SHARED INTEREST SOCIAL ACCOUNTS for the year ended 30 September 2006

Shared Interest Society Limited 2 Cathedral Square, An Industrial and Provident Society Groat Market, Registered Number 27093R Newcastle upon Tyne And NE1 1EH Shared Interest Foundation, Tel 0191 233 9100 Registered Charity Number 1102375 www.shared‑interest.com Social Accounts for the year ended 30 September 2006

Acknowledgements Shared Interest is very grateful for the help and advice received during the preparation of these accounts. We would like to thank everyone who has been involved, especially John Pearce, Chris Pay, Jane Gibbon and Keith Stamp for taking part in the Social Audit Panel and David Parker from Alpha Communication for supporting the preparation of the report. The Social Audit Network and Co‑operatives UK have both been a useful source of guidance and training. We are grateful to the staff team involved in the process of preparing this second set of social accounts, particularly Amy McIntosh, Francesca Smith, John Grady, Lis Dales and Tracy Bonham as well as to other staff who contributed to specific areas particularly, Claire Brown, Kirsteen Bonar, Phoebe Richardson and Stuart Raistrick.

Finance for fair trade and support for disadvantaged producers 2 Social Accounts for the year ended 30 September 2006

Contents

Page 1 Welcome 4

2 History and Background 5 2.1 Shared Interest 5 2.2 Social accounts 7

3 Vision, Mission, Values, Objectives and Activities 8 3.1 Vision and values 8 3.2 Mission 8 3.3 Objectives and activities 9 3.4 Main issues, achievements, conclusions and recommendations 11

4 Analysis of the Social Accounts 14 Objective 1 Lend to and work with fair trade producer groups and buyers 14 Objective 2 Promote a North‑South partnership 30 Objective 3 Strengthen the fair trade movement 35 Objective 4 Value our work force 39 Objective 5 Demonstrate co‑operative difference 49

5 Stakeholders, Methodology and Scope 61 5.1 Stakeholders 61 5.2 Methodology 62 5.3 Scope 62

6 Compliance 64 6.1 Compliance with statutory and voluntary codes 64 6.2 Legal structure and reporting 64

7 Social Audit Statement 66

8 Next Steps 67

Appendices 68 Appendix A to support Objective 1 Lending Appendix B to support Objective 1 Customer List Appendix C to support Objectives 2 and 5 Members Appendix D to support Objective 2 Producer groups and buyers Appendix E to support Objective 4 Staff questionnaire Appendix F to support Objective 4 Staff feedback Appendix G to support Objective 5 Customer satisfaction questionnaire Appendix H to support Objective 5 Customer satisfaction comments

Finance for fair trade and support for disadvantaged producers 3 Social Accounts for the year ended 30 September 2006

1 Welcome

Welcome to the social accounts for Shared Interest, covering the year ended 30 September 2006. This is our second social audit report and it builds on the good foundation laid with last year’s report. Once again, I hope that you will find the report informative, encouraging and perhaps occasionally surprising. Shared Interest Society is the world’s leading fair trade finance organisation based on volume of lending and focus on fair trade. For our borrower customers, both producer groups and buyers all over the world, we provide access to fair finance to develop fair trade. For the Society’s 8,402 members who invest more than £20 million with us, it is a chance to give some of the poorest communities in the world the financial backing they need to join the fair trade market place and trade their way out of poverty. Shared Interest Foundation is the sister charity to Shared Interest Society. It is a British‑based international development organisation whose mission is to support disadvantaged producer groups in using fair trade as a sustainable solution to poverty. The year 2005/6 has seen further consolidation of our work with partners in the fair trade and social lending movement. Our direct lending to overseas producer groups has grown. We have established pilot programmes for overseas representation in East Africa and Central America. The Foundation has led its first training programme for producers in Kenya. We have welcomed a new Managing Director, Patricia Alexander. Other staff changes during the year and an office move have made it a challenging year for our employees. We are indebted to their skill and commitment. Shared Interest’s customers are scattered all over the world and Shared Interest itself works through many local intermediaries to bring benefit to individuals and communities. This makes it difficult to measure directly the impact of our work. This report builds on last year’s first step in a continuous process of information gathering and reporting. We are continually seeking to better explore and understand the impact we believe we are making. We welcome feedback from Shared Interest members and from observers. You can comment directly by email to socialaccounts@shared‑interest.com.

Philip Angier

Moderator

Finance for fair trade and support for disadvantaged producers 4 Social Accounts for the year ended 30 September 2006

2 History and Background

2.1 Shared Interest Shared Interest began in 1990, set up by a group of fair trade pioneers with a vision of a new way of investing money to reduce poverty. They created a financial co‑operative with the aim of using the members’ pooled capital to lend to disadvantaged producer groups in the poorer parts of the world. Shared Interest works with both the International Fair Trade Association (IFAT) and the Fairtrade Labelling Organisation (FLO) using international definitions of what constitutes fair trade. Fair trade contributes to sustainable development by offering better trading conditions to, and securing the rights for, marginalized producer groups and workers – especially in the developing world. Shared Interest chose fair trade because it closely matches its objective and provides a coherent, well defined international market in which to lend. Shared Interest Society provides financial services to fair trade businesses all over the world, both producer groups and buyers, providing much needed short term trade credit that enables producer groups to be paid in advance for their orders. It also provides some longer term loans to producer groups to enable them to improve their overall businesses. The various lending products that Shared Interest offers are outlined in section 4, Objective 1. Having been providing finance for fair trade for over 15 years, this year Shared Interest implemented the first stages of plans to develop an international presence. The intention is to have staff on the ground, working in partnership with customers allowing Shared Interest to operate on a truly international basis and hence be true to its mission. This year the organisation has recruited staff in Nairobi, Kenya, and in San Jose, Costa Rica. The East African regional office is shared with Traidcraft. The regional staff have three key roles: to increase Shared Interest’s impact through increased lending, to explore ways of widening access to fair finance and to identify opportunities for supporting producer groups by providing financial training. Over the coming years Shared Interest aims to continue the international expansion. In 2004 Shared Interest established a subsidiary charity, Shared Interest Foundation, with a mission to support disadvantaged producers in using fair trade as a sustainable solution to poverty. The Foundation is owned and controlled by the Society, and as such the financial accounts of the Foundation are consolidated into the Society’s accounts. To date the Foundation’s work has been funded largely by donations from the Society’s members and by sponsored activities. It is anticipated that grants will become a key funding stream over the coming years and fundraising work is on going to support this strategy. The Foundation is able to concentrate on very specific charitable activities that support the vision of Shared Interest 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. 2005/6 was the Foundation’s first fully active year and this is the first year that the Foundation’s activities have been included in the scope of our social accounts. The

Finance for fair trade and support for disadvantaged producers 5 Social Accounts for the year ended 30 September 2006

Foundation widens the social impact of Shared Interest by complementing the services offered by the Society. The following table clarifies some of the key areas of work for the Society and Foundation:

Society and Foundation – areas of work Society Foundation Lending to producer groups Grants for producer groups Producer capacity building through loans Producer capacity building through training Support the fair trade movement by providing Support to the fair trade movement by grant credit facilities and loans to buyers support (eg, to the Fairtrade Foundation) Sales focused research Research of benefit to the wider community

Governance Shared Interest is an independent organisation with 28 staff located in 3 countries. Shared Interest Society is owned and controlled by its membership. 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.

Membership of Council and Board of Directors 2005/06 Council Board of Directors Richard Butchart Non­Executive: Executive: (Moderator) Philip Angier (Moderator) * Patricia Alexander (Managing Denis Stewart Donald Main* Director) * Florence Kirkby Gill Dandy * Malcolm Curtis (Customer Jenny Hamilton Michael Walton * Services) Mary Willcox Peter Freeman * Sue Osborne (Business Shweta Otiv Jan Simmonds (to March 06) * Development) Steve Summers Carol Wills (from March 06) * Stuart Raistrick (Finance Director David Nussbaum (from March 06)* to Sept 06, Company Secretary) * indicates also a Trustee of Shared Interest Foundation

Finance for fair trade and support for disadvantaged producers 6 Social Accounts for the year ended 30 September 2006

2.2 Social accounts The period covered by these social accounts year is from 1 October 2005 to 30 September 2006. Drafting this report was undertaken by the Social Reporting Team: Projects Manager Tracy Bonham, IT Manager John Grady, HR Manager Lis Dales, HR Administrator Amy McIntosh and Marketing and Communications Manager Francesca Smith. The model used for these accounts is that recommended by the Social Audit Network. This is the same model as last year for consistency and is the model generally used by small social economy organisations. The steps of this model are simple and practical:

Step one • Clarify mission, objectives and activities • Identify underpinning values • Identify objectives and activities • Analyse organisation’s stakeholders

Step two • Set up the social bookkeeping systems which collect relevant information (indicators) over a period of time • Collect quantitative data and qualitative information • Analyse the data • Feed into the ongoing management of the organisation and contribute to future planning

Step three • Write social accounts • Have them verified (audit) • Report to and inform the organisation’s stakeholders.

Comparisons with previous year • The mission, vision and values were not revised during this financial year, although a review is planned for 2006/7. The Foundation’s mission has been included in the social accounts this year for the first time. • The objectives and activities identified last year were reviewed and revised and an additional objective has been added (see section 3.3) • The stakeholders identified last year were reviewed and revised (see section 5.1)

Finance for fair trade and support for disadvantaged producers 7 Social Accounts for the year ended 30 September 2006

3 Vision, Values, Mission, Objectives and Activities

3.1 Vision and values Shared Interest Society and Shared Interest Foundation share a common vision and values.

Vision Our vision is to achieve real and lasting improvements to the lives of disadvantaged producers, particularly in poorer parts of the world, by providing fair and just financial services and sharing risk.

Values We will: • Work within the fair trade standards set by the International Fair Trade Association (IFAT) on: creating opportunities for economically disadvantaged producers; transparency and accountability; capacity building; promoting fair trade; payment of a fair price; gender equity; working conditions; child labour and the environment • Operate as a co‑operative business; valuing and engaging our members • Seek to form creative partnerships to further our work • Value our workforce and support their personal development and enrichment. 3.2 Mission

Shared Interest Society Our mission is to finance fair trade. We do this by: • Lending to and working with producer and buyer organisations which are committed to using fair trade principles • Promoting a North‑South partnership: o Enabling members in the UK to share risk and take positive action to direct funds to borrowers working in poorer parts of the world o Listening to and promoting southern voices and views • Strengthening the fair trade movement so that it continues to present a more just model of trade.

Shared Interest Foundation Our mission is to support disadvantaged producer groups in using fair trade as a sustainable solution to poverty. We do this by: • Providing education and training, particularly in business and financial management • Developing capacity within producer organisations and assisting them in improving their business performance • Widening access to fair finance • Supporting the development of the fair trade movement • Improving and developing the social impact of Shared Interest. Finance for fair trade and support for disadvantaged producers 8 Social Accounts for the year ended 30 September 2006

3.3 Objectives and activities In order to measure social performance for this year, five objectives have been identified from our Mission and Values statements. Four of these are carried over from last year’s social accounts and were arrived at in consultation with staff, Directors, Council members and customers. The fifth, relating to being a co‑operative, was identified last year but not included in our first set of social accounts following advice not to review too many objectives in the first year. We have used the Co‑operatives UK indicators and guidance for this fifth objective. We have revised the indicators within some of last years’ objectives and in particular indicators in objective one now more closely reflect our values statement. This year we have included all the conclusions and recommendations later in this section and within the discussion of each objective in section 4.

Objective 1: Lend to and work with producer and buyer organisations which are committed to using fair trade principles Evidenced by: • Economic impact ‑ creating opportunities for economically disadvantaged producer groups through lending • Economic impact ‑ creating opportunities for economically disadvantaged producer groups by capacity building • Promoting fair trade • Charging a fair price • Taking into account ethical and environmental considerations.

Objective 2: Promote a North­South partnership Evidenced by (for members): • Creating awareness and sharing information about the situation of the South to both current UK members and potential UK members • Members providing share capital and sharing the risks that fair trade organisations face. Evidenced by (for buyers and producer groups): • Increasing personal contacts with fair trade producer groups, listening and responding to their views and requirements.

Objective 3: Strengthen the fair trade movement so that it continues to present a just model of trade Evidenced by: • Working with partners in the fair trade and social lending movement

Finance for fair trade and support for disadvantaged producers 9 Social Accounts for the year ended 30 September 2006

Objective 4: Value our work force and support their personal development Evidenced by: • Offering fair pay and benefits • Providing training and supporting personal development • Providing a good work environment – to include health, safety and welfare of staff and visitors • Ensuring transparent and effective communication channels and participation in decision making • Offering job satisfaction, a good appraisal system and regular reviews • Respecting employees’ work–life balance.

Objective 5: Demonstrate co­operative difference Evidenced by: • Member economic involvement • Member democratic participation • Participation of employees and members in training and education • Staff injury and absentee rates • Staff profile – gender and ethnicity • Customer satisfaction • Consideration of ethical issues in procurement and investment decisions • Investment in community and co‑operative initiatives • Net carbon dioxide emissions arising from operations • Proportion of waste recycled/reused.

Finance for fair trade and support for disadvantaged producers 10 Social Accounts for the year ended 30 September 2006

3.4 Main issues, achievements, conclusions and recommendations This second set of social accounts has used many of the methods and measures developed for last year’s social accounts and has introduced a number of improvements. This year there is analysis of a new objective – Demonstrate Co‑operative Difference – and the evidence used to analyse the other objectives has been reviewed and reorganised. During 2005/6 there was a significant increase in the value of lending to fair trade organisations, especially producer groups. This is our core business activity and the one that has the greatest social impact. As a result we are confident that the beneficial impact of Shared Interest in developing countries has grown. To achieve this growth we have had to expand our operations in various ways. During the last year we have employed more staff, moved head office, opened a new office in East Africa and engaged a consultant in Central America, and introduced a new scheme to help increase recruitment of members. This expansion of operations has had an impact on all our social objectives. This was also the first full year of operation for Shared Interest Foundation, the sister charity created to complement the work of the Society by building capacity among disadvantaged producer groups.

