Common Good Balance Sheet: points for ethical business practices

Common Good Balance Sheet: points for ethical business practices

"All economic activity serves the common good", is stated in the Bavarian constitution. It is not a new idea included there in 1946, but it unfortunately seems almost revolutionary in today's economic world.

"Our current economic system is upside down. Money has become a self-purpose instead of a means for what really matters: a good life for all," writes Christian Felber. The Viennese co-initiated the Economy for the Common Good (ECG) after the world financial crisis in 2008 and wrote the book "Gemeinwohl-Ökonomie" (Change Everything: Creating an Economy for the Common Good) in 2010. In February 2021, it made the German SPIEGEL bestseller list for the first time - in crises, the desire for new visions arises.

After we learned about the movement in 2019, we became a member. The idea of the ECG, to put people and the environment at the centre of economic activity, corresponds to the guiding principle from which Rosy and Patrick founded Rosy Green Wool. While we initially focused on animal welfare and organic production, the ECG goes further and promotes ethical behaviour towards all stakeholders of a company. For us, this is a good guideline for the further development of Rosy Green Wool.

Our role models are people like Antje von Dewitz, who consistently aligned the outdoor outfitter VAUDE with the ECG. In her highly recommended book "Mut steht uns gut!" she reports on this. Taifun, the tofu manufacturer, is another company whose orientation towards the common good impresses us.

"The Economy for the Common Good is a bridge to an ethical market economy, whose goal is not the increase of monetary capital, but a good life for all. Human dignity, solidarity and social justice, environmental sustainability and democracy are guiding values. The Common Good Matrix shows how these values can be lived in everyday business life. It is continually being developed and should be decided upon democratically. Companies use the Matrix to draw up a Common Good Balance Sheet. In the Common Good Report, they explain the implementation of the common good values as well as their development potential and make an assessment. The report and balance sheet are reviewed by auditors and made available to the public." These are the first of 10 points we signed up to as sub-supporters of the Economy for the Common Good (ECG) when we became a member in 2019.

The Common Good Matrix lists stakeholders for businesses: Suppliers, owners, financial partners, employees, customers, fellow companies and the social environment. Interactions with these groups are assessed in terms of the values of human dignity, solidarity and justice, environmental sustainability, transparency and co-determination.
This results in 20 topic areas that are described and evaluated. There are points for each area - which can also be negative in the case of behaviour that is detrimental to the common good. This results in a total of -3600 to +1000 points, whereby 0 points are given for the minimum standards that are legally prescribed or customary. The weighting of the individual fields can be different for companies, depending on their size, financial flows, social risks and sector.

Our first common good balance sheet for the period 2019/20 received a total of 548 points (also see the english version of the common good matrix):

Balance Sheet with points

The assessment is usually done by an independent auditor. However, there is an exception for a company's first balance sheet: entrepreneurs can join a peer group and evaluate each other accompanied by a certified common good advisor. In our case, Patrick participated in 50 hours of video conferences in the group over a period of 9 months and also wrote the 40-page report. There were six companies in the peer group, including a stonemasonry company, an ENT doctor and a solidarity-based agriculture.
The intensive discussion of the questions of the ECG matrix and the approaches of the other businesses in the peer group was at least as important as writing the balance sheet. It was a learning group in the best sense.

The specific points were not the focus for us. For us, the common good report is above all a stocktaking exercise that enables us to focus even better in the future. And in the peer process, we have received good suggestions for improvements.

Here you can download the complete 40-page report as a PDF.

Some key points from it by stakeholder group:

75% of our purchasing volume goes to companies that are either GOTS-certified or are also controlled by our GOTS audits. This means that ecological aspects and working conditions are independently examined, and we are much better in this area than required by law.
And our long-term partnerships with small businesses and independent contractors are important aspects.

Owners and financial partners
Rosy and Patrick are the sole owners and financial backers, which allows Rosy Green Wool to operate independently. We were able to reinvest profits to cover all future needs. However, without in-house production, there was no possibility of social-ecological investment in equipment. We did not get any points in the area of ownership and co-decision because we currently operate as a typical small family business and employees have no involvement.

With two part-time employees, we are a small company that, for example, has not yet offered any further training or a systematic culture of co-decision. On the other hand, we are more flexible than most in terms of working hours and location and the salary difference between employees and owners is small.

Customers and co-owners
Local yarn shops can buy from us without minimum quantities, and we try to support them where we can. In the Covid-19 crisis, we gave 30% of our online shop sales to them during the lockdowns. We cooperate with fellow businesses and recommend partners and staff to each other. Most of our marketing budget goes to freelancers who design and publish knitting patterns.

Social environment
Knitting contributes to recreation and health and together with our ecological focus, we have a positive impact on several UN Sustainable Development Goals. We contribute to the community through taxes and donations. We donate at least 10% of our income in an effective and evidence-based way, giving us a 100% score in this area. By publishing the Common Good Report, we aim to become more transparent and encourage other companies to follow this path.

In 2023, we will produce our next Common Good Report. Until then, we are looking at where we can do better without neglecting the successes we have achieved so far. Aligning with the common good is an attitude and an ongoing process, so a report can only ever be a snapshot.