Module 2: CST Framework for Cooperatives

Question: Does the framework offered here (4 principles and then 12 questions for diligence) help you? What would you change? Where would you take it further? How would you apply it to your context?

I really appreciate the straight-forward outline of the 12 CST questions to ask and the four principles to center your investments around. The question that I keep returning to throughout this workshop is how members of our investor community are defining impact in relation to outcomes and not necessarily inputs. A traditional interpretation of CST principles oftentimes lends itself to looking at the end product or service that has the most impact in alignment with caring for our common home, caring for the poor and most vulnerable, and other direct translations of social or environmental justice. The principle of solidarity begs us not only to examine the product or service we’re investing in, but challenges us to examine the approach the fund, product or service is taking to achieve impact. The beauty of this principle of solidarity, which we can clearly see in the cooperative and ESOP examples outlined in this module, is that wealth is equitably distributed to employees. Shifting the power dynamic to be more centralized, and less top-down, ensures that beneficiaries have a voice at the table.

While cooperatives and ESOPs align with Catholic Social Teaching, the practical application to Catholic investors is less clear. Many asset owners in our community are still defining impact as the most good to be done for the end beneficiary, and not as how the process itself can be good. I’ve seen investors struggle to define cooperatives and ESOPs as “impact investments” because they don’t necessarily have the impact metrics we expect on the end beneficiary of what we define as “traditional” impact investments. The products or services offered by these entities may not be seen as core to the impact goals of the organization, and therefore written off.

Some of the questions that emerged for me from my small breakout group during the last deep dive session was: How attractive are these investment opportunities to our community of Catholic asset owners? What institutional constraints exist that prohibit investors from exploring cooperatives or ESOPs as “impact investments”? What proof do these entities need before they can attract large scale capital? What ecosystem building needs to be done to support these entities as impactful, in alignment with CST?

I appreciated hearing the responses from my small group, but what I enjoyed the most was hearing asset owners share what felt most practical to them in terms of next steps. Going back to the original question about the CST framework, these questions are an easily applicable criteria for our community members to use during their due diligence processes. They are a great first step to understand the internal power dynamics of the deals in your pipeline, and are aspirational for asset owners to expand what opportunities they might consider in the future.

My final reflection is: I wonder how can investors continue to ask these questions of their entire portfolio even after they’ve invested? I know how important it is to make a decision to invest based on this criteria, but I can’t assume that it’s a “one and done” test. How do these questions translate to impact measurement criteria? Beyond impact measurement – how do groups check in to make sure they are upholding these principles? How can this lens be applied across a portfolio?

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