Objective 1: Lend to and work with producer and buyer organisations which are committed to using fair trade principles

Conclusions • Value of direct lending to producer groups has more than doubled • Overall lending has grown by 7% • Number of customers has increased by almost 20% • Pilot business skills training programme was very successful

Recommendations • Further increase the customer base • Improve assessment of economic impact • Develop the producer training programme • Expand our regional presence with more staff and offices in developing countries • Further improve communication with customers, including explaining more clearly the process for setting interest rates

Finance for fair trade and support for disadvantaged producers 11 Social Accounts for the year ended 30 September 2006

Objective 2: Promote a North­South partnership

Conclusions • We have provided our members with an increased level of information direct from the South via Quarterly Return • The new format for the AGM and Members’ Day increased understanding of North‑ South partnership • The launch of the Shared Interest Ambassador Scheme has increased the number of people with the training and resources to promote North‑South partnership • We increased marketing and communications activity to recruit new members (mature response and conversion rates are awaited to measure success) • We have met an increased number of potential customers to discuss their requirements

Recommendations • Further increase marketing activity to recruit new members • Expand the Shared Interest Ambassador Scheme • Develop a strong mechanism for acting on feedback from producer groups • Continue to make good use of conferences and trade shows as a cost effective way of meeting a large number of producer groups and buyers • Increase the proportion of staff that have the opportunity to meet producer groups and buyers

Objective 3: Strengthen the fair trade movement so that it continues to present a just model of trade

Conclusions • Shared Interest continues to be actively involved in a wide variety of fair trade and social lending initiatives and this strengthens the wider fair trade movement • By providing finance to fair trade buyers we are playing a key role in strengthening fair trade • The establishment of Shared Interest Foundation has the potential to strengthen the fair trade movement

Recommendations • Continue as a charity shareholder of the Fairtrade Foundation • Continue to partake in other initiatives to support the development of the fair trade movement • Ensure that Shared Interest and its ambassadors play a full part in local fair trade networks • Further develop links with regional fair trade groups

Finance for fair trade and support for disadvantaged producers 12 Social Accounts for the year ended 30 September 2006

Objective 4: Value our work force and support their personal development

Conclusions • Our staff are proud to work for Shared Interest and proud of the impact their work has on producers’ lives • Our staff enjoy the friendly atmosphere and value the relationship they have with their colleagues and appreciate the new work environment • Our staff are clear about the aims and objectives of the Society and Foundation • Some concerns still exist over communications and our staff’s ability to get their ideas across

Recommendations • Monitor and improve training and development records • Improve health and safety training in general, including overseas offices • Monitor individual staff workloads to ensure a healthy work‑life balance • Implement the new communications structure to enable our staff to express their opinions openly

Objective 5: Demonstrate co­operative difference

Conclusions • The economic involvement of members increased during 2005/6 • The Society has a high level of democratic member participation, although attendance at AGMs is not rising • Customers are very satisfied with the service they receive. However some concern was raised about the interest rates charged and the clarity of the account statements • We have set up an environmental group to look at all environmental issues including sourcing, recycling and carbon emissions

Recommendations • Keep listening to producer groups’ needs • Continue efforts to increase membership and encourage members to increase their investments • Increase the level of training for Shared Interest ambassadors • Improve the mechanism for acting upon customer feedback • Examine the investment policy • Agree and implement procurement guidelines • Agree the proportion of profit that the Society will donate to the Foundation in profitable years • Develop and implement a policy on energy use, carbon offsetting and recycling • Monthly reviews of business travel to ensure that trips planned are appropriate

Finance for fair trade and support for disadvantaged producers 13 Social Accounts for the year ended 30 September 2006

4 Analysis of the Social Accounts

Quotations used in this section have been provided spontaneously by Shared Interest buyers and producer customers during the period 1 October 2005 to 30 September 2006. Each customer has agreed for their quotation to be published in our social accounts. Objective 1: Lend to and work with producer and buyer organisations which are committed to using fair trade principles

Economic impact ­ creating opportunities for economically disadvantaged producer groups through lending This objective considers the social impact of our core business activity. This impact derives from our financial support of organisations that have a social impact. To evaluate this impact we must consider two factors: 1. The degree of support we provide to customers. 2. The social impact of our customers on their communities. A quantitative measurement of each of these is difficult, and development of reliable indicators is a long term process. We have only just begun to address these issues in this year’s social accounts. In this year’s social accounts we have made a fundamental change in the way we measure the degree of support we provide to our customers. Last year’s statistics were based on payment flows, ie measuring the payments we make to producer groups. This, however, does not consider our function as a lender. This year we have progressed to considering lending as the principal indicator of our support for organisations. The justification for this is that our activity as a payment processor has minimal social impact, since if a buyer paid the producer group directly through a commercial bank then the payment would be received exactly in the same way. The main value we provide to customers is through lending.

Focus on producer groups The end‑beneficiaries of our lending are producer groups, and so for this analysis we have looked at all our lending (including lending to buyers) from the perspective of the producer group. Details of how we consider this for buyer lending are explained in Appendix A. A full list of our customers can be found in Appendix B.

Financial products provided by Shared Interest Producer Lending Buyer Lending Fair trade export credit Pre­financing credit facility Commercial order export credit Shop loans Long term loans Fair trade export credit The purpose of this facility is to provide sufficient money to producer groups to enable them to fulfil their orders, grow their businesses and increase their social impact, by providing sufficient working capital to complete and deliver new orders. Customers are provided with a facility enabling them to borrow up to a maximum of 80% of the value of any order received (60% for some commodity orders). Repayment is made on delivery when the buyer pays for the order via Shared Interest, which deducts the amount borrowed and any interest due. Another feature of this facility is the ability for a fair trade buyer to provide part of the Finance for fair trade and support for disadvantaged producers 14 Social Accounts for the year ended 30 September 2006 pre‑finance and then for the producer group to borrow more (up to a total maximum of 80% per order). To access this facility orders must be made with a fair trade buyer who has an account with Shared Interest. “Shared Interest is invaluable to our business because of accessibility of credit and financial services at affordable cost.” Fred Masinde, Chairman, Undugu Society of Kenya

Commercial order export credit This facility is for fair trade producer groups which are selling goods to commercial firms or fair trade buyers who are not clients of Shared Interest. Where a buyer does not provide pre‑ finance, Shared Interest can step in and assist a producer group in financing an order, which otherwise they might be unable to fulfil. Repayment of lending is made when orders are delivered. On delivery of an order a buyer pays the full value of the order to Shared Interest who will deduct the loan repayment and any interest generated and then transfer the remaining amount of money for that order to the producer group.

Long term loans Shared Interest offers producers long term loans for the purchase of infrastructure such as machinery, buildings or vehicles. Borrowing is for between one and five years and repayments are set depending upon the circumstances of the producer. Loan sizes are determined by the financial situation of the producer and their ability to repay the loan. Long term loan to purchase a tractor (USD 26,000) “We have been very slow for months, but with the acquisition of the tractor a couple of months ago, we have improved quite considerably in efficiency and a little more in productivity. Our needs during the past months were huge, but the support we had from Shared Interest though small, has impacted greatly. It will take us some time to recover fully from the downward trend we were used to before we had the tractor”. “We took delivery of the tractor barely two weeks ago and the staff motivation is very high. Last week, the tractor helped in carting compost materials to the site, since it has been raining heavily recently and all the farm roads are in a deplorable condition and it is only the tractor that can ply the roads”. James Cole, Managing Director, ELOC Farms, Ghana

Lending to producer organisations over the last four years 2003 2004 2005 2006 No of producers with credit/loan accounts 45 41 43 56 No of commercial order export credit payments 15 15 10 54 Total commercial order export credit value £59,841 £167,475 £153,695 £451,523 No of fair trade export credit payments 119 112 128 113 Total fair trade export credit value £287,828 £313,512 £286,685 £370,104 No of long term loans 15 15 20 27 Total long term loan value £347,669 £480,988 £440,381 £821,627 Total producer borrowing £420,252 £600,584 £580,065 £1,346,955 The financial figures are annualised averages of the daily balances.

Finance for fair trade and support for disadvantaged producers 15 Social Accounts for the year ended 30 September 2006

Producer Lending

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Fair trade export credit Commercial order export credit Long term loans

This year there has been a huge increase in the value of commercial order export credit and long term loans. This is due to three main reasons: 1. Previously we allowed a producer group to take out a long term loan only if it had a facility with Shared Interest for over 12 months. Our new policy allows a producer group to apply for a long term loan without an existing credit facility. 2. Many of our new producer customers come from the food market and their needs are different to those of handicraft producer groups. For example, their turnover is usually much higher and therefore they need larger loans. Food producer groups on average have a higher proportion of export orders from commercial buyers. 3. Three producer groups between them accounted for 53% of our producer lending over the 12 month period. This concentration of lending is expected to reduce rapidly as we continue to increase our overall volume of direct producer lending.

Buyer pre‑financing credit facility Fair trade buyers often want, or are required, to provide producer groups with pre‑finance when placing an order. However, buyers can find themselves struggling to provide sufficient pre‑finance from their own cash reserves and Shared Interest assists by offering fair trade buyers a facility which can be used to pre‑finance orders with their producers. In addition a buyer can also benefit from a further credit period after the order is received enabling them to sell their product and receive an income prior to repayment of the amount borrowed. “Shared Interest provides lines of credit for both ourselves and our partners without which it would be impossible for us to operate as a viable fair‑trade business. This year we have purchased 250 tonnes of dried fruit and nuts from our partners in Africa, South America and the Asian sub continent. Through Shared Interest we enable our partners to have a place in the European food market”. Dr Karen Hetherington, UK buyer, FM Foods Finance for fair trade and support for disadvantaged producers 16 Social Accounts for the year ended 30 September 2006

Buyer shop loans Shop loans are specifically designed for retailers of fair trade products. They enable a business to finance their fair trade stock purchases, repaying the loan at a point in time when they are able to do so. The loan amount is agreed by Shared Interest in consultation with each applicant.

Lending to buyer organisations over the last four years 2003 2004 2005 2006 No of buyers with accounts** 35 41 38 39 Total value of pre­finance* £7,168,688 £6,048,076 £6,944,685 £6,664,533 No of shop loans 4 12 22 22 Total value of shop loans £199,059 £213,508 £303,482 £384,973 Total buyer borrowing £7,367,748 £6,261,583 £7,248,167 £7,049,506 * For 2006 we have taken the average of drawn lending. For previous years we used the drawn balances at the end of each month added together and divided by 12 to get an average for the year. ** We have stated the number of buyers as at the end of each year.

Buyer lending has dropped slightly this year. This is to be expected, as a result of our internationalisation process and a focus on lending directly to producer groups. However buyer borrowing continues to be the majority of our lending portfolio (buyers 84%, producer groups 16%).

Analysis of social impact Despite considerable investment into researching effective indicators to measure our social impact this year, we have succeeded in collecting little additional data. Most effort has been given to setting up and embedding systems of data collection that will be used to evaluate social impact in future years. This year, therefore, we are able to consider only basic indicators. We have commented on these indicators, and also considered indicators that we intend to use in future years. The aim is to combine indicators of the two factors (our support to customers, and the social impact of our customers) to create indicators of our social impact as a whole. To assess our support of customers we consider the volume of our lending. In simple terms, we assume the more that we lend the more social impact we will have. Overall our lending has grown 7.3% over the past year, which is encouraging. This, combined with the growth in direct producer lending, leads us to believe that we have had an increased social impact this year. The direct lending to producer groups has more than doubled in the last year, from a fairly low base. This trend is very satisfying, and is a result of the strategy at Shared Interest to focus on direct producer lending for 2005 to 2008. Useful factors to use in consideration of our support of customers are: • The proportion of a customer’s borrowing (for loans) that is provided by Shared Interest, or the proportion of a customer’s trade (for trade finance) that is financed by Shared Interest. This information is needed to understand how much of a producer group’s social impact we have influenced with our finance. • The characteristics of the lending, in terms of interest rate, lending conditions, etc.

Finance for fair trade and support for disadvantaged producers 17 Social Accounts for the year ended 30 September 2006

Data collection systems are now in place to record information for this analysis for the future, but no data is yet available and therefore is not included in this report. The fair trade movement continues to grapple with measuring social impact. We consider this year two simple indicators below, and comment on other potential indicators for future reports.

Human Development Index (HDI) The HDI is a widely recognised macro‑economic measure published by the United Nations Development Programme. It is used to rank countries not just by income but also takes into account various social and economic factors including life expectancy at birth and adult literacy.

Percentage of producer organisations receiving payments from Shared Interest over last four years analysed by Human Development Index (HDI) of their countries HDI 2003 2004 2005 2006 Low 16% 17% 18% 12% Medium 67% 66% 66% 73% High 16% 17% 16% 15% 2006 figures are based on lending, with buyer lending apportioned to producer groups as explained in Appendix A; figures for previous years are based on payment flows.

It is important to mention that although only 56 producer groups have direct credit facilities or loans with Shared Interest, we do make payments (on behalf of fair trade buyers) to nearly 400 producer groups worldwide. When apportioned to the relevant producer group, 85% of our lending in 2006 went to low and medium HDI countries. The majority of lending to producer groups in high HDI countries is for wholesalers in developed countries who all source from developing countries.

Gender equity Empowerment of women is an important contribution to social impact and as such is included in both FLO and IFAT standards. The table shows the percentage of women employees or members for the 56 producer groups we directly lend to, scaled by the borrowing of each producer. We only collect statistics for these producers, hence the need to restrict our dataset.

Proportion of women members or employees of producer customers 2003 2004 2005 2006 Women 58% 43% 50% 40%

Gender equality is a systemic problem and these figures are encouraging. Although the 40% recorded for this year is lower than in previous years, this is due to a high volume of new lending in the commodity sector which has lower gender equity in general than the handicrafts sector, our traditional market. We plan to monitor this trend and consider action as required.

Finance for fair trade and support for disadvantaged producers 18 Social Accounts for the year ended 30 September 2006

Other indicators Other indicators we wished to consider this year but have not been able to collect data for are: • Growth in producer group size. If a producer co‑operative is growing in size, it is indicative that individual producers see benefit in joining the co‑operative. We have already begun to collect data for the number of individual producers in each producer group so we can measure any change in size. • Environmental measures. We will collect data for agricultural producer groups on the percentage of land that is farmed according to organic standards. • Percentage of a producer group’s trade that is sold through fair trade channels. This is an indicator in so far as fair trade goods are expected to have a higher social impact on a producer group than non‑fair trade goods. We will begin to collate this for next year.

Indirect social impact Indirect social impact on producer groups through our support for buyer organisations has not been analysed for these social accounts. This is difficult to measure, but we believe it is significant. Without our support, buyer organisations would struggle financially and producers would be adversely affected. One of the main benefits of fair trade is market access for producer groups, which is provided mostly by the fair trade buyer organisations. Buyers also benefit by being able to process all their payments to fair trade producer groups through Shared Interest. We do seek to report on indirect social impact through the case studies and customer profiles which are regularly featured in Quarterly Return, our members’ magazine.

Progress on areas for improvement noted in previous social accounts Last year’s social accounts highlighted three main areas for improvement relating to Objective 1:

• Increase the recruitment of customers

• Improve the variety of different credit products

• Improve the internet site for making transactions.

Increase the recruitment of customers We have recruited 20 producer groups and five buyers since October 2005. However 6 producer groups and 4 buyers have closed their facilities, so the net increases were 13 producer groups and one buyer. The 30% increase in producer customers is particularly encouraging as it has been our focus for this year.

Improve the variety of different credit products Although we have not introduced any new products we have adapted our existing products to meet the needs of our customers more effectively. For example, we no longer require a producer group to be a customer for 12 months before we offer a term loan.

Finance for fair trade and support for disadvantaged producers 19 Social Accounts for the year ended 30 September 2006

Improve the internet site for making transactions We have a new and more functional transaction website for our buyer customers to make payments to their producer groups. All of our buyers have access to this and currently over half are using the site to make payments. We have had excellent feedback from customers about the website and we have been working with them to make the site as user friendly as possible. “Your new website is working well, and I like the improvements you have made.” Janice Bucher, Ten Thousand Villages USA

Finance for fair trade and support for disadvantaged producers 20 Social Accounts for the year ended 30 September 2006

Objective 1 continued: Lend to and work with producer and buyer organisations which are committed to using fair trade principles

Economic impact ­ creating opportunities for economically disadvantaged producer groups by capacity building In addition to the capacity building impact of our long term loans, a new way that Shared Interest builds capacity among disadvantaged producers is through the work of the Shared Interest Foundation, especially through training. In May 2006 the Foundation ran its first training course, using a UK‑based trainer. It was a pilot programme of business skills training for a producer group in Kenya. This pilot was the result of extensive research into the needs of producer groups. Below is a report on this event.

Pilot training programme Mango True Mirage is a small manufacturer and supplier of a range of fair trade products, including baskets, handbags, jewellery, timber and soapstone products. It has a wide range of national and international wholesale customers and also a small retail outlet. The company’s manufacturing policy is to make to order, except for a small proportion of production that is sold in the retail outlet. Consequently it has very little stock. Its supply chain extends over a large area with soapstone products being made in western parts of Kenya, whilst suppliers of timber products are more local (within 20 km) and most vegetable fibre products such as baskets and bags are made in close proximity to the village of Mango. The objectives of the pilot training programme were to: • Prepare and deliver a bespoke 5 day business skills training programme to the management and staff of Mango True Mirage • Assess the potential improvements and benefits that business skills training initiatives can realistically achieve with other fair trade companies • Identify improvements that can be applied to future business skills training programmes. After a review of the operations at Mango True Mirage, discussions with the management team and tour of the facilities, the following issues were found to be the highest priorities for improvement. • Expand the customer base • Achieve delivery on‑time performance • Introduce business and financial management controls and procedures including business planning • Acquire skills and competencies to access funding for growth • Production control and scheduling techniques • Product design. A training programme to address these priorities was developed and delivered, using an interactive workshop approach. Topics included market research, negotiation and marketing, business planning, production control, key performance indicators, efficiency and effectiveness, bottleneck analysis, elimination of waste, financial control, budgeting, Finance for fair trade and support for disadvantaged producers 21 Social Accounts for the year ended 30 September 2006 planning and forecasting, order tracking, team working, communication, supplier development, customer relationship management and project management. All 11 participants were highly motivated to learn and participated well. A number of case study materials were selected to reinforce the teaching. The final day was used to assess the understanding and the effectiveness of the learning process. The participants were tasked to produce a company action plan with priorities and reasons for the choices. Based on evaluation reports submitted by Mango True Mirage and a visit by our Managing Director to their premises in September 2006, we are confident that the group has been progressing well since the training programme. The staff have implemented a business planning process and a tracking system which enables them to follow the whole process from receiving an order, to sourcing the materials right through to delivery. As a result they are meeting deadlines they were previously missing. They have also incorporated new skills from the training into their daily tasks and are seeing a great improvement in the way their business is running.

