is:

…a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalised producers and workers - especially in the South. Fair Trade organisations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade…

In order to qualify for fair trade status certain requirements must be fulfilled.

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Fairtrade Labelling Organisation mark

Workers must be paid a fair price for their labour, this fair price is dependant upon the local cost of living, however the key factor is that exceptionally low prices for the consumer are not achieved through compromising pay for workers (as is often the case in capitalistic ventures, i.e. where costs are ‘externalised’ as happens in an oligopsony ). Aside from pay, working conditions must also be of decent standard, safe and hygienic, with working hours kept to a reasonable length, respecting the recommendations of the International Labour Organisation (ILO).

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IFAT Fair Trade Organization Mark

Fair Trade buyers must also fulfil certain mandates; they must buy from registered fair trade producers using multi-annual contracts to ensure a high degree of stability for producers. They must pay a minimum price pre-determined by FLO for the goods they source, plus a social premium. Should the producer request, they must also provide pre-financing of sixty percent of the contract.

These conditions are supposed to protect producers from fluctuations in the market and problems of overproduction coupled with a few large monopolistic buyers who can wield inordinate power over producers, a situation which has been particularly noticeable in the coffee industry.

Fair trade has come under critiscism, and the fair trade debate rages with both ends of the political spectrum taking issue at the approach of the fair trade movement. Some, such as the Economist argue fair trade simply distorts prices and hides market inefficiencies, others, such as French author Christian Jacquiau condemn it for working with mainstream organisations and not being radical enough.

The immediate demand for capital means that services like those provided by Shared Interest Society Ltd are essential, lending to both buyers and producers, facilitating transactions which otherwise would be impossible due to lack of immediate funds. Security is not required for credit, meaning there is a potentially higher risk of bad debt than under investment schemes with guaranteed return. By not insisting on security, however, Shared Interest Society Ltd allows smaller organisations with few assets to obtain credit, thus increasingly giving access to the fair trade system on a wider basis than would otherwise be conceivable.

Fair Trade Finance

Shared Interest invites people to invest capital, but attempts to mix business with a social conscience. It lends without security, trusting fair trade customers to make any due payments. Investors should not expect a large financial return on their capital due to the risk involved in lending without security, however Shared Interest has had good financial growth, plus investors know they are engaged with a pro-social project, rather than a purely capitalistic venture, as such it produces social capital.

Shared Interest Society Ltd is not a charity and does not solicit donations, instead requiring investment from its members in the UK; the Shared Interest Foundation is the charitable arm.

Shared Interest Society Ltd functions as illustrated:

• 1. The order is placed by a buyer (for instance a shop) with the producer (for instance a coffee farming co-operative)
• 2. Shared Interest Society Ltd makes an advance payment on behalf of buyers to the producers
• 3. The producer is able to borrow an additional amount (30%) against that order to cover their expenses
• 4. The goods are delivered
• 5. The final payment is made to the producer; the buyer re-pays the credit provided by Shared Interest Society Ltd

Social Accounts

Definition: Social accounts are a systematic means by which to account for the social impact of an organisation, pioneered in the UK by Traidcraft. Shared Interest began social accounting in 2005, delivering a first report that year. Their second annual report came in September 2006, both under guidelines from theSocial Audit Network.

The Office of the Third Sector defines a social enterprise as:

…a business with primarily social objectives whose surpluses are reinvested for that purpose in the business or in the community (rather than being driven by the need to deliver profit to shareholders and owners).

Because Shared Interest provides fair trade finance to producers and buyers it falls under the above definition, consequently social accounting provides key indicators as to the effectiveness of the company’s strategies in terms of its pro-social goals.

External Links

• Shared Interest Society Ltd
• FLO International
• The International Fair Trade Association
• International Labour Organisation

Selection of Shared Interest Society Ltd. Clients

• Cafe Direct
• Ecco Bella
• Epona Clothing
• Equal Exchange Inc.
• FM Foods Ltd.
• Fair Trade Company
• Just Us! Coffee Roasters Co-op
• Ten Thousand Villages
• Traidcraft Plc.