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CERO Coop

Building a worker-owned green business, incubated by two worker centers

 
Background

CERO (Cooperative Energy, Recycling, and Organics; and, Cooperativa para Energía, Reciclaje, y Orgánicos) is a multicultural worker cooperative in the waste-recycling sector. Formally incorporated at the end of 2013, CERO leapt at the market opportunity created by the 2014 Commercial Food Waste Disposal Ban on large institutions in Massachusetts, the result of past environmental struggles to reduce waste and its impacts on communities. CERO collects organic waste from Boston-area restaurants, grocery stores, and institutions that would otherwise be sent to landfills, has it composted, and then resells the compost locally for use in urban agriculture.

The idea for CERO first surfaced in 2011, a time when the unemployment crisis in Boston’s working class neighborhoods was critical and the concept of the “green economy” was entering mainstream consciousness. As worker-owner Lor Holmes describes it, “the founders of CERO coop were a bunch of community folks” actively involved in two local nonprofits: Boston Workers Alliance (BWA) and Massachusetts Coalition for Occupational Safety and Health (MassCOSH) Immigrant Worker Center. They wanted to start a worker cooperative in the environmental sector to create good, green jobs for Boston residents. In part the initiative followed up on a prior effort by BWA to incubate Roxbury Green Power, a worker-owned microenterprise for recycling waste oil.

BWA and MassCOSH were supportive of their members’ effort. They provided meeting space and served as fiscal agent for CERO to receive an early grant in 2012 from the Barr Foundationt hat supported coop development training and hiring

their startup manager, Holmes. With challenges in obtaining startup financing from conventional lenders, CERO was forced to be persistent and creative in finding alternative resources. They started with a crowd-funding campaign in 2013 that raised $17,000 from over 300 donors and also secured a zero-interest loan from Boston Impact Initiative and the Cooperative Fund of New England. These funds paid for consultants to help launch a Direct Public Offering (DPO) in summer 2014 for non-accredited Massachusetts residents to invest in CERO. A year later, the DPO raised more than $375,000 from eighty-four investors.

The cooperative first launched with five worker-owners. They have weathered difficult periods of financial strain and uncertainty, sometimes working without pay for significant lengths of time. But as of today, according to Holmes, CERO has been “operational and revenue generating for two years”, with each of the seven worker-owners and an eighth employee earning $20/hour, and on track toward its “break even” goal for 2018. It has purchased its own trucks customized for hauling organic waste, and holds contracts with several major businesses and institutions in the area, including Northeastern University, America’s Food Basket, Wegman’s, the Boston Public Market, and Crop Circle Kitchen.

Key Learnings

CERO’s worker-owners hold an explicit awareness of the political-economic implications of their work. Holmes explained “We’ve got to continue to resist the injustice. At the same time we’ve got to survive, which I think means creating the kind of businesses and economies that help us to live in the full sense of that word.” The worker-owners are proud of the fact that from the beginning, the coop was driven by the worker-owners themselves. “This really is a grassroots up model,” Holmes said. “Nobody made this happen except the members.” That approach can be contrasted with other efforts (such as Evergreen and Wellspring) that first create cooperative entities and then bring in workers-owners. CERO is also conscious of the differences represented within the cooperative. Holmes described the cooperative as “Black, Brown, White, Latino, African American, queer. Everyone is choosing our multicultural workplace, choosing to bridge those differences, where we aim for raising everybody up in their power.”

The grassroots approach to development has been a source of strength as CERO has had to develop its internal bylaws and practices at the same time it is operating. The worker-owners developed a closeness throughout the process. “We all kind of fell in love with each other instantly,” Holmes recalled. And, she said, it helped that “we had a model since before we even began doing operations of holding weekly coop meetings. It’s a sacred space, nobody ever misses those meetings.” Those first years of startup development were a space for the worker-owners to learn about the cooperative structure and their own culture. Now when they hire new worker-owners the education happens “culturally, transmitting the values and talking about the principles in the context of how we do business with each other,” according to Holmes. But, she admitted, “we do have to institutionalize ways of working on this stuff.”

Courtesy of CERO Coop

In financing the cooperative, CERO worker owners benefitted from the institutional credibility of BWA and MassCOSH to secure their first foundation grant. Later they were able to depend on “a terrific community,” Holmes said, in jerry-rigging a variety of alternative resources to get their business off the ground. At an early point when CERO was unable to reimburse BWA several thousand dollars for health insurance premiums, BWA accepted payment in the form of shares instead. “In that way they were definitely new economy more than old economy,” Holmes said. “They could make different things work with less rigid ways.” Their crowd-funding campaign enabled them to conduct their DPO campaign. A portion of the DPO funding went to secure a $100,000 line of credit from the Cooperative Fund of New England (CFNE). After the DPO, a consortium of progressive lenders, including Boston Impact Initiative, the Working World, Chorus Foundation, and Access Strategies were willing to step in with additional loans for equipment and working capital. Holmes called this “a new economy loan” because “we don’t start making interest payments for a period of time, and then they’re pegged to the level of success we’re having, and there are terms for re-negotiating if we need to.”

CERO plays an important role in the Boston region as a visible and often-referenced example of an alternative to capitalism. CERO worker-owners have been generous in publicly sharing the lessons learned from their work in cooperative development. The cooperative is a participant in the Boston Ujima Project (also featured in this report).

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Courtesy of CERO Coop

Additionally, despite the demands of running a cooperative, CERO worker-owners have dedicated time to remaining involved in their local neighborhoods. CERO collaborates regularly with local groups like the Dudley Street Neighborhood Initiative and is part of a local initiative to build a food hub in Boston (for which CERO would “close the loop” by recycling local