Further training As a result of the success of the pilot programme, the Foundation Trustees have now approved a three‑year producer training project and further courses are underway. In August, the Foundation co‑funded (with TWIN) a commodities training project in Uganda for Gumutindo coffee co‑operative. As a result Gumutindo now has strong internal financial systems following one week’s intensive training with the co‑operative’s accountant. Further training is planned for November 2006 in our Nairobi office, using a local trainer. Working with COFTA (Co‑operation of Fair Trade in Africa) the training will include a range of different producer groups from the region. The participants will benefit from shared learning from their peers and will in turn build a support network in the area. Bookkeeping, cash flow forecasting and budgeting are some of the topics that will be covered.

Finance for fair trade and support for disadvantaged producers 22 Social Accounts for the year ended 30 September 2006

Objective 1 continued: Lend to and work with producer and buyer organisations which are committed to using fair trade principles

Promoting fair trade

Through our lending Our support for the fair trade movement is dealt with in more detail in Objective 3 but when analysing the social impact of our lending it is relevant to point out that we strongly encourage our customers, both buyers and producer groups, to join with the International Fair Trade Association (IFAT) or register with the Fairtrade Labelling Organisation (FLO). Each of these organisations has its own set of criteria that ensures that its producer groups/buyers are working within fair trade principles.

Shared Interest customers membership/registration with fair trade organisations Fair trade organisation No of Shared Interest customers Member of IFAT 72 Registered with FLO 20 Other 4

All our customers, except four, are either members of IFAT or registered with FLO. Of the four exceptions, two are members of the British Association of Fair Trade Shops and two are members of the US Fair Trade Federation. Our credit policy recommends that all new customers should join IFAT or register with FLO if they have not already done so. In this way we are indirectly promoting fair trade.

By the work of the Foundation The Foundation’s mission identifies that one of the ways we support disadvantaged producers is by “supporting the development of the fair trade movement”. Activities carried out in 2005/6 that relate to this include: • Being a charity shareholder in the Fairtrade Foundation and providing sponsorship for the Producer Tour as part of Fairtrade Fortnight (see report under Objective 3) • Together with Traidcraft Exchange and as part of the North East Fair Trade Action Research Network, supporting the initiation of research into the impact of local fair trade organisations in developing countries. This work is being led by Geoff Moore, Professor of Business Ethics at Durham University, and will continue in 2006/7. Given its newness, low staffing level and low public profile, this year has seen the Foundation make significant positive contribution to the development of the fair trade movement. Feedback from both the Fairtrade Foundation and Durham University has indicated that the Foundation’s support for the projects listed above has been a vital enabler and is much appreciated.

Finance for fair trade and support for disadvantaged producers 23 Social Accounts for the year ended 30 September 2006

“Little academic research effort has been directed specifically towards the producer or local fair trade organisations … As the buyers from the producer households and the suppliers to both fair trade and commercial buying organisations, local fair trade organisations perform a central role. Gaining a fuller appreciation of how these organisations perform this role, the development of capacity, their ability to access not only fair trade markets but also local and international commercial markets is important to a deeper understanding of how fair trade works.” Geoff Moore, Professor of Business Ethics at Durham University

Finance for fair trade and support for disadvantaged producers 24 Social Accounts for the year ended 30 September 2006

Objective 1 continued: Lend to and work with producer and buyer organisations which are committed to using fair trade principles

Charging a fair price One of the principles of fair trade is payment of a fair price. Translating this to our business we consider whether our lending is done on fair terms. There are two main considerations here • Are our interest rates fair? • Are our lending terms and conditions fair?

Interest rates When setting interest rates we consider: • Our credit policy • Local market rates.

Our credit policy The interest rate we charge to a customer is a combination of 1. Prime Rate. This is calculated from the cost of the funds that we are lending on plus a margin. Prime rates differ by currency lent and the cost of borrowing that currency. We use judgement to determine the level of the margin on each currency necessary to achieve sufficient income in order to meet our yearly budget targets. 2. Risk Premium. We complete a risk assessment of the customer and establish an objective risk premium based on this assessment. The policy is designed to be equitable for all borrowers, based on an objective risk assessment of the borrower. In the past the interest rates for producer groups were all set at the same (prime + 4%) and minimal financial information was requested. Neither local rates nor customer risk were taken into consideration. The credit policy was revised in December 2005 to enable us to take into account a reasonable risk assessment of the producer group and to adjust the interest rate charged accordingly. In practice the rate is always less than or equal to the default rate of prime + 4%. Interest rates for new customers are calculated using the new policy. For existing customers this methodology will be implemented at their next annual facility review and their interest rates re‑assessed.

Local market rates We always ask customers to advise us about their other borrowing facilities and the interest rates charged by local lenders. Occasionally we adjust our interest rate in order to be competitive with local market rates and to make sure the customer is not disadvantaged through borrowing from Shared Interest. Customer feedback Customer feedback is covered in detail under Objective 5 however it is worth commenting on customer feedback regarding interest rates. 4 out of 10 buyers and 4 out of 17 producer groups have commented that they do not consider our interest rates are fair. Some of these Finance for fair trade and support for disadvantaged producers 25 Social Accounts for the year ended 30 September 2006 comments were based on a misunderstanding of our interest rates (for instance, one customer mistakenly thought our interest rate was monthly rather than annual) and we need explain our methodology clearly and apply it consistently.

Lending terms and conditions In general we do not seek security against financing, but where we do it is because the borrowing organisation is not strong enough on its own. We might seek a guarantor to provide security to support the borrowing – this could be an individual or an organisation. Only five facilities currently have guarantees in place.

Finance for fair trade and support for disadvantaged producers 26 Social Accounts for the year ended 30 September 2006

Objective 1 continued: Lend to and work with producer and buyer organisations which are committed to using fair trade principles

Taking into account ethical and environmental considerations

Gender equity We have looked at this already in the analysis of the social impact of the lending; however we revisit the issue to consider the impact of fair trade in general in this area. Although we collect information on producer group annual reviews about the number of women employees in an organisation we provide credit to, this is not something that affects the decision as to whether the facility is approved or not by the Shared Interest Board. We rely on the fact that our current producer group and buyer members are registered with FLO or members of IFAT which have their own standards for gender equity. “FLO follows ILO Convention 111 on ending discrimination of workers. The Convention rejects “any distinction, exclusion or preference made on the basis of race, colour, sex, religion, political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation” (art. 1). As far as applicable, FLO extends these principles to members of organisations.” FLO Generic Standards

“To oppose discrimination and ensure equality of employment opportunities for both men and women who suffer from the exploitation of their labour and the effects of poverty and racial, cultural or gender bias.” IFAT Standards

Working conditions We do not specifically consider working conditions when deciding whether to lend to a producer group. We believe that this issue is covered by the fact that they are members of IFAT or registered with FLO. “FLO follows ILO Convention 111 on ending discrimination of workers. The Convention rejects “any distinction, exclusion or preference made on the basis of race, colour, sex, religion, political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation” (art. 1). As far as applicable, FLO extends these principles to members of organisations.” FLO Generic Standards

“To ensure a safe working environment that satisfied at a minimum all local statutory regulations. To provide the opportunity for all individuals to grow and reach their potential. To ensure that work is carried out under humane working conditions, using appropriate materials and technologies, while following good production and work practices.” IFAT Standards

Finance for fair trade and support for disadvantaged producers 27 Social Accounts for the year ended 30 September 2006

Environment We do not collect information on environmental impact specifically although this is something that we look at during a visit to a producer group. We aim to begin collecting data for assessing environmental impact of producer groups. Some simple indicators that we are considering: • To measure the proportion of land (for agricultural producer groups) that is certified organic • To gather data on environmental policies for handicraft producer groups in sourcing materials. However, we are confident that our current producer customers will have been made aware of environmental developments and have to adhere to generic and product specific standards by being a member of IFAT or registered with FLO.

“The producers’ organization ensures that its members protect the natural environment and makes environmental protection a part of farm management. The organization is expected to facilitate the development, implementation and monitoring of producers’ operational plans with the aim of establishing a balance between environmental protection and business results through the use of a combination of measures including crop rotation, cultivation techniques, crop selection, careful use of inputs such as fertilizers and pesticides and, as relevant, shade production. The organization ensures that its members minimize the use of synthetic and other off‑farm fertilizers and pesticides, partially and gradually replacing them with non‑synthetic and on‑farm fertilizers and biological methods of disease control. FLO encourages small producers to work towards organic practices where socially and economically practical. Producers are encouraged to minimize the use of energy, especially energy from non‑renewable sources. The organization is expected to maintain a management system consistent with its size in order to ensure organizational control of those areas for which it is responsible and to monitor production by its members through the use of recognized inspection and verification methodologies.” FLO Generic Standards

“To encourage the trading of goods which are environmentally friendly. To manage resources sustainably and to protect the environment.” IFAT Standards

Finance for fair trade and support for disadvantaged producers 28 Social Accounts for the year ended 30 September 2006

Objective 1: Conclusions and recommendations

Conclusions • Value of direct lending to producer groups has more than doubled • Overall lending has grown by 7% • Number of customers has increased by almost 20% • Pilot business skills training programme was very successful

Recommendations • Further increase the customer base • Improve assessment of economic impact • Develop the producer training programme • Expand our regional presence with more staff and offices in developing countries • Further improve communication with customers, including explaining more clearly the process for setting interest rates

Finance for fair trade and support for disadvantaged producers 29 Social Accounts for the year ended 30 September 2006

Objective 2: Promote a North­South partnership

Creating awareness and sharing information about the situation of the South to both current UK members and potential UK members

Current members

Quarterly Return (QR) The main method of communication with members is the newsletter Quarterly Return which is sent to every member in October, January, April and July. This is usually an 8 page magazine which contains news from producer groups that the Society works with, the projects in the South that the Foundation is working on, updates from the wider fair trade movement, articles usually focusing on subjects from the South, and regular updates from Shared Interest’s regional offices in Kenya and Costa Rica. To ensure QR is widely accessible to members, customers and others, it is available to download on the Shared Interest website and also in large print format. QR also enables members to have their questions published and can act as a discussion forum for members. QR also contains information about members, ambassadors and staff. Every issue is also sent to all producer group customers. This enables Shared Interest’s Southern customers to understand how the members in the UK are involved in the work of the Society and Foundation.

Annual General Meeting and Members’ Day We combine our AGM with a Members’ Day which helps to keep our UK‑based membership informed about the South. In 2006 there was a new format to ensure that sufficient focus was given to the content of the Members Day and encouraging the day to be as interactive as possible. Shared Interest staff gave a presentation which included updates on producer groups in the South worked with during the year; a short film made by Shared Interest’s consultant based in Costa Rica was shown which included footage and comment direct from a producer; and a fair trade cotton producer was interviewed and gave a question and answer session about the situation in India and the impact of fair trade. Members were invited to participate in a workshop, and also give feedback on the content of the day. Please see Appendix C for the full feedback which demonstrates that the Members’ Day was valuable for keeping members informed. There is more analysis of attendance and voting under Objective 5.

Potential members In order to promote Shared Interest to potential members and supporters it is necessary to generate awareness and share information about the situation in the South to explain what we do, why we do it and the impact it has. There has been greater communications activity during 2006 to increase the profile of Shared Interest to encourage new membership.

Finance for fair trade and support for disadvantaged producers 30 Social Accounts for the year ended 30 September 2006

Promotional campaigns, enquiries and new accounts Measure 2005 2006 Increase/decrease No of inserts placed in campaigns for 200,000 682,100 241% new members No of titles used for insert campaigns 8 25 213% Responses to insert campaigns 484 861 78% New members as a result of insert 109 108 ­1% campaigns* No of adverts placed 10 13 30% Total readership opportunity to see direct 855,500 994,100 16% marketing activity** Total no of enquiries about membership 1354 1227 ­9% New accounts opened 318 336 6% Conversion rate 23% 27% 17% New investment total value* £556,163 £596,260 9% Net increase in new accounts (after 10 48 380% closures) *Response and conversion time from enquirer to member can be 18 months therefore the campaigns from 2005/06 are not yet at full response and conversion **Circulation figures supplied by magazine/newsletters

We also use our website to generate awareness, by publishing news articles, newsletters and producer group stories. This is accessed by both existing and potential members. During 2005/6 there were 46,789 visits to the website (data supplied by web hosts Intrica). During 2005/6 Shared Interest also worked to increase awareness using press releases. This activity generated a further ʹopportunity to see’ of 290,071 (data supplied by Durrants media monitoring service). We developed a set of Frequently Asked Questions during 2005/6 for use by any representative of Shared Interest. This gives accurate and consistent answers to common questions put by people in the North about Shared Interest (Society and Foundation), our work in the South, and about fair trade generally.

Ambassador scheme The Shared Interest Ambassador Scheme was launched in January 2006 to further generate awareness for Shared Interest and its impact in the South and to increase membership. The scheme has only been fully operational since August 2006 and by the year end 47 ambassadors had been recruited. They attend various events (including church events, music festivals, fair trade fairs and markets etc) to promote Shared Interest by giving talks about fair trade, distributing leaflets and newsletters and various other activities. During 2006 ambassadors have spoken to over 300 individuals at various events. The launch of this scheme is a big improvement from 2005, when there were just 20 voluntary representatives with no resource committed to them. The Ambassador Scheme has a dedicated member of staff to support it (for 50% of her time).

Progress on areas for improvement noted in previous social accounts

Increasing membership Last year 318 new accounts were opened but 308 were closed making a net increase of 10. This year not only was there an increase in the number of new accounts opened (336), but also fewer accounts were closed (288), so the net growth in membership was 48.

Finance for fair trade and support for disadvantaged producers 31 Social Accounts for the year ended 30 September 2006

Objective 2 continued: Promote a North­South Partnership

Members providing share capital and sharing the risks that fair trade organisations face The amount of share capital provided by Shared Interest’s members demonstrates the relationship the UK members have with the Southern producer groups. Our literature makes it clear that the share capital is at risk. Therefore the level of capital provided and the risk involved is an effective measurement of the relationship.

Share capital and risks compared for the last two years Measure 2005 2006 Increase/decrease Total share capital £19,215,621 £20,494,557 6.7% Average value of investment £2,314 £2,439 5.4%

Level of bad debt £51,587 £36,473 n/a Lending loss reserve £766,406 (with £766,406 (with ­12.5% £9.6m lent as at £11.5m lent as at 30/09/05 = 8%) 30/09/06 = 7%) % of share capital lent 50.6% 56.3% 11%

In the workshops held during the 2006 AGM and Members’ Day, members were asked to discuss a variety of questions including what was surprising about the update by Shared Interest staff, and what they would like to know more about. The presentation by staff prior to the workshop included some discussion about the increased level of risk in the lending being done during 2005/6, yet no feedback about risk was given by members as part of the workshop. It would be reasonable to infer that members feel comfortable sharing the level of risk with the fair trade businesses that is inherent in the investments made with Shared Interest.

Finance for fair trade and support for disadvantaged producers 32 Social Accounts for the year ended 30 September 2006

Objective 2 continued: Promote a North­South Partnership

Increasing personal contacts with fair trade producer groups, listening and responding to their views and requirements Shared Interest staff continue to have considerable contact with both existing and potential customers by email, telephone and letter. However, with the establishment of overseas offices and the progress on commodities lending and producer training, this year has seen a significant increase in the number of face to face meetings staff have held with producer groups (from 40 producer groups in 2004/5 to almost 150 in 2005/6, 270% increase). Below is a table summarising the visits carried out by Shared Interest staff during the year. The data is sourced from staff records and detailed in Appendix D. This year data is included for buyer visits as well as producer group visits since the buyers are often able to provide feedback on their producers’ views and requirements.

