Success Story: Equal Exchange

Introduction – Calvert Impact Capital's history with Equal Exchange

In 2003, Calvert Impact Capital made its first loan of $200,000 to Equal Exchange, a pioneering Fair Trade and organic food cooperative that partners with small-farmer cooperatives and institutions in over 20 countries. Equal Exchange's mission is to build long-term trade partnerships that are economically just and environmentally sound; to foster mutually beneficial relationships between farmers and consumers; and to demonstrate the contribution of worker cooperatives and Fair Trade to a more equitable, democratic, and sustainable world. Equal Exchange is the only Calvert Impact Capital borrower that sells a product directly to retail consumers. Its Fair Trade products, with $80.9 million in sales in 2019, include coffee, chocolate, tea, bananas, olive oil, avocados, bananas, cashews, almonds, and mangoes.

As a worker-owned cooperative, Equal Exchange seeks to challenge the corporate control of food, increase the market viability of small farmers and their cooperatives, and reshape the food system to benefit all. The sourcing and sales of their products, as well as their Small Farmer Fund, support small-scale farmers in 75 farmer coops around the world. Equal Exchange's work has also fueled the expansion of the Fair Trade market in the US, which now encompasses many other major players in the coffee and chocolate world.

As a cooperative, Equal Exchange is not designed to maximize profits, but rather to bring to the workplace many of the rights and responsibilities that individuals hold as citizens in our communities. Unlike many other cooperatives, Equal Exchange remains independent and has not been bought by a larger entity. As Equal Exchange puts it:

"The Fair Trade movement has been watered down in favor of corporate interests. The whole food industry has continued to consolidate into the hands of just a few big players, allowing concentrated power and deception of choice."

As one of the few independent cooperatives of its size, Equal Exchange has received major interest and support from the impact investing community, including Calvert Impact Capital. We continuously renewed and increased our loan to Equal Exchange, from $200,000 in 2003 to $1 million in 2013, with an additional $350,000 lent in 2015.

In 2016, our portfolio strategy focused more clearly on financing scalable impact intermediaries, and we anticipated Equal Exchange would repay our loan. Instead, after discussions about ways our capital could continue helping them achieve their mission, we collaborated to launch a private label program in which investors could target their investment in our Community Investment Note® (our "Note") to Equal Exchange, with the same rate and terms as our traditional Note offering – we use our investor's targeting selections to inform our lending activities. The program provided an opportunity for investors to support the transformation of global food systems not only by purchasing Equal Exchange's retail products, but also by investing in their continued growth through our Note.

How did our loan have an impact at Equal Exchange?

Our capital supports our borrowers to build, grow, and sustain their portfolios, organizational strength, and impact they have on the ground. Our initial financing to Equal Exchange helped the cooperative continue building its track record, grow its operations, and expand to new customer markets. While our first loan to Equal Exchange was only $200,000, our subsequent loans grew as both we and Equal Exchange scaled up.

By 2016, Equal Exchange was well capitalized through a variety of loans, private placements, and even a certificate of deposit program with a regional bank, and they sought further growth to increase their impact on the global food system. By 2016, their sales had grown to more than $70 million, up from $36 million in 2010. At the time, Equal Exchange noted that our private label program was very important, not just for the capital, but also the potential for deeper engagement with their "citizen consumers."

As Daniel Fireside, former Capital Coordinator at Equal Exchange, recently reflected:

"As a mission-aligned and trusted capital source, Calvert Impact Capital's relationship was very valuable, especially knowing that the capital came from retail investors who aligned with democratizing capital structures. I love Calvert Impact Capital's Community Investment Note® program. No one else is lowering the barriers to community impact investing in the way and at the scale that Calvert Impact Capital is."

Ultimately, 50 investors supported Equal Exchange through Calvert Impact Capital's private label note program and we communicated directly with those investors about Equal Exchange's impact. However, due to regulatory and investor privacy constraints, we were not able to share investor information directly with Equal Exchange to engage with them further. The private label note program wound down in April 2021 given Equal Exchange's changing capital needs at the time. Calvert Impact Capital and those who invested through the private label program continue to support sustainable agriculture through our portfolio, and remain big fans of Equal Exchange's products and efforts to transform the global food system.

What we can learn from Equal Exchange's success

There is real value in mission-aligned capital. As Equal Exchange is a worker-owned cooperative, external capital can seek control in a way inconsistent with a cooperative's structure and mission. Equal Exchange sought to be very intentional with the investors they worked with, finding Calvert Impact Capital to be well-aligned.

Ultimately, the private label note program provided its greatest value through engaging retail investors with Equal Exchange's mission. While the private label note program was strategically valuable, it had unrealized potential. Internally, we identified several ways in which a program like this could be coordinated better and allow investors to opt-in for more direct engagement.

We are proud of our support of Equal Exchange over the last 17 years and will continue to lift up their story given their extensive impact on both small-scale farmers globally and engaging consumers in the mission of Fair Trade.

Interested in how you can continue to support Equal Exchange? Check out their Citizen-Consumer Initative and learn more about joining their community.