Comment: Our energy company is turning capitalism upside down

An old electric company sign rusts, but change is coming to the industry
An old electric company sign rusts, but change is coming to the industry
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Our company turns the traditional capitalist business model upside down – and it could help tackle the rising levels of inequality in the UK, write David Pike and Karin Sode, co-founders of People’s Energy, a crowdfunded energy company with more than 14,000 customers.

Inequality is growing within the British economy, and it’s time to do something about it. A new report by the Institute of Public Policy Research (IPPR), a progressive think tank, has revealed only 22 per cent of people think the way the economy works is fair.

A continually changing British economic climate means there is a significant call to action for businesses to change their processes to reflect a stronger and fairer work ethic.

The report, called Prosperity and Justice: A plan for the new economy, revealed damning statistics highlighting Britain is becoming more unequal. It is argued that current business conduct is adding to this problem, rather than helping to solve it. The report also suggested the UK economy simply is not working, with living standards stagnating and people feeling increasingly disenfranchised.

People’s Energy is exactly that – the people’s energy – and we are actively bucking a toxic business trend which is adversely impacting the country’s economy. In a radical move, we put profits and ownership in the hands of people looking for a fairer deal on gas and electricity. People are fed up with being taken for a ride by large corporates, with some losing trust in their suppliers completely. By giving people a stake in our company, they are part of a community that builds profit which is shared out among all. Seventy-five percent of profits are returned to our customers in an annual rebate, which will increase to 100 per cent after seven years.

Economic reform

The IPPR report highlights how much our economy needs fundamental reform, not just short-term measures. Our business model turns the capitalist model upside down, giving everyday people the benefits of the company’s profits. It is not a renationalisation, but a hybrid between a capitalist and social enterprise model.

According to the report, the country needs investment-led growth which reduces the incentives that currently favour short-term shareholder returns over long-term productive investment. By rejecting the traditional shareholder model and creating a ‘publicly’ funded – meaning crowdfunded – company, People’s Energy has overcome the challenge of a short-term focus. The IPPR think tank also states that a fairer economy is a stronger economy, and we need to achieve prosperity and justice together. Contrary to hundreds of companies across the UK, our business model is built on the ‘Conscious Capitalism’ model put forward by John Mackey and Rajendra Sisodia in the 2013 book Conscious Capitalism, which builds social purpose into the very fabric of the company rather than as a corporate social responsibility add-on or afterthought.

Our overall purpose is to give power back to the people, by providing a solution that simplifies the buying process, always gives them the best deal and a share in the takings of the company. It also gives them confidence that the company is making good, ethical choices on their behalf. Ensuring equal access to affordable energy for all has been embedded into our focus from the beginning.

READ MORE: Duncan Thorp: Alternative energy firms doing social good are available

Power to the people

Giving people greater power, including inviting customer representatives to sit on our board, allows us to hear first-hand what people want. We have included a worker representative on our advisory board from day one, and recently added a customer representative on the board. Both roles are democratically elected by customers and staff. When a major decision needs to be made, customers have a vote on the direction of the business. People’s Energy directors share decisions, accounts, their salaries, and wholesale energy costs openly to maintain transparency.

Challenging the industry

Our own research into profits of big energy companies made for alarming, but depressingly unsurprising, reading, with people across the country believing UK organisations are becoming greedier and less honest.

The IPPR thinktank suggests it is an imperative that we promote open markets and reduce the near-monopoly power of dominant companies, and we agree. People’s Energy actively challenges the larger players in the energy market, and more should do the same in their respective industries.

READ MORE: Dr Alastair Martin: Switched-on customers changing energy market

Recognising your staff

Worker pay continues to remain an issue according to the IPPR report, but this isn’t anything new. So many companies are guilty of painting a rosy picture for the public that employees are at the heart of their organisation and everyone is treated fairly and equally. This is rarely the case.

Workers of all ages can be paid the minimum wage, but there is a lack of investment in actively developing young people. We pay all of our staff at least the living wage and provide leadership to enable rapid growth and opportunities for development.

More organisations need to bite the bullet and disrupt their industries to tackle the inequality which is currently gripping the British nation. People’s Energy has built its foundations on ethical structures which gives back to its consumers, more businesses need to put customers and employees at the heart of company values, not just in theory but in practice.