Personal contact with customers 2005/6 Region No of Increase No of Staff member Primary reason for (location of producer from last buyer (UK based or visits meeting)* groups year (%) groups overseas visited/met visited/met based) Europe 24 118% 27 All UK based Lending (sales) Africa 59 436% 0 Approx 50/50 Lending (sales) 80% & Foundation (research) 20% Latin America 31 342% 1 Mainly Lending (sales) overseas staff North 6 ­45% 29 Approx 50/50 Lending (sales) America Asia 28 None last 3 All UK based Lending (sales) 50% & year Foundation (research) 50% Total 148 270% 60 * Location of meeting taking into account trade fairs etc

As far as we are aware there is no formal external benchmark for this area, however one of the reasons for developing an overseas presence was a realisation that Shared Interest was behind other lenders in relation to ability to visit producer groups and respond to their needs.

Progress on areas for improvement noted in previous social accounts

Increase contact with existing and potential customers The implementation of regional presence in East Africa and Central America has led to significant increase in contacts with potential customers (up 436% and 342% respectively) and a steady flow of new lending proposals and feedback on producer groups’ requirements. The Customer Service Team has a contact plan for all existing customers and the customer database is used to track these monthly updates. We have a travel plan for visits to key customers and have started to make increasing use of new technology (web cams and internet based telephony). This has been a good year for face‑to‑face contact with both producer groups and buyers, with a good variety of staff having the opportunity to travel on behalf of the organisation.

Finance for fair trade and support for disadvantaged producers 33 Social Accounts for the year ended 30 September 2006

(Over 50% of staff have been able to travel to meet with producer groups or buyers during the year). As a result of their visits, staff members feel more informed about their customers’ needs and more able to respond to these. This year this has included not just lending customers but also research trips to meet with potential beneficiaries of the Foundation. These needs assessment meetings proved extremely valuable in developing the producer training plans and ensuring the project reflected the producer groups’ varying needs.

Objective 2: Conclusions and recommendations

Conclusions • We have provided our members with an increased level of information direct from the South via Quarterly Return • The new format for the AGM and Members’ Day increased understanding of North‑ South partnership • The launch of the Shared Interest Ambassador Scheme has increased the number of people with the training and resources to promote North‑South partnership • We increased marketing and communications activity to recruit new members (mature response and conversion rates are awaited to measure success) • We have met an increased number of potential customers to discuss their requirements

Recommendations • Further increase marketing activity to recruit new members • Expand the Shared Interest Ambassador Scheme • Develop a strong mechanism for acting on feedback from producer groups • Continue to make good use of conferences and trade shows as a cost effective way of meeting a large number of producer groups and buyers • Increase the proportion of staff that have the opportunity to meet producer groups and buyers

Finance for fair trade and support for disadvantaged producers 34 Social Accounts for the year ended 30 September 2006

Objective 3: Strengthen the fair trade movement so that it continues to present a just model of trade

Working with partners in the fair trade and social lending movement The table below shows the fair trade and social lending organisations, networks and initiatives that Shared Interest has participated in the last year

Shared Interest’s involvement with other organisations, networks and initiatives Organisation Type of Type of Level of involvement organisation involvement International Fair Global network of Non trading Strategic partnership – credit Trade Association over 200 FT member available to IFAT members. (IFAT) organisations in Staff members attended and www.ifat.org more than 50 presented at the regional countries conferences in Africa, Asia & Europe as well as the AGM. Fairtrade Labelling Worldwide Fair trade Supporter Credit available to FLO Organisation standard setting producers. Meetings with FLO International (FLO) and certification staff in Oct 2005 and Jan 2006, www.fairtrade.net organisation leading to FLO board paper regarding lending (currently progressing) Fairtrade Foundation Responsible for Shared Non Exec Director www.fairtrade.org.uk marketing and Interest Attended AGM & members promoting the Foundation is meetings Fairtrade label and a member Project funding to support Fairtrade labelled Producer Tour in Fairtrade products in the UK Fortnight Transfair USA and FLO national Supporter Credit available to Transfair Transfair Canada initiatives in USA & producers. Meetings with both to www.transfairusa.org Canada, responsible discuss credit facilities and other www.transfairca.org for Fairtrade labelled opportunities for working together. products FAST ­ Finance Network of social Supporter Networking with various social Alliance for lenders lenders about Shared Interest’s Sustainable Trade future role in the association / assistance with establishing it Trade Justice Campaigns for Member The Society is a member of the Movement (TJM) changes to unjust TJM. Invited to join their AGM. www.tjm.org.uk rules governing world The Society participates in trade various campaigns (eg Make Poverty History) and passes relevant information onto its members UK Fair Trade Informal grouping of Member Approx 4 meetings per year Leaders Forum Chief Executives of UK IFAT members Newcastle Fairtrade Local fair trade city Member Treasurer Partnership initiative Monthly meetings www.newcastle.gov. uk/fairtrade.nsf/ British Overseas Network of ~300 UK Member Attendance at various training NGOs for based development days Development organisations (BOND) www.bond.org.uk

Finance for fair trade and support for disadvantaged producers 35 Social Accounts for the year ended 30 September 2006

Co­operatives UK The apex Member Company Secretary co­led a www.cooperatives­ organisation for seminare at Co­operative uk.coop co­operatives in the Congress. Ongoing dialogue re UK code of practice and with Co­op College re projects International Global network of Member Staff member presented at Association of socially and INAISE conference in Spain Investors in the environmentally Social Economy oriented financial (INAISE) institutions www.inaise.org UK Social UK membership Member Investment Forum network for socially (UK SIF) responsible www.uksif.org investment FEBEA ­ Brussels based Supporter Increasing involvement via www.febea.org/ association of EU INAISE conference and European Federation financial institutions discussions regarding social of Ethical and whose aim is to reporting. Alternative Banks finance social and solidarity­based economy Oikocredit Oikocredit is a Member Have previously issued 5 year www.oikocredit.org cooperative society, bonds as Loan Stock in support of which encourages Oikocredit. 4 of these remain in investors to invest place at the end of September their funds in a 2006. Value ~£4m socially responsible manner Co­operative Law Association of Member Association people/organisations interested in special bits of law that relate to co­operatives DARN and North Informal local Member Several meetings per year, East Fair Trade networks of hosted one and presented at Action Research practitioners and another; contribution to research academics interested plans on impact of local fair trade in fair trade and organisations. related topics

(Source Shared Interest internal records)

Three key developments in our support of the fair trade and social lending movements this year are discussed below:

Financing Alliance for Sustainable Trade (FAST) We have worked closely with other providers of social financial services to establish a trade association for lenders working to assist sustainable trade producer groups across the developing world. The association, known as the Financing Alliance for Sustainable Trade (FAST), is expected to start operating in early 2007. Shared Interest staff have played a key role in this initiative, both attending and facilitating a number of events over the past two years and dedicating time to the establishment of this association. FAST will focus initially on developing world‑class producer training materials, identifying accessible loan guarantee funds and building credible social impact metrics for social financial service providers. The

Finance for fair trade and support for disadvantaged producers 36 Social Accounts for the year ended 30 September 2006 association should make it easier for all lenders to assist producer organisations through the provision of fair finance.

Sponsorship of Fairtrade Foundation producer tour As a charity member of the Fairtrade Foundation, Shared Interest Foundation provided project support that enabled the Fairtrade Foundation to fund the costs of bringing two producers to the UK for the producer tour of Fairtrade Fortnight 2006. As ever, the tour had an enormous impact on the people who were involved, creating an enthusiasm and commitment difficult to achieve without the producers’ own voices so compellingly talking of the impact of fair trade on their lives. The objective of the producer tour is to maximise the impact on the awareness and subsequent loyalty of the public to fair trade products and the wider trade debate which results from producer groups telling their own stories. Specifically the Foundation’s aim was to reach 3,000 people directly through the tour and many, many more indirectly through media coverage of the events attended by the producers. The Shared Interest Foundation grant paid for two producers to visit the UK, Silver Kasoro‑ Atwoki of the Mabale Growers Tea Factory in Uganda and Shailesh Patel, Cotton Project Manager of Agrocel Industries in India. Feedback from event organisers was overwhelmingly positive. The number of people reached through these visits varied enormously from several hundred people to small groups of 50 but all the event organizers valued the producers’ presence and felt that their contributions had made an enormous impact on people at their events and more widely on the motivation for ongoing campaigns. The target of reaching 3,000 people directly was easily met. (Source: Fairtrade Foundation Producer Tour Report) “The Producer Tour was a great success and contributed to the overall results of Fairtrade Fortnight 2006. The Fairtrade Foundation is confident that Shailesh and Silver’s contribution to the many events that they attended added immensely to the focus and impact of the events. The feedback received from event organisers indicates that they both touched many people with their compelling stories of life improved under fair trade. The Foundation’s strategy remains to retain the Producer Tour as a key feature of future Fairtrade Fortnights.” Fairtrade Foundation, Producer Tour report May 06

Fair Trade House, Kenya Shared Interest has signed a Memorandum of Understanding with Traidcraft for collaboration in East Africa. We are sharing premises (called Fair Trade House) with Traidcraft in Nairobi and together are also providing office space to COFTA (Co‑operation of Fair Trade in Africa). For the first year, COFTA is being supported through rent‑free office space. Through this arrangement we are able to strengthen our links with this regional grouping of fair trade organisations, something that is already proving very useful for the producer training project (see Objective 1).

Other points In addition to the three key developments noted above it is worth noting the following points: • Shared Interest’s relationship with FLO has been strengthened through meetings in Bonn and attendance at the AFN (Africa Fairtrade Network) meeting in Tanzania in

Finance for fair trade and support for disadvantaged producers 37 Social Accounts for the year ended 30 September 2006

May. It is also likely that there will be FLO staff based at Fair Trade House in Nairobi from late 2006. • Shared Interest staff attended three of the regional IFAT conferences this year (Africa, Asia and Europe). They updated attendees on Shared Interest developments and on the IFAT proposal for a producer protection fund (to give fair trade producer groups some degree of insurance in the event of a buyer going out of business). This proposal, developed by Shared Interest in conjunction with some other IFAT members, received very positive feedback from Southern IFAT members. It is possible that Shared Interest will be involved in the implementation of this fund in due course. • The Foundation has made a small number of other grants to support the fair trade movement, including a market access grant to COFTA. • The former Chief Executive Officer of IFAT, Carol Wills, joined Shared Interest’s Board of Directors further strengthening our links with the wider fair trade movement

Objective 3: Conclusions and recommendations

Conclusions • Shared Interest continues to be actively involved in a wide variety of fair trade and social lending initiatives and this strengthens the wider fair trade movement • By providing finance to fair trade buyers we are playing a key role in strengthening fair trade • The establishment of Shared Interest Foundation has the potential to strengthen the fair trade movement

Recommendations • Continue as a charity shareholder of the Fairtrade Foundation • Continue to partake in other initiatives to support the development of the fair trade movement • Ensure that Shared Interest and its ambassadors play a full part in local fair trade networks • Further develop links with regional fair trade groups

Finance for fair trade and support for disadvantaged producers 38 Social Accounts for the year ended 30 September 2006

Objective 4: Value our work force and support their personal development

Background During 2004 staff were consulted on new policies and procedures and these were formally adopted by staff with effect from 1 August 2005. Since then there have been a number of new recruits (in line with our strategy for growth) who were not included in the original consultation process, but who have had the policies and procedures explained to them as part of their induction process. This is the second year we have issued staff with a questionnaire in relation to the social accounts. This year’s questionnaire therefore builds on last year’s, but had a slightly wider context which we think is appropriate now that we are a bigger team, have several offices, and have a number of people who have joined Shared Interest since last time. Given this year’s questionnaire was significantly different to last year’s, direct comparisons are unavailable. There were 22 responses from a total staff number of 28 (including fixed term contracts, consultants and temporary staff), this being a response rate of 79%. This compares favourably with last year’s which was 15 out of 21 (71%). Responses were anonymous and collated by the HR Manager. Please refer to Appendix F for the collated responses. As a result of last year’s staff survey results and initial discussions with staff and our new Managing Director, there are ongoing projects to look at communications, personal development and reward.

Staffing Shared Interest has 23 permanent employees on indefinite contracts. Most work 9am to 5pm Monday‑Friday inclusive, although some are contracted to work 8.30am to 4.30pm. There are no formal flexible working agreements in place. There are three members of staff on fixed‑term contracts, one engaged as a consultant and one agency temp.

Staff Numbers (as at 30 September) Category 2005 2006 Full time, male * 9 9 Full time, female * 7 14 Part time, male 1 1 Part time, female * 1 2 Temporary, female 3 1 Consultant, male 1 Total 21 28 * Within these figures there are 3 staff on fixed term contracts.

During the year 12 new employees joined the staff and six left. The reasons for leaving were: • Other employment (2) • End of contract (1) • Relocation (1) • Other reasons (2)

Finance for fair trade and support for disadvantaged producers 39 Social Accounts for the year ended 30 September 2006

We have continued to use our exit interview procedures, which has provided useful information to our new Managing Director and Management Team. No placements were organised during the year, as the focus has been on recruiting and inducting new members of staff. We have, however reached the stage in our development where we have been able to promote two people within the organisation. There were no instances of having to use the grievance procedure during the year.

Staffing at 30 September 2006 Name Job Title Patricia Alexander Managing Director Stuart Raistrick Company Secretary Lis Dales HR Manager Amy McIntosh HR Administrator Jill Gregory Financial Controller Peter Edwards Accounts Assistant Sarah Francis Accounts Assistant Malcolm Curtis Customer Services Director Elices Roman Credit Risk Analyst Lorraine Cronin Account Manager Will Cowell Account Manager Andrew Ridley Account Manager Kirsteen Bonar Account Manager Sue Osborne Business Development Director Tracy Bonham Projects Manager Roy Parizat Project Leader Andrea Wilkinson Project Leader Ben Lilley Commercial Manager Kerry Gardner Commercial Assistant Rachel Ngondo Market Development Executive Hugo Villela Market Development Executive Jane Njora Administrative Assistant Francesca Smith Marketing and Communications Manager Ann Colquhoun Account Manager – Membership Phoebe Richardson Membership Development Coordinator John Grady IT Manager Andy Jones Web Developer Claire Brown Administrator

Finance for fair trade and support for disadvantaged producers 40 Social Accounts for the year ended 30 September 2006

Staff questionnaire The staff questionnaire contains a lot of information. We have chosen to comment on only a few sections from the questionnaire although you can read the full collation of the results in Appendix F. One question was asked twice in the survey in order to check consistency with answers. There was only one instance where a staff member seemed to answer this question in contradictory fashion.

Staff likes and dislikes about working for Shared Interest What do you like about working for Shared What do you least like about working for Shared Interest? Interest? It fits in with my beliefs and skills Top heavy structure Colleagues, work environment, social impact of Decisions take a long time to be made work The fact that we make a difference Pettiness and complaining about minor issues Meeting producers who are greatly in need of our Negativity services Friendly atmosphere Lack of morale and motivation We have a great staff team spirit Inconsistencies in application of policies I am inspired by our customers Lack of clarity The values and objectives of the Society Lack of openness from the management team

Top five things that are most important to staff • Interesting work • Feeling you have accomplished something worthwhile at work • Making the best use of your skills • Career development • Pay

Finance for fair trade and support for disadvantaged producers 41 Social Accounts for the year ended 30 September 2006

Objective 4 continued: Value our work force and support their personal development

Offering fair pay and benefits

Staff views about pay and benefits Very Fairly Neither Fairly Very satisfied satisfied satisfied nor dissatisfied dissatisfied dissatisfied Pay 3 11 2 2 4 Benefits package 4 7 9 2 Flexible working 7 6 6 2 hours Pension 8 7 5 Annual holidays 8 9 3 2

In 2004, the Society introduced a benchmarking system for salaries, using information from the charities/fundraising sector, together with any locally‑available and relevant commercial information (for North East England and Kenya). This approach was used in 2005 and again in 2006, using updated information from the same sources. The basic level of salaries for staff was increased by 3% with effect from 1 April 2006. Building on the feedback from staff last year, our Rewards Strategy Group was established in April 2006 and its composition has been reviewed since then to ensure representation from all areas of Shared Interest. The benefits package is generally thought to be satisfactory (holidays, sick leave, pension, flexible working etc), with the focus for on‑going work being pay and specifically progression through the salary bands. Proposals for a new job evaluation system, competencies matrix and appraisal scheme have been briefed to staff for consultation. We are on target for introducing a new scheme which will feed into the April 2007 review.

