Business model

A Greener Business Model: How the Private Sector Can Lead Where Government Has Not

UWM professor Melissa Scanlan provides a model for an alternative business model that incorporates green practices, pays living wages and preserves community jobs in her new book, “Prosperity in the Fossil Free Economy”. (UWM Photo / Elora Hennessey)

Countries have been debating how to tackle climate change since the early 1990s. Yet little progress has been made as governments scramble to set and enforce emission reduction commitments.

Photo of the logo of Curious Campus, UWM's new science, discovery and culture podcast

Curious Campus, UWM’s new podcast on science, discovery and culture

This is what motivated Melissa Scanlan to study how private sector action could encourage companies to do what governments have not done: favor environmentally friendly practices. But is it realistic to expect businesses to scale up?

In his new book, “Prosperity in the fossil-free economy: cooperatives and the design of sustainable enterprises” (Yale University Press, 2021), Scanlan provides a model for creating cooperative, alternative business models – both nonprofit and for profit – that incorporate green practices, pay living wages, and preserve community jobs. .

“A lot of people have been frustrated by the slow pace of government action, and that has really been part of the motivation for me to write this book,” said Scanlan, UW-Milwaukee professor Lynde B. Uihlein Endowed Chair of Water Policy and director of the Center for Water Policy at UWM. “What type of business structure would allow us to move faster to increase shared prosperity and deal with the climate crisis? “

Scanlan discusses this topic in more detail in this week’s episode of Curious campus, UWM’s new science, discovery and culture podcast.

Triple net returns

Cooperatives are geared towards producing returns that are not only financial, but also social and environmental. The best have an auditing system in place to show they are producing those triple bottom lines, Scanlan said. By their very definition, cooperatives unite to reduce the costs of any type of business.

Co-operatives are more common than people realize, she adds, and exist in all sectors – insurance, energy, housing, agriculture and food. They can be owned and operated by workers or consumers, or both. Many well-known brands, such as Organic Valley, Equal Exchange, Vanguard, REI, and Ace Hardware, operate as cooperatives.

And co-ops can transcend politics. One example Scanlan talks about in the book is Cobb Electric in Georgia, which has become a leader in solar power distribution in a state where there are no laws promoting renewable energy. “So the private sector can always move forward, even when politicians are dragging their feet,” she said.

Spain leads the way

Environmental sustainability is not the only social issue that cooperatives can tackle. The book examines key studies from the United States but also from Spain, which has a very strong worker co-op sector.

In 2019, Scanlan spent a semester as a Fulbright Fellow in Spain, which is home to the world’s largest worker cooperative. She investigated the “sustainability pioneers” in the community of Valencia.

After Spain’s economic hardships during the 2008 financial crisis, the country enacted legislation to promote cooperatives and other businesses that prioritize the triple bottom line. They emphasize the democratic engagement of employees in these companies.

Benefits for employees and consumers

One of the Spanish cooperatives Scanlan discusses in the book is a large supermarket chain called Consum, which is owned by both its employees and consumers.

“If it was organized in the traditional way, the profits would go directly to shareholders,” Scanlan said. “Instead, the profits go to employees and consumers, as well as a large fund to give back to the community.”

Examples of co-ops in Wisconsin and Minnesota include Just Coffee in Madison, Outpost Foods in Milwaukee, Land O’Lakes Dairies, and CROPP, which markets products under the Organic Valley brand.

The United States could develop more cooperatives and social enterprises, she said, if the business model were more widely taught in American universities.