Finance for fair trade and support for disadvantaged producers 42 Social Accounts for the year ended 30 September 2006

Objective 4 continued: Value our work force and support their personal development

Providing training and supporting personal development “At Shared Interest, we believe that people are our most valuable asset and therefore we will seek to develop our staff in line with business needs and personal aspirations. Shared Interest aims to develop all staff in order that they may have the knowledge, skills, attitudes and commitment necessary to meet current and future organisational needs. Currently training and development initiatives include, induction training, on the job training, one to one meetings, departmental meetings, formal training courses (internal and external), guided reading.” Shared Interest Training and Development Policy

“Because we are a small organisation, it will not always be possible to provide as wide a range of career opportunities as people might ideally like to have. We therefore understand that, after a period of time, individuals may wish to take up other employment elsewhere in order to further their personal development/career. The Appraisal interview should be seen as an opportunity for an open and honest discussion about an individual’s future development.” Shared Interest Training and Development Policy

Expenditure on staff training over the last two years 2005 2006 Total cost of training* £11,943 £12,186 No of days on courses Not known 73.5 *Excludes cost of staff time There has been a slight increase in the total training spend for 2006 compared to 2005. The number of days spent on training cannot be compared as we were unable to provide this figure last year. Thanks to improvements in how we record training information, this year we have also been able to provide information on training spend which includes not only the cost but the cost of time as well. We have decided to include time and cost of staff inductions and Management Team (MT) away days. Next year we will be able to supply all of this information and have a direct comparison.

Total cost of staff training 2005/6 Description Costs Training cost (course fees) £12,186 Staff time cost (whilst on courses) £11,435 Inductions (staff time cost carrying out and attending inductions) £8,471 MT away days (staff time and venue costs) £5,164 Overall Total £37,256

£37,256 is the total cost of training and development including training cost and staff time. The total number of training days, including inductions and away days, was 205.5.

Finance for fair trade and support for disadvantaged producers 43 Social Accounts for the year ended 30 September 2006

We have had a large number of new starters during the year and we have a thorough induction programme, so this is included in the figures. Our management team has regular off‑site away days to look at strategic and developmental issues. During the year, there has been a new management team and there has been a focus on effective team working. Other departments also have off‑site away days, and the developmental aspects of these have also been included.

Comparison This year (including staff time, inductions and MT away days) the average training spend per employee was £1,152 and the average number of training days involved per employee was 8.5 days. Shared Interest’s commitment to training is well above the average for a company of its size and sector. (For example the CIPD Annual Survey 2006 reports average budget per employee is £438 and the average number of training days per employee is 4.9. The survey includes data from a number of employers who will have different policies on whether or not to include induction and away day data. The Shared Interest data does include induction training, away days and external courses.)

Staff views about training and personal development Very Fairly Neither Fairly Very satisfied Satisfied satisfied nor dissatisfied dissatisfied dissatisfied Interesting work 14 7 1 Career 5 4 4 4 3 development Making the best 9 6 5 1 1 use of your skills Training 4 7 5 5 1 opportunities Emphasis on 1 2 8 8 3 personal development

In 2005 the staff questionnaire highlighted that several staff members were unsure if access to learning was fair and others felt that everyone did not get an equal chance. Continued emphasis has been placed on all staff using the appraisal process and the training, development and support forms to identify development needs. For most of the year, there was little HR support and the systems required to record training and development activity have not been established. With additional HR support, we will be able to monitor and improve our training and development records and to provide more accurate data. We clearly state in our training and development policy that we are not large enough as an organisation to provide a typical career path for our employees. We do, however, need to continue to provide appropriate learning and development opportunities for staff and openly discuss future career options. Our budget for training courses (excluding all staff time costs) in 2006/7 is £20,000, representing 2.5% of our gross payroll cost and £8,500 more than the cost of training this year.

Finance for fair trade and support for disadvantaged producers 44 Social Accounts for the year ended 30 September 2006

Objective 4 continued: Value our work force and support their personal development

Providing good work environment – to include health, safety and welfare of staff and visitors

Staff views about work environment Very Fairly Neither Fairly Very satisfied satisfied satisfied nor dissatisfied dissatisfied dissatisfied Safety and personal 10 8 4 security at work A place in a 5 7 5 4 1 company that cares for its staff Physical working 10 10 1 1 1 environment

The post‑implementation review of our move to new office premises indicated that things had gone much better than expected and that people were generally very happy with their new accommodation.

Finance for fair trade and support for disadvantaged producers 45 Social Accounts for the year ended 30 September 2006

Objective 4 continued: Value our work force and support their personal development

Ensuring transparent and effective communication channels and participation in decision making

Staff views about communication and decision making Strongly Agree Neither Disagree Strongly Agree agree nor Disagree disagree I understand the 12 9 1 business objectives of Shared Interest Society Ltd. I understand the 8 8 4 2 business objectives of the Shared Interest Foundation Manager keeps me 7 10 3 1 in touch with what’s going on Manager answers 8 7 4 2 my questions openly and honestly Manager gives me 6 7 3 3 1 the right information to do my job properly Manager involves 5 9 4 2 1 me in decisions which affect me People are 1 3 9 5 4 expected to obey orders without questioning them People are reluctant 3 7 4 5 3 to speak their minds

The staff survey indicates a good level of staff understanding of the objectives of the Society and Foundation. The majority of the team are satisfied with their manager’s communications in relation to the business and their role within it.

Progress on areas for improvement noted in previous social accounts It was identified last year that internal communications needed to be improved and series of projects were launched to review the communications processes and the appraisal system. There still seems to be some concern about being able to honestly share views with the management team. Hopefully the broadening of the management team and the new communications structure, which is being introduced in October 2006, will encourage the staff to express their opinions openly.

Finance for fair trade and support for disadvantaged producers 46 Social Accounts for the year ended 30 September 2006

Objective 4 continued: Value our work force and support their personal development

Offering job satisfaction, a good appraisal system and regular reviews

Staff views about their line manager, job satisfaction, appraisal and review Very Fairly Neither Fairly Very Satisfied Satisfied satisfied nor dissatisfied dissatisfied dissatisfied How satisfied are 9 7 4 1 1 you with your current job? Keeps me in touch 7 10 3 1 with what’s going on Encourages my 5 12 3 1 ideas

Gives me feedback 6 10 3 1 1 on my ideas Agrees 12 6 2 1 goals/objectives with me Gives me good 9 6 4 1 1 feedback on how I am doing Makes it clear 7 9 5 what’s required of me

73% of staff rate Shared Interest as one of the best or above average compared with other places they have worked/heard about. Three people indicated that they are thinking of moving to another job in the next 12‑18 months, but this is likely to include people on short‑term contracts. During the year, we have been able for the first time to facilitate internal promotions.

Progress on areas for improvement noted in previous social accounts Following consultation we are currently in the process of introducing a new appraisal system which is competency based. In addition we have introduced staff meetings to inform the team of the business situation and give them the opportunity to ask questions. The Society and the Foundation have also established key performance indicators and critical success factors with staff input for all the teams to ensure objectives and goals are clear.

Finance for fair trade and support for disadvantaged producers 47 Social Accounts for the year ended 30 September 2006

Objective 4 continued: Value our work force and support their personal development

Respecting employees’ work­life balance

Staff views about work­life balance Strongly Agree Neither Disagree Strongly Agree agree nor disagree Disagree I often have to work 5 6 6 4 1 additional hours to get my job done

Shared Interest tries to be as flexible as possible, through a mixture of formal and informal arrangements, to accommodate individual employee’s circumstances. Half of the staff who responded are needing to work in excess of their contractual hours. The introduction (and training) of new staff, moving to new premises and covering for maternity leaves all had an impact at various times during the year. A skills analysis was carried out in April 2006 and resulted in the recruitment of a small number of additional staff. Once these staff are fully embedded it is hoped the situation will improve. This needs to be monitored carefully. During the year, we reviewed our Time Off In Lieu (TOIL) policy for those needing to work evenings and weekends. The new policy is now undergoing a 6 month trial period.

Objective 4: Conclusions and recommendations

Conclusions • Our staff are proud to work for Shared Interest and proud of the impact their work has on producers’ lives • Our staff enjoy the friendly atmosphere and value the relationship they have with their colleagues and appreciate the new work environment • Our staff are clear about the aims and objectives of the Society and Foundation • Some concerns still exist over communications and our staff’s ability to get their ideas across

Recommendations • Monitor and improve training and development records • Improve health and safety training in general, including overseas offices • Monitor individual staff workloads to ensure a healthy work‑life balance • Implement the new communications structure to enable our staff to express their opinions openly

Finance for fair trade and support for disadvantaged producers 48 Social Accounts for the year ended 30 September 2006

Objective 5: Demonstrate co­operative difference Analysis of this objective was not included in 2005 social accounts but it was stated at that time that it would be included in the 2006 report. All of the following indicators are taken from the Co‑operatives UK guidance.

Member economic involvement Co‑operatives are in business to meet the economic, social and cultural needs of their members. Economic participation of members is a fundamental part of co‑operative identity. This data gives a measure of the extent to which members are engaging with their co‑operatives on an economic level.

Member economic involvement over the last two years Measure 2005 2006 Increase/decrease Number of members 8,354 8,402 0.6% Value of total investment funds £19,215,621 £20,494,557 6.7% Average length of investment 8.7 years 9.3 years 6.9% Number of new members 318 336 6.9% Total value of new investment £556,163 £596,260 9.1% Average investment per account £2,314 £2,439 5.4%

All the data in the table shows an increase in member economic involvement from 2005. A particular indicator of increased involvement economically is that the average investment value has increased by 5.4% from 2005. It should be noted that there can be a long time lapse between membership campaigns, enquiries and subsequent conversion to membership and investment, potentially as much as three years. It should also be considered that Shared Interest is interested in increasing both membership numbers and total investment value. Additionally, we received almost £100,000 in donations to the Foundation during 2006. This came from approximately 200 donors the majority of whom are also Society members. There are no appropriate external benchmarks. We aim for an increase year on year in member economic involvement and benchmark against the previous year’s performance.

Finance for fair trade and support for disadvantaged producers 49 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Member democratic participation The Co‑operatives UK guideline for measuring the democratic participation of members is the average number of members voting in elections as a proportion of the total membership.

Attendance and voting at AGMs over the last three years 2004 2005 2006 AGM location London Birmingham Newcastle AGM attendees 98 103 77 Postal votes (proxy in 2004) 786 1271 1183 Membership 8194 8344 8354 Percentage voting 11 15 14 Source: Shared Interest Society AGM minutes, (member numbers as at voting eligibility date)

Until 2005 only members who attended the Society’s AGM voted to elect Directors and Council members. Other members who could not attend the AGM were entitled to submit a proxy vote which would be counted in the event of uncertainty in, or challenge to, the result declared on a show of hands at the meeting. Proxy votes have never been used to settle a question in the Society’s history. In 2004 the Society began recording the numbers of proxy votes in the minutes of the AGM in line with new ideas about best practice in corporate governance. Directors thought that this practice could be improved and so from 2005 introduced postal voting for the election of Directors and Council members. The rise from 11% in 2004 to 15% in 2005 is attributed to the improved postal voting arrangements. It is difficult to compare this data with external benchmarks. Midcounties Co‑operative has 414,000 membership accounts of which it estimates that 189,000 are active, in other words are customers of its shops. Of these less than 8000 (4%) have indicated a wish to be ‘active’ members (source: Midcounties Co‑operative Directors’ Report 2005). The Co‑operative Group reports that, in 2004, 24,555 members (1.8%) voted in elections out of a total membership of 1.4 million (source: Co‑operative Group Social Responsibility Report 2005). These comparisons are with consumer co‑operatives with a different kind of involvement from members but they do indicate that Shared Interest Society has a high level of member involvement.

Council Member democratic involvement in the Society is also enabled by the random nomination system for selecting members to serve on Council. All members are eligible (unless they are also members of staff or Directors) to be randomly nominated to serve on Council and although such service is not compulsory the opportunity is taken up by sufficient numbers of members to provide a vibrant Council overseeing the role of Directors in managing the Society’s activities.

AGM At the AGM, members were asked to complete feedback forms (see Appendix C for collation responses). These highlighted the value participating members placed on hearing more about development in Shared Interest whilst also raising some issues regarding time for questions within the formal AGM. Some of the points raised were followed up in Quarterly Return and as a result we are planning to reconsider the format of the day for 2007.

Finance for fair trade and support for disadvantaged producers 50 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Participation of employees and members in training and education

Employees The participation of employees in training and education has already been analysed under Objective 4.

Members

Measuring member participation in training and education provides an indication of how much Shared Interest values its members as key stakeholders and how it provides them with opportunities to contribute to the success of the organisation. Member training and education plays an important part in enabling members to participate fully in their co‑ operative. Feedback (gained at the AGM and on the AGM feedback forms) on the education provided has been positive from members. We involve our members in training and education about our work and about fair trade generally in three main ways: • Quarterly Return and website • Shared Interest Ambassador Scheme • AGM and Members’ Day Each of these activities has been analysed under Objective 2. QR is sent to every member four times a year. The magazine contains news, features and letters that aim to inform and educate. Members are also sent with QR a number of inserts from other organisations – World Development Movement, Friends of the Earth, Practical Action. These leaflets also act as educational material for the issues addressed by these organisations. The Shared Interest Ambassador Scheme’s main objective is to raise awareness of Shared Interest and its work. The ambassadors have a resource pack which contains educational information such as facts and figures about Shared Interest, fair trade, the history of fair trade and much more. This will educate the ambassadors and also help them to educate other members and potential members. The content of the 2006 AGM and Members’ Day was structured to enable attendees to learn more about Shared Interest and fair trade generally, and to be interactive. Feedback from the AGM workshops demonstrates that the attendees felt the content was all educational and informative, and also allowed Shared Interest to understand what members would like more knowledge about. (See Appendix C for full feedback).

Finance for fair trade and support for disadvantaged producers 51 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Staff injury and absentee rates Data is only available for 1 January 2006 onwards. There were no absences due to an injury at work. There were 52.5 days absence due to sickness. The annualised figure would therefore be 70 days, which equates to an average of 2.9 days per employee and compares with the national average of 5.6 (financial services) or 6.3 (charities) days per employee. The national average for all sectors is 8 days (source: CIPD, 2006). The absence percentage rate is 1.3% of days available for work, compared to the national average of 2.4% (financial services) or 2.8% (charities). The national average for all sectors is 3.5% (source: CIPD 2006).

Finance for fair trade and support for disadvantaged producers 52 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Staff profile – gender and ethnicity At 1 October 2006 the 23 staff employed by the Society on indefinite contracts comprised 14 women, (13 full time and 1 part time) and 9 men (8 full time and 1 part time). 3 staff are on fixed term contracts (2 female and 1 male) and 1 female is an agency temp. We have 1 male consultant working on a long term contract with us. The Management Team comprised 4 women (3 full time, permanent and 1 part time, fixed term contract) and 2 men (both full time, permanent). Completion of equal opportunities monitoring forms is entirely voluntary, and we therefore are unable to report accurately on ethnicity, although it is clear that the majority of our staff are White, British. None of Shared Interest’s current employees has declared a disability.

Finance for fair trade and support for disadvantaged producers 53 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Customer satisfaction In early September 2006, a customer satisfaction questionnaire was issued to all producer groups and buyers with a Shared Interest credit/loan account. Each customer was asked to rate Shared Interest against a small number of statements relating to the products and data we provide and the service they receive from their account manager. They were also asked to provide any comments, particularly where the statement was marked low. We issued 96 questionnaires and received 28 responses (30% of our customers).

Producer groups

Analysis of customer satisfaction questionnaire for producer groups (2006) Producer group results Strongly Agree Neither Disagree Strongly (17 responses) agree disagree

When I have a problem or a query with 8 5 3 1 my Shared Interest account, I feel my account manager deals with it effectively and quickly. I feel comfortable that I can approach 4 12 1 my account manager to request an increase or a new facility. My Shared Interest statements arrive 8 6 2 1 when expected My Shared Interest statements are 4 9 1 3 easy to understand Shared Interest charges me a fair rate 7 6 3 1 of interest Credit received from Shared Interest is 9 5 3 important to the sustainability of my organisation The type of loans/credit facility that I 5 9 3 have with Shared Interest is structured in a way that meets the needs of my organisation I find Shared Interest easier to deal 10 3 3 1 with than my commercial bank Overall, I am satisfied with the 6 10 1 customer service received from Shared Interest

Finance for fair trade and support for disadvantaged producers 54 Social Accounts for the year ended 30 September 2006

Buyers

Analysis of customer satisfaction questionnaire for buyers (2006) Buyer results (10 responses) Strongly Agree Neither Disagree Strongly agree disagree When I have a problem or a query with 4 6 my Shared Interest account, I feel my account manager deals with it effectively and quickly. I feel comfortable that I can approach 4 4 2 my account manager to request an increase or a new facility. My Shared Interest statements arrive 6 4 when expected My Shared Interest statements are 3 4 1 2 easy to understand Shared Interest charges me a fair rate 2 4 3 1 of interest Credit received from Shared Interest is 7 2 1 important to the sustainability of my organisation The type of loans/credit facility that I 1 5 4 have with Shared Interest is structured in a way that meets the needs of my organisation I find Shared Interest easier to deal 6 3 1 with than my commercial bank Dealing with Shared Interest 2 3 4 1 strengthens our relationship with our producers All payment instructions to Shared 2 8 Interest are dealt with accurately and in a timely manner Overall, I am satisfied with the 3 7 customer service received from Shared Interest

Comparison with last year’s data Last year we carried out very limited surveying of our customers for the social accounts: • 6 buyers took part in a buyer perceptions survey (only those 10 buyers visited during the year were asked for their feedback). • Producer group perceptions were gauged via comments made during face to face meetings. Buyers: • The buyer perceptions noted last year in relation to customer satisfaction were very positive overall. This year all the buyers that responded agreed or strongly agreed with the statement “Overall, I am satisfied with the Customer Service received from Shared Interest”. • Last year the transactional website and limited range of products were highlighted as areas for improvement. Neither item was explicitly measured in this year’s survey although we have had positive feedback to the revised buyer website (see Objective 1). However this year’s response to the statement “The type of loans/credit facility Finance for fair trade and support for disadvantaged producers 55 Social Accounts for the year ended 30 September 2006

that I have with Shared Interest are structured in a way that meets the needs of my organisation” leaves some room for improvement. • Changes have been made to the buyers’ statements since last year’s poor feedback however the feedback remains mixed. Producer groups: • Given the anecdotal nature of last year’s reporting in this area, it is hard to make any meaningful comparison with last year’s data.

Comparison with external benchmarks Whilst not directly comparable, the overall customer satisfaction data from the Co‑operative Insurance Society Social Accountability Report 2000 provides some motivation for improvement, whilst the Coop Bank’s Partnership review 2001 highlights that our customer satisfaction data is already very positive.

Comparison of customer satisfaction Shared CIS Coop Bank Coop Bank Interest Service Relationship Very satisfied/Satisfied 96% 98% 76% 87% Neither/Dissatisfied/Very 4% 2% 24% 13% dissatisfied

Finance for fair trade and support for disadvantaged producers 56 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Consideration of ethical issues in procurement and investment decisions

Investment decisions ­ current situation Our investment policy is set out in the Directors’ Report each year as “We adopt an ethical investment policy in respect of the Societyʹs ordinary cash deposits. These are to be distinguished from our deposits with social banks, which directly further the Societyʹs object. During the year the Society held its general funds on deposit with the Co‑operative Bank and with the Newcastle Building Society.” There is no guidance in the minutes of the Board as to what constitutes the ‘ethical’ part of the investment policy. Clearly banking with the Co‑operative Bank is itself quite an ethical commitment moreover it fits with our mission and values which pledge us to “operate as a co‑operative business, valuing and engaging our members”. Our Council has supported the Co‑operative Bank’s ethical position in the past. The Society wants to follow an ethical policy in its investment decisions. However, the most important factor is the impact on producer groups. A member survey in 2001 revealed that 38% of members banked with the Co‑operative Bank.

Procurement decisions ­ current situation We do not currently have a procurement policy covering ethical considerations, however our current practices can be summarised as follows: • Food and drinks – fair trade products where possible, otherwise follow the LOAF principle (Local, Organic, Animal friendly, Fair trade) • Paper for promotional literature, stationery and office use – a mixture of recycled and sourced from sustainable forests • Magazines used for advertising and distribution of inserts are mostly targeted at ‘ethical titles’ • Where appropriate we use local suppliers. Our current practice is broadly in line with the Co‑operatives UK guidance however there is a lack of up to date policies to support these decisions.

Finance for fair trade and support for disadvantaged producers 57 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Investment in community and co­operative initiatives Essentially all of our work is focused on investment in the community – the fair trade producer community, many members of which are co‑operatives. Last year we reported that, based on extrapolation* of known producer group data, Shared Interest touched the lives of 580,000 individuals in the developing world. (There was an error in the calculation process last year and this figure should in fact have been 760,000. During the course of this year we have also established that some of the source data was and still is out of date.) For 2005/6 the equivalent figure is 810,000. We are currently reviewing both accuracy of the producer group data that we hold and the way we measure our outreach for next year’s social accounts to give adequate consideration to the level of impact. * The calculation was based on known data on number of individuals within the producer groups we lend to. This was then averaged and extrapolated to include the producer groups we processed payments to.

Support given to specific community and co­operative initiatives during 2005­6 by the Society: Description Measure of Involvement Sponsorship of L’Afrique festival in Newcastle­ £250 Gateshead Sponsorship of IFAT Global Journey £50 Staff participation in Coast to Coast cycle ride 6 staff given 1 day off each to complete C2C event = approx £800 One North East­ local regeneration board 4 hours per month of Managing Director time sitting on the Board = approx £850 in 2005/6

Overall (monetary value) £1,950 (Source: accounts team and staff records)

In addition, the following involvement in community and co‑operative initiatives is worth noting: • The Foundation made grants totalling £2,500 to support co‑operatives in the developing world • We now have 47 active Ambassadors working in their own communities and since August 2006 these volunteers have been supported by the Membership Development Co‑ordinator (half time). Through this work we are aiming to create a ‘community of members’. This data was not specifically collected during 2004/5 and no areas for improvement were noted last year. All of the items included in the table above are new this year. Various external data is available for investment in the community by companies. Specifically, Business in the Community has an index (the Percent Club Index) of all the companies that invests at least 1% of pre‑tax profits. Since Shared Interest is not focused on profit generation, it seems more appropriate for us to compare with turnover. The total monetary value of Shared Interest Society’s investment in the community detailed above equates to 0.1% of this year’s turnover.

Finance for fair trade and support for disadvantaged producers 58 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Net carbon dioxide emissions arising from operations There are two main sources of carbon dioxide emissions from Shared Interest’s operations: running the office and business travel. Prior to this year no specific attempt has been made to measure or control/reduce these impacts, other than via budget control and a general environmental policy of waste avoidance. This year a small staff group has been meeting to consider our current impact and make proposals for control/reduction and offsetting.

Estimated carbon dioxide emissions from operations Activity Amount CO2* Running the Shared Interest Unknown at present. Data will Unknown at present. Data head office (new office since be gathered will be gathered April 2006) Business travel Approx 12 flights to Europe, 10 Approx 50 tonnes flights to Africa 12 flights to Asia /Americas plus regional flights within Africa and Americas

* CO2 calculated by www.climatecare.org

Additionally, there will carbon dioxide emissions arising from staff travel to and from work, although we are aware that a good proportion of staff travel by foot, bicycle or public transport. This is the first year environmental issues have been included, so there are no measurements against last year. We also moved offices in April 2006. No external benchmark information was found with regards to average CO2 emissions for UK businesses. As per the Co‑operatives UK guidance we plan to use the information from this year for setting our targets and reporting within the social accounts for 2007. We also acknowledge that there are carbon dioxide emissions arising from the trade that we facilitate. These arise through the transport of goods from the developing world to the buyers and consumers. During this first year of environmental reporting, we have made no attempt to quantify this impact.

Finance for fair trade and support for disadvantaged producers 59 Social Accounts for the year ended 30 September 2006

Objective 5 continued: Demonstrate co­operative difference

Proportion of waste recycled/reused Whilst the Society has long had an environmental policy covering basic waste avoidance and has promoted use of scrap paper where possible, we have not had any formal recycling in place. During this year we have set up one printer (of three) to print on scrap paper and a second printer prints doubled sided only to save paper on large print jobs. The environmental team has been meeting to consider our current impact and make proposals for control/reduction.

Objective 5: Conclusions and recommendations

Conclusions • The economic involvement of members increased during 2005/6 • The Society has a high level of democratic member participation, although attendance at AGMs is not rising • Customers are very satisfied with the service they receive. However some concern was raised about the interest rates charged and the clarity of the account statements • We have set up an environmental group to look at all environmental issues including sourcing, recycling and carbon emissions

Recommendations • Keep listening to producer groups’ needs • Continue efforts to increase membership and encourage members to increase their investments • Increase the level of training for Shared Interest ambassadors • Improve the mechanism for acting upon customer feedback • Examine the investment policy • Agree and implement procurement guidelines • Agree the proportion of profit that the Society will donate to the Foundation in profitable years • Develop and implement a policy on energy use, carbon offsetting and recycling • Monthly reviews of business travel to ensure that trips planned are appropriate

Finance for fair trade and support for disadvantaged producers 60 Social Accounts for the year ended 30 September 2006

5 Stakeholders, Methodology and Scope 5.1 Stakeholders

Key stakeholders The following key stakeholders for Shared Interest have been identified by the Social Reporting Team. The team reviewed those stakeholders identified for the 2005 social accounts with a specific reference to increasing the scope to include the Foundation as well as the Society. The team considered that a stakeholder for these social accounts was any party with an interest in the organisation, where we have a significant impact on them or people to whom we have a duty.

Key stakeholders identified by the Social Reporting Team Category Definition Description Customers Organisations who benefit Producer group customers (56) from a commercial relationship with Shared Buyer customers (39) Interest Society Beneficiaries Organisations who benefit Producer groups trained (1), producer from support from Shared groups/networks receiving grants (2) and Interest Foundation other beneficiaries of the Foundation such as Fairtrade Foundation Members Shared Interest Society Members (8402) (including Council (7)) members and Ambassadors(47)) Ambassadors Supporters Shared Interest Donors (approx 200) Foundation supporters Employees Staff and Non Executive Staff (28) Directors Non Executive Directors (7) Partners IFAT, FLO, Fairtrade Foundation, other FLO national initiatives Key Suppliers Co­operative Bank

Groups not consulted Other stakeholders where we have not consulted and measured the impact directly include: • Friends and family of staff, members and customers, local and wider community including potential members • Loan stock holders • Other partners – such as Trade Justice Movement, Network of European World Shops, British Association of Fair Trade Shops, Oikocredit etc • Other service providers – including IT providers, Quarterly Return and promotional material suppliers, auditors, legal advisers and other financial institutions Additionally, there are groups that are key to us (but where we are not key to them) such as Government regulators (Financial Services Authority and HM Treasury) and Co‑operatives UK.

Finance for fair trade and support for disadvantaged producers 61 Social Accounts for the year ended 30 September 2006

5.2 Methodology This report is based on both secondary and primary data. This is the second period of social accounting for the organisation and we have continued to focus on data already available within our operational systems, which have been substantially overhauled during the year. The changes have been designed to easily provide data required for social accounting as well as operational purposes. We have supplemented this with quotations sourced mainly during this year. Where possible we have made comparisons with last year’s data and external benchmarks. The Social Reporting Team plans to consult with a selection of stakeholders each year and this year carried out the following consultations with the key stakeholders.

Customers All buyers and producer groups with a Shared Interest loan or credit account were consulted via a customer satisfaction questionnaire issued electronically. We felt it was important to solicit feedback from as many customers as possible to build on last year’s limited consultation with buyer and producer customers.

Members No member survey was carried out during the year. However there was an extended feedback session at the AGM in March and data gathered from this has been used in these social accounts. Members also completed feedback forms for the day.

Employees In September 2006, we surveyed all employees, except non executive Directors, using a questionnaire prepared after a consultation with the Social Reporting Team. Out of 28, 22 employees completed and returned the questionnaire.

5.3 Scope In our social accounts for 2005, we indicated the following omissions: • The activities of Shared Interest Foundation • Environmental impact study • Economic impact study In these accounts, we have addressed the first of these and included assessment of the activities of the Foundation under all relevant indicators. We have started work on the environmental impact study, in line with the indicators recommended by Co‑operatives UK and details of current position and planned improvements are included under Objective 5. In terms of economic impact, we have made some progress this year which is captured within the accounts, mainly under Objective 1. We are working with other social lenders to share learning on economic impact assessment. We have part funded some initial work through Durham University to research the economic impact of fair trade producer groups in their local communities and will work with the researchers as they progress this work. We continue to strive to understand our real, specific impact better but anticipate that this will be a long term piece of work, with progress being reported each year in our social accounts. Finance for fair trade and support for disadvantaged producers 62 Social Accounts for the year ended 30 September 2006

We have also agreed a range of key performance indicators for the organisation to be reported monthly from October 2006. These include lending amounts, share capital figures and progress on Foundation projects as well as some staff measures. We plan to include relevant measures within next year’s social accounts. In the meantime the following table aims to highlight some key areas of increased economic impact.

Some key areas of increased economic impact Measure 2004/5 2005/6 % increase Total amount lent – direct benefit to the groups £9,606,314 £11,654,397 21 borrowing Payment to local suppliers in North East England £227,293 £252,220 11 – direct benefit to the companies concerned Staff salary payments – increased staff/salaries £466,412 £496,540 6 has an indirect economic impact in the locality Payments to overseas employees – recruitment 0 £3,052 n/a of overseas staff changes the location of the indirect benefit of employment

Additionally, last year we noted that an objective relating to being a co‑operative had been de‑scoped, something which we have addressed this year by the addition of Objective 5 – demonstrate co‑operative difference.

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6 Compliance

6.1 Compliance with statutory and voluntary codes Part of Shared Interest’s social performance is defined by and monitored through its compliance with statutory and voluntary codes. To support this Shared Interest has a compliance action plan that was agreed in June 2005. This established a regular routine of reviews to be carried out either by an internal team or by external auditors. The following reviews have been carried out in 2005/6. • Money laundering – review completed by a staff team of Customer Service Team Leader and Office Co‑ordinator in October 2005 • Internal control – reviewed as part of implementation of new systems (customer database and accounting database) • FSA/Treasury regulation – Board report in May 2006 – new regulations have not yet emerged, however work is in progress on a code of conduct • Statutory/financial – completed December 2005 plus foreign exchange report and systems review commissioned from auditors November 2005 and March 2006 respectively • Co‑operatives UK Code of Corporate Governance (May 2005 revision) – exceptions reported on in our Financial Statements. Co‑operatives UK has recently published a Corporate Governance Checklist that we will be using to monitor our corporate governance compliance from 2006/7. • Risk review – report to Directors December 2005 and May 2006 – Foundation and regional offices included in reviews. The following reviews are currently being progressed: • Data protection – last undertaken in March 2005 • Health and safety – A health and safety policy is in place and is available to all staff. A review was undertaken as part of the move to new offices in Newcastle and Kenya. We state in our staff handbook that we provide functional, but safe working conditions. The move to the new offices has significantly improved the working environment for our staff. We have a Health & Safety Committee, which meets regularly. We exceed the requirements for first aid training. Risk assessments have also been completed by staff working regularly at home. There will be staff training on fire risk assessments as part of the launch of the new Fire Regulations. As a member of the IFAT, Shared Interest has to report every two years on its adherence to IFAT’s Standards for Non Trading Organisation. This self assessment was last carried out in March 2005 and so was not due in the current year.

6.2 Legal structure and reporting Shared Interest Society is incorporated with limited liability under the Industrial and Provident Societies Acts 1965 to 1978 and is registered in England, Number 27093R. The Society submits annual returns to the Financial Services Authority (Mutuals division). Shared Interest Foundation is registered in England, Number 4833073, and is a registered charity, Number 1102375, and submits annual returns to the Charity Commission and to the Registrar of Companies. Finance for fair trade and support for disadvantaged producers 64 Social Accounts for the year ended 30 September 2006

The annual returns for 2005/6 were submitted on: ‑ • Shared Interest Society Limited – 3 March 2006 • Shared Interest Foundation – Charity Commission 10 March 2006 and Companies House 15 July 2006 Shared Interest Society Limited is an exempt person from regulated activity for the purpose of the issue of shares by it pursuant to paragraph 24 of the Financial Services and Markets Act 2000 (Exemption) Order 2001. The shares are not a specified investment for the purpose of section 22 of the Financial Services and Markets Act 2000 pursuant to paragraph 76 of the Financial Services and Markets Act (Regulated Activities) Order 2001. The Society’s shares are withdrawable and not transferable except on death or bankruptcy.

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7 Social Audit Statement

Shared Interest Social Accounts 2006 The Social Audit Panel has examined the draft social accounts submitted to us and discussed them in detail with Tracy Bonham, John Grady, Amy McIntosh, Francesca Smith, Malcolm Curtis, Stuart Raistrick and Patricia Alexander of the Shared Interest Society at the Social Audit Panel meeting held on Thursday 16 November 2006. I have examined the revised social accounts which were prepared following the Social Audit Panel meeting and which have taken into account various points identified in the notes of the Social Audit Panel meeting*. We also examined a sample of the data and the sources of information on which the Social Accounts have been based. We believe that the process outlined above has given us sufficient information on which to base our opinion. We are satisfied that, given the scope of the social accounting explained in the revised draft and given the limitations of time available to us, the social accounts are free from material mis‑statement and present a fair and balanced view of the performance and impact of Shared Interest as measured against its stated social, environmental and economic objectives and the views of the stakeholders who were consulted. In the notes of the Social Audit Panel meeting we identified a number of important issues to be taken into consideration during the next social audit cycle. In particular we would refer to the following: • The need to review the wording of the Values and of the Objectives and Activities; ensuring along the way that the work of the Foundation is properly accommodated; • The merit of consulting stakeholders about Shared Interest’s performance in regard to its Values and also allowing stakeholders the opportunity to comment on Shared Interest’s overall performance; • The need to continue to strengthen reporting on environmental and economic impact. The members of the Social Audit Panel were: • Jane Gibbon, UNN and Jesmond Swimming Pool • Chris Pay, Business Link Tyne & Wear • John Pearce, Social Audit Network (Chair) • Keith Stamp, Interact Social Accounting

Signed: …………………………………………………….. Chair of the Social Audit Panel Dated: 7 December 2006

* The notes of the Social Audit Panel meeting form part of the social accounting and auditing process and may, by arrangement, be inspected along with the full social accounts at the offices of the Shared Interest Society Limited at 2 Cathedral Square, Groat Market, Newcastle upon Tyne NE1 1EH. Members of the Social Audit Panel have acted in an individual capacity.

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8 Next Steps

Following any updates arising from the Audit Panel on 16 November 2006, this report will be submitted for approval at the Shared Interest Board on 14 December 2006. We then intend to publish the full document on the internet and a summary in printed form for circulation to members and other stakeholders. We plan to present the social accounts along with the financial accounts at our AGM on 24 March 2007. Recommendations will be prioritised and converted into an action plan with specific targets which will be reviewed regularly by the Management Team to ensure progress. Next year’s social accounting process will start in January 2007 to ensure all learnings from this year’s process are taken on board.

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Appendix A to support Objective 1 Lending

Data analysis methodology We have improved our data collection considerably over the past year so that we can calculate accurate annualised lending statistics. This allows us to calculate averages of our lending over the whole period. Previously we averaged spot balances at the end of each month or used totals from the year end accounts that show the balance only at the year end. Using an average of the whole period eliminates any short term trends that may have distorted the numbers, eg spikes in borrowing if buyers tend to repay after the month end and seasonal trends.

Apportionment of buyer lending to individual producers For buyers it is not straightforward to identify borrowing with individual producers, since buyers often have irregular repayment schedules, sometimes paying back all due credit on time, sometimes overpaying or underpaying. The outstanding balance at any time cannot be directly associated with particular orders and producers. To apportion the buyer lending against producers we use the following methodology: • Take all the payments for a buyer in a year for each producer and calculate the theoretical lending to each producer as if the buyer had taken maximum possible credit on each payment • Divide the theoretical lending to each producer by the total theoretical lending for the buyer to get a ratio for that producer • Apportion the actual lending of the buyer to producers by these ratios. This gives us a systematic method to apportion all our lending against target producer groups.

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Appendix B to support Objective 1 Customer list

Buyer customers at 30 September 2006 Buyers Country Cafédirect UK Citizen Dream Belgium Commercio Alternativo Italy Contigo Germany CTM Altromercato Italy Dritte Welt Partner Germany Ecco Bella USA El Puente Germany Epona UK Equal Exchange USA Equal Exchange Trading UK Equoland Italy EZA Dritte Welt Austria F M Foods (Tropical Wholefoods) UK Fair Trade Company (People Tree) Japan Fairwind UK Gepa Fair Handelshaus Germany IDEAS Spain Just Us! Coffee Canada La Siembra Canada Liberomondo Italy Magasins du Monde Oxfam Belgium One World Shop UK Oxfam Australia Trading Australia Oxfam Wereldwinkels Verdeelcentrum Belgium PointOV UK Rattvis Handel Import Sweden Red Tomato USA Roba dell’altro Mondo Italy SERRV International USA Solidar’Monde France Ten Thousand Villages Canada Canada Ten Thousand Villages USA USA Top QualiTea (UK) UK Trade Aid Importers New Zealand Traidcraft UK Tropical Forest Products UK Twin Trading UK World of Good USA

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Producer group customers at 30 September 2006 Producer groups Country Alternative Trade Network Nigeria (ATNN) Nigeria APICOOP Valdivia Cooperativa Campesina Apicola Chile APRAINORES El Salvador Arum Dalu Mekar Indonesia Asociacion De Artesanos Qantati Bolivia CACVRA Peru Camari Fepp Ecuador Candela Peru CECOCAFEN Nicaragua COCLA Peru Centro de Exportaciones Gruppo Salinas Ecuador Cercle des Secheurs Burkina Faso Comparte Chile Coocafe Costa Rica Coopercañera­Cooperativa Cancra Costa Rica Craft Aid (Mauritius) Mauritius Dezign Incorporated Zimbabwe ELOC Farms Ghana Fruits of the Nile Uganda Frutos de los Andes Fruandes Colombia Fundacion Solidaridad Talleres Artesonales Chile Gebana Afrique Burkina Faso Gebana Brasil Brasil Getrade Ghana Grupo Agricola Prieto Ecuador Gumutindo Coffee Cooperative Enterprises Uganda Holyland Handicrafts Palestine Honey Care Africa Kenya Intercrafts Peru Peru Jirmit Papyrus Group Egypt Kisii Soapstone Carvers Cooperative Society Kenya Kisii Soapstone Art & Craft Kenya La Alianza Costa Rica Lombok Pottery Centre Indonesia Machakos District Cooperative Union Kenya MCCH – Fundacion Maquita Cushunchic Ecuador Much in Little Inc Philippines Mysha Enterprises Ghana NAWOU­National Association of Women’s Organisations of Uganda Uganda North Western Bee Products Ltd Zambia Panay Fair Trade Center Philippines Proagroin Costa Rica Productores de Miel Flor de Campanilla Mexico Rungwe Smallholders Tea Growers Association Tanzania Salay Handmade Paper Industries Philippines Smolart Self Help Group Kenya Speciality Foods of Africa Zimbabwe Thai Tribal Crafts Thailand Trinity Jewellery Kenya UCRAPROBEX El Salvador Undugu Society Kenya Volta River Estates Ghana Wupperthal Rooibostee Komitee South Africa Xochipilli A. C.y Xochiquetzal Kenya Yatta South Women Group Kenya Yayasan Mitra Bali Indonesia

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Appendix C to support Objectives 2 and 5 Members’ views

Feedback from members’ workshop in AGM 2006

Question: What excited or surprised you about the update from Shared Interest? • Getting people involved; building relationships between products/buyers/producers • Going local – another level of partnership • The stories, the case studies – and how Shared Interest has/is evolving

Question: “It is important for Shared Interest to develop a regional presence because…..” • Creating a shared vision • Reduce reliance on the North • Need to be there in order to know what will work, what is needed • Become part of culture in order to go beyond just scraping the surface • Better partnership • Developing local skills/expertise • Spread fair trade South • Improves communication • Promotes global networking • It promotes co‑operation • Feedback to members of Shared Interest on security of loans, effective monitoring and support provided • Build relationships and trust • Helps to develop more of a two‑way process, makes capital/loans more accessible • Reduces risk through monitoring

Question: What did you find most useful about the meeting today? • The update from staff and the review with Q&A • Information on regional developments • Detailed information on producer loans • Hearing about the new developments – local offices and direct producer loans • Updates on projects • Informal chat with the informed • Becoming better informed – exchange of ideas, meeting Shared Interest members and staff • Presentation about developments ain Kenya and Costa Rica and the Q&A session preceding the AGM

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• Meeting other members and staff and hearing from a producer • First time: Personal contact with members/staff etc. First hand reporting of developments. “Buzz” of meeting similarly minded people. • Networking opportunities. It makes being a member more real • Learning about new directions i.e. long terms loans and the regionalisation programme that sounds great

Feedback forms AGM 2006

What did you find most useful about the meeting today? • Meeting Patricia • Discussion between members and questions to Board • The update from staff and the review with Q&A • Seating arrangement • Contributions/questions from members • Meeting new staff. Information on regional developments • Detailed information on producer loans • Hearing about the new developments – local offices and direct producer loans • Updates in projects • Informal chat with the informed • Info on close connections between Shared Interest and Traidcraft • Meeting the new MD and learning about new developments • The organised table/group discussion with the Council members was an excellent idea and encouraged individual contributions • Becoming better informed – exchange of ideas, meeting Shared Interest members and staff • Presentation about developments in Kenya and Costa Rica and the Q&A session preceding the AGM • Meeting other members and staff and hearing from a producer • Well organised, good food, accessible location and plenty of information about Fair trade • First time: Personal contact with members/staff etc. First hand reporting of developments. “Buzz” of meeting similarly minded people. • Networking opportunities. It makes being a member more real • All was interesting/useful • Learning about new directions i.e. long terms loans and the regionalisation programme that sounds great • Confirmation reassurance encouragement • I enjoy meeting like‑minded people

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What could be done better next time? • Arrangements for the formal AGM • Accounts could be presented in a clearer fashion so the he SI Society and the SI Foundation accounts can be viewed separately • Presentation of financial accounts (for laypersons) and should have noted the exchange losses during the presentation • Questions more time and proper answers • Lunch needed 2 points of access • Brighter projection • Room too big – too impersonal • Excellent venue • This was much more professional that previous experience but despite very smart venue the air conditioning was most uncomfortable • On the presentation – Hugo’s English not very decipherable. Couldn’t understand Shailesh’s English – needs to speak more clearly. Gill Dandy – good as interviewer • The setting out of the accounts • Smoother transition of slides/audio‑visual material • Please ensure that all presenters speak clearly/slowly into microphones • A room with windows • A smaller, slightly more intimate venue. Better sound • Good venue – no criticism or suggestions

Any other feedback/questions about Shared Interest or the AGM? • Liked the format of the day but be careful not to rush the AGM • Philip Angier should have been open to more questions • Questions not answered effectively/addressing people’s queries • Not enough time for Q&A • Attitude of the chair in the afternoon session was arrogant and dismissive • Small point: marketing started 3 years ago. It is correct that it takes a lengthy time for people to convert, but the reason investor recruitment was slow/minimal in 2004/5 was because a decision was made to concentrate on market research , communications strategy and the Ambassadors Scheme, to position ourselves for the future. • Still confused about SI Society/Foundation accounts • Is the style of this kind of meeting very/too expensive? • I’m encouraged that the Board will consider SI policy re sustainability and GM. Please keep us informed of progress in QR • Very well organised • Good venue and well presented event

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• More news about producer contacts, and local production of FT goods • Good presentations/contributions – a little more time for members questions/contributions • Have spoken to Francesca about meeting up to discuss ideas for promoting to a younger market (Sandra King, Community Foundation Newcastle)

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Appendix D to support Objective 2

Shared Interest Producer/Buyer Visits

Month Country Region Traveller Producer Buyer Visit reason (sales/ groups s existing customer visited visited visit/research)

Oct­05 Scotland EUR UK 2 2 Lending (sales) Oct­05 USA, Canada NAM UK 0 14 Lending (sales) Oct­05 Costa Rica, LAM UK 5 0 Lending (sales) Peru, Mexico Jan­06 India ASIA UK 12 0 Foundation (research) Jan­06 Kenya AFRICA UK 3 0 Existing customers Jan­06 Kenya, Uganda, AFRICA UK 12 0 Foundation (research) Tanzania Feb­06 Tanzania AFRICA UK 8 0 Lending (sales) Feb­06 Germany EUR UK 20 9 Lending (sales)

Mar­06 El Salvador, LAM Reg 2 0 Lending (sales) Nicaragua Apr­06 Germany EUR UK 0 1 Existing customers Apr­06 UK EUR UK 0 1 Existing customers Apr­06 USA NAM mixed 6 15 Lending (sales) May­06 Kenya, AFRICA mixed 14 0 Lending (sales) Tanzania May­06 Kenya AFRICA UK 1 0 Foundation (training) May­06 El Salvador, LAM mixed 5 0 Lending (sales) Nicaragua May­06 UK EUR UK 0 1 Existing customers Jun­06 Mexico LAM UK 2 0 Existing customers Jun­06 UK EUR UK 0 5 Lending (sales) Jun­06 Tanzania AFRICA mixed 2 0 Lending (sales) Jun­06 Nicaragua, LAM Reg 3 0 Lending (sales) Honduras Aug­06 UK EUR UK 0 1 Existing customers Aug­06 Chile, Bolivia, LAM Reg 11 1 Lending (sales) Peru Aug­06 Kenya AFRICA Reg 1 0 Lending (sales) Sep­06 Nicaragua LAM mixed 3 0 Lending (sales) Sep­06 UK EUR UK 1 0 Existing customers Sep­06 UK EUR UK 1 0 Lending (sales) Sep­06 Vietnam, ASIA UK 16 3 Lending (sales) Thailand Sep­06 France EUR UK 0 7 Lending (sales) Sep­06 Kenya AFRICA mixed 3 0 Existing customers Sep­06 Kenya AFRICA Reg 15 0 Lending (sales) Totals 148 60

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Appendix E to support Objective 4

Staff questionnaire, September 2006 As part of the process of gathering data from staff for this year’s social accounts, we are attaching a questionnaire, which we would encourage you to complete. This builds on last year’s questionnaire, but has a slightly wider context which we think is appropriate now that we are a bigger team, have several offices, and have a number of people who have joined Shared Interest since last time. As you will know, there are on‑going projects to look at communications, personal development/reward as a result of last year’s staff survey and Patricia’s initial discussions with staff. The questionnaire may look daunting, but in trials has taken less than 10 minutes to complete. For those in the UK: please complete it on screen, print off on the duplex printer and return to the box on Lis’s desk by close of business on Friday 29 th September 2006. Rachel, Hugo and Andrew: we would encourage you to complete it too, but in your case the only practical way to return it will be via email to Lis, which we appreciate requires an element of trust. John is already looking at the possibility of anonymous email responses for next year! Many thanks, The Social Accounting Team: Tracy, Amy, John, Francesca, Stuart and Lis

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About you i) How long have you worked for Shared Interest?

0­6 months 7­12 months Up to 2 yrs Up to 3 yrs 3+ yrs

ii) Environment

Always Usually Sometimes Rarely n/a A At home do you recycle cardboard, paper, plastics etc. wherever possible? B At work do you re­ use paper (note pads, Squeaky printer etc)? C At work do you use the most appropriate printer? D At work, do you switch your computer off overnight? Yes No n/a E Could your normal journey to work be realistically done in a more environmentally­ friendly way? F Are your business trips planned to minimise your carbon footprint?

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About your job

1 On the whole, how satisfied are you with your present job? Please tick the one option that most accurately reflects your opinion. Very satisfied Fairly satisfied Neither satisfied or dissatisfied Fairly dissatisfied Very dissatisfied

2 How would you rate Shared Interest as a place to work, compared to other companies you have heard about, or for whom you have previously worked? One of the best Above average Average Below average One of the worst Don’t know/no opinion

3 Think about your future. In the next 12–18 months, which of the options below best reflects your thinking? Please tick the one option that most accurately reflects your opinion. Stay at my present job with Shared Interest Change to another job within Shared Interest Be promoted within Shared Interest Move to another job outside Shared Interest Have not thought about the possibilities

4 What do you MOST like about working for Shared Interest?

5 What do you LEAST like about working for Shared Interest?

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6 Below is a list of things that any job may offer. Please indicate how satisfied or dissatisfied you are with each of these factors in YOUR job. Please answer for all those listed.

Very Fairly Neither Fairly Very satisfied satisfied satisfied dissatisfied dissatisfied nor dissatisfied A Interesting work B Career development C Making the best use of your skills D Pay E Opportunity to show initiative F Safety and personal security at work G Training opportunities H Feeling you have accomplished something worthwhile at work I Friendly colleagues J Working as part of a team K Good benefits package L Equal opportunities for all staff M A place in a company that cares for its staff N Physical working environment O Flexible working hours P Pension Q Annual holidays R Corporate and individual awareness of environmental impact/issues

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7 Below is the same list of things as in question 6. Please look at the list again, and identify which are the most important to you. Please pick only six from the whole list and rate them: 1 (most important) to 6 (least important) Six most important A Interesting work B Career development C Making the best use of your skills D Pay E Opportunity to show initiative F Safety and personal security at work G Training opportunities H Feeling you have accomplished something worthwhile at work I Friendly colleagues J Working as part of a team K Good benefits package L Equal opportunities for all staff M A place in a company that cares for its staff N Physical working environment O Flexible working hours P Pension Q Annual holidays R Corporate and individual awareness of environmental impact/issues

About your job ­ any other comments

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About your immediate manager

8 Listed below are a number of statements that could be used to describe your immediate manager. Please indicate how often these apply to him/her, if at all. Please tick one box in each line. Always Usually Sometimes Rarely Don’t know A Keeps me in touch with what’s going on B Encourages my ideas C Gives me feedback on my ideas D Agrees goals/objectives with me E Is good at dealing with people F Gives me good feedback on how I am doing G Answers my questions openly and honestly H Treats me fairly I Is supportive J Is accessible K Gives me the right information to do my job properly L Encourages me to work as part of a team M Makes it clear what’s required of me N Is good at making decisions O Involves me in decisions which affect me P Has a style which I feel comfortable and relaxed with Q Has a style which motivates me to do my best work About your manager ­ any other comments

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About Shared Interest

9 Below is a list of statements. Please indicate how strongly you agree or disagree with each one. Please tick one box for each statement. Strongly Agree Neither Disagree Strongly agree agree nor disagree disagree A1 I understand the business objectives of Shared Interest Society Ltd. A2 I understand the business objectives of the Shared Interest Foundation B The management Team are doing a good job running the business C Morale is good here D I’m proud to work for Shared Interest E I often have to work additional hours to get my job done F Awareness of the needs of the customers is an important part of my job G There’s generally an atmosphere of good co­operation within Shared Interest H People’s personal development is given great emphasis I People are afraid of making mistakes J Taking the initiative is strongly encouraged K People are expected to obey orders without questioning them L Quality of service to the customers is improving M People compete against one another rather than working for the good of the whole N Work is carried out efficiently O There is an atmosphere of mistrust P There is a spirit of hope for the future Q People are criticised more readily than they are praised R Morale is high S People are reluctant to speak their minds T People work together as a team U Procedures take preference over the requirements of the customers V The organisation is conscious of its impact on the environment and takes appropriate action to minimize it

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10 About Shared Interest: please use this space for any other comments you would like to make:

Conclusion

11 Given your responses to the above questions, what changes would you like Shared Interest to introduce in the next 12­18 months?

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Appendix F to support Objective 4 Feedback from staff questionnaire, September 2006

About you i) How long have you worked for Shared Interest?

0­6 months 7­12 months Up to 2 yrs Up to 3 yrs 3+ yrs 3 4 8 3 3 ii) Environment

Always Usually Sometimes Rarely n/a A At home do you 8 9 1 2 2 recycle cardboard, paper, plastics etc. wherever possible? B At work do you re­ 3 7 7 3 1 use paper (note pads, Squeaky printer etc)? C At work do you use 8 7 4 1 2 the most appropriate printer? D At work, do you 17 2 1 2 switch your computer off overnight? Yes No n/a E Could your normal 4 17 1 journey to work be realistically done in a more environmentally­ friendly way? F Are your business 4 7 10 trips planned to minimise your carbon footprint?

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About your job

1 On the whole, how satisfied are you with your present job? Please tick the one option that most accurately reflects your opinion. Very satisfied 9 Fairly satisfied 7 Neither satisfied or dissatisfied 4 Fairly dissatisfied 1 Very dissatisfied 1

2 How would you rate Shared Interest as a place to work, compared to other companies you have heard about, or for whom you have previously worked? One of the best 9 Above average 7 Average 2 Below average 2 One of the worst 1 Don’t know/no opinion 1

3 Think about your future. In the next 12–18 months, which of the options below best reflects your thinking? Please tick the one option that most accurately reflects your opinion. Stay at my present job with Shared Interest 10 Change to another job within Shared Interest 4 Be promoted within Shared Interest 2 Move to another job outside Shared Interest 3 Have not thought about the possibilities 3

4 What do you MOST like about working for Shared Interest?

Not included for confidentiality reasons

5 What do you LEAST like about working for Shared Interest?

Not included for confidentiality reasons

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6 Below is a list of things that any job may offer. Please indicate how satisfied or dissatisfied you are with each of these factors in YOUR job. Please answer for all those listed.

Very Fairly Neither Fairly Very satisfied satisfied satisfied dissatisfied dissatisfied nor dissatisfied A Interesting work 14 7 1 B Career development 5 4 4 4 3 C Making the best use of 9 6 5 1 1 your skills D Pay 3 11 2 2 4 E Opportunity to show 8 9 3 1 1 initiative F Safety and personal 10 8 4 security at work G Training opportunities 4 7 5 5 1 H Feeling you have 11 7 3 1 accomplished something worthwhile at work I Friendly colleagues 11 10 1 J Working as part of a 7 10 4 1 team K Good benefits package 4 7 9 2 L Equal opportunities for 3 6 7 4 1 all staff M A place in a company 5 7 5 4 1 that cares for its staff N Physical working 10 10 1 1 1 environment O Flexible working hours 7 6 6 2 P Pension 8 7 5 Q Annual holidays 8 9 3 2 R Corporate and individual 2 9 9 1 1 awareness of environmental impact/issues

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7 Below is the same list of things as in question 6. Please look at the list again, and identify which are the most important to you. Please pick only six from the whole list and rate them: 1 (most important) to 6 (least important) Six most Count important A Interesting work 1,1,1,2,1,2,4 20 ,1,1,Y,2,3,1, 1,5,2,Y,3,1,4 B Career development 6,1,2,3,5,2,Y 11 ,1.4,2,3 C Making the best use of your skills 3,3,3,4,5,Y,2 12 ,5,6,Y,2,2 D Pay 4,3,5,1,3,4,1 11 ,2,3,3,1 E Opportunity to show initiative 2,3,Y,6 4 F Safety and personal security at work 5 1 G Training opportunities 6,6,4,4,3,Y 6 H Feeling you have accomplished something worthwhile at 2,2,1,1,6,3,Y 13 work ,4,2,1,Y,1,2, 1 I Friendly colleagues 5,5,5,2,Y,4 6 J Working as part of a team 3,4,4,Y,3,5,4 8 ,5 K Good benefits package 2,4,2,6,2 5 L Equal opportunities for all staff 6,1 2 M A place in a company that cares for its staff 4,6,6,6,6,4,5 9 ,Y,4 N Physical working environment 6,6,6 3 O Flexible working hours 5,5,3,5,6,6,5 9 ,5,3 P Pension 3,5 2 Q Annual holidays 4,6 2 R Corporate and individual awareness of environmental 5 1 impact/issues

Finance for fair trade and support for disadvantaged producers 87 Social Accounts for the year ended 30 September 2006

About your immediate manager

8 Listed below are a number of statements that could be used to describe your immediate manager. Please indicate how often these apply to him/her, if at all. Please tick one box in each line. Always Usually Sometimes Rarely Don’t know A Keeps me in touch with 7 10 3 1 what’s going on B Encourages my ideas 5 12 3 1 C Gives me feedback on my 6 10 3 1 1 ideas D Agrees goals/objectives with 12 6 2 1 me E Is good at dealing with people 5 7 7 1 1 F Gives me good feedback on 9 6 4 1 1 how I am doing G Answers my questions openly 8 7 4 2 and honestly H Treats me fairly 10 5 5 1 I Is supportive 9 6 5 1 J Is accessible 10 6 3 2 K Gives me the right 6 7 3 3 1 information to do my job properly L Encourages me to work as 8 9 3 1 part of a team M Makes it clear what’s required 7 9 5 of me N Is good at making decisions 3 9 5 1 3 O Involves me in decisions 5 9 4 2 1 which affect me P Has a style which I feel 5 7 4 4 1 comfortable and relaxed with Q Has a style which motivates 5 6 4 4 2 me to do my best work

Finance for fair trade and support for disadvantaged producers 88 Social Accounts for the year ended 30 September 2006

About Shared Interest

9 Below is a list of statements. Please indicate how strongly you agree or disagree with each one. Please tick one box for each statement. Strongly Agree Neither Disagree Strongly agree agree nor disagree disagree A1 I understand the business objectives 12 9 1 of Shared Interest Society Ltd. A2 I understand the business objectives 8 8 4 2 of the Shared Interest Foundation B The management Team are doing a 4 5 9 4 1 good job running the business C Morale is good here 1 4 8 6 2 D I’m proud to work for Shared Interest 15 2 4 1 E I often have to work additional 5 6 6 4 1 hours to get my job done F Awareness of the needs of the 10 8 2 2 customers is an important part of my job G There’s generally an atmosphere of 6 8 5 2 1 good co­operation within Shared Interest H People’s personal development is 1 2 8 8 3 given great emphasis I People are afraid of making 1 3 8 5 4 mistakes J Taking the initiative is strongly 1 5 11 3 1 encouraged K People are expected to obey orders 1 3 9 5 4 without questioning them L Quality of service to the customers 2 12 8 is improving M People compete against one 1 2 9 7 2 another rather than working for the good of the whole N Work is carried out efficiently 8 7 5 2 O There is an atmosphere of mistrust 2 5 8 4 3 P There is a spirit of hope for the 2 9 7 3 1 future Q People are criticised more readily 3 3 10 5 1 than they are praised R Morale is high 6 6 6 3 S People are reluctant to speak their 3 7 4 5 3 minds T People work together as a team 2 9 8 2 1 U Procedures take preference over the 3 8 7 3 requirements of the customers V The organisation is conscious of its 2 9 4 4 2 impact on the environment and takes appropriate action to minimize it

Finance for fair trade and support for disadvantaged producers 89 Social Accounts for the year ended 30 September 2006

Appendix G to support Objective 5 Customer satisfaction questionnaires

Producers The following questionnaire should take no more than 5 minutes to complete. The information will be received, collated and compiled into statistics by Tracy Bonham, Project Manager, who is leading this years Social Reporting team. The information provided will be confidential and not shared with your Account Manager. Please rate Shared Interest against the following statements using the scale 1‑5 as indicated below. 1 = Strongly disagree 2 = Disagree 3 = Neither 4 = Agree 5 = Strongly agree

1 2 3 4 5 1. When I have a problem or a query with my Shared Interest accounts, I feel my account manager deals with it effectively and quickly. 2. I feel comfortable that I can approach my Shared Interest account manager to request an increase or a new facility. 3. My Shared Interest statements… a. Arrive when expected b. Are easy to understand 4. Shared Interest charges me a fair rate of interest 5. Credit received from Shared Interest is Important to the sustainability of my organisation 6. The type of loans/credit facility that I have with Shared Interest are structured in a way that meets the needs of my organisation 7. I find Shared Interest easier to deal with than My commercial bank 8. Overall, I am satisfied with the Customer Service received from Shared Interest

We would be very grateful for any further comments about Customer Satisfaction, your relationship with Shared Interest and the service provided by Shared Interest Society – both positive and areas for improvement. The more details you provide, the more we will be able to address your needs. It would be helpful to add any comments especially were you have used ratings 1 or 2.

Finance for fair trade and support for disadvantaged producers 90 Social Accounts for the year ended 30 September 2006

Buyers The following questionnaire should take no more than 5 minutes to complete. The information will be received, collated and compiled into statistics by Tracy Bonham, Project Manager, who is leading this years Social Reporting team. The information provided will be confidential and not shared with your Account Manager. Please rate Shared Interest against the following statements using the scale 1‑5 as indicated below. 1 = Strongly disagree 2 = Disagree 3 = Neither 4 = Agree 5 = Strongly agree

1 2 3 4 5 1. When I have a problem or a query with my Shared Interest accounts, I feel my account manager deals with it effectively and quickly. 2. I feel comfortable that I can approach my Shared Interest account manager to request an increase or a new facility. 3. My Shared Interest statements… a. Arrive when expected b. Are easy to understand 4. Shared Interest charges me a fair rate of interest 5. Credit received from Shared Interest is Important to the sustainability of my organisation 6. The type of loans/credit facility that I have with Shared Interest are structured in a way that meets the needs of my organisation 7. I find Shared Interest easier to deal with than My commercial bank 8. Dealing with Shared Interest strengthens our relationship with producers 9. All payment instructions to Shared Interest are dealt with accurately and in a timely manner 8. Overall, I am satisfied with the Customer Service received from Shared Interest We would be very grateful for any further comments about Customer Satisfaction, your relationship with Shared Interest and the service provided by Shared Interest Society – both positive and areas for improvement. The more details you provide, the more we will be able to address your needs. It would be helpful to add any comments especially were you have used ratings 1 or 2.

Finance for fair trade and support for disadvantaged producers 91 Social Accounts for the year ended 30 September 2006

Appendix H to support Objective 5 Feedback from customer satisfaction questionnaires

Producer comments About statements “The information on payments is clear and easy to understand. This is not the same for the loans. I don’t easily understand: how the repayments are calculated or what happens if you haven’t paid off the loan by the end of the term. This uncertainty means I have not requested any new loans. Everything else about this mutual relationship is absolutely satisfactory for us.” “Arrival ‑ it’s take around 2 weeks from our buyer confirmation” “Arrive when expected – in general yes but they didn’t all arrive last year.” “Clarity – are very complicated and are not current/up to date.”

About interest rates “We feel the interest rate is a little high (of course nothing compared to those rates in Mexico) but for the international market we feel it’s a lot. We do not know if this is due to having a USD facility with you or if it’s generally the international level, we are unsure if having a EUR facility would make a difference.” “The interest rate of 11% to 12% monthly is very high. One would have thought per annum would have been appropriate.” [NB the interest rates we charge are on a per annum basis and we have recently updated statements and other correspondence to try to make this clearer.]

General comments “In general, you are flexible enough with us and we can make changes when necessary for the efficient running of our company. This helps us a lot.” “Thank you for allowing us to evaluate the work of Shared Interest – we have only worked with Shared Interest for a short time but we are satisfied with all the effort that you have made to benefit our organisation.” “Comms with Account Manager – is very nice and quick.” “You should update your risk analysis which does not look case by case.” “I have instances where I haven’t had replies to e‑mails for weeks and have had to resend e‑ mails several times before receiving replies [Investigation established that replies had been sent but were being filtered out by our spam email filter, this has now been corrected]

Finance for fair trade and support for disadvantaged producers 92 Social Accounts for the year ended 30 September 2006

Buyer comments About statements “You have already made a lot of effort but it is still sometimes not clear enough.” “While I have been able to figure out the statements, I would hesitate to go so far as to say they are ‘easy to understand’.”

About interest rates “About interest rates, they are very high but you don’t take any guarantees. I don’t know if it is fair.” “I would like to see the interest rate we pay coming down.”

About facilities “The need of my organisation and our cash flow should require a 5 or 6 months facility limits. We have only 3 months at the moment.” “Relationship with Shared Interest compared with commercial bank ‑ The score assigned to this statement should not be construed as a negative reflection on Shared Interest, but is more a comment on the unusually strong relationship that we enjoy with our commercial bank.”

General comments “I feel that the Account Manager doesn’t have the power to decide anything about it.” “We have no complaint against the work that our Account Manager is doing for us. Actually all the Account Managers who followed us during these years have made an excellent work, always agreeing to our requests. We can only strongly thank them for it.” “In general I am quite satisfied with the level of service provided by, and response time on questions submitted to, our representative.” “Questions related to other matters that cannot be answered by our normal contacts take very long and we have to ask them several times.” “Follow up could be better.”

Finance for fair trade and support for disadvantaged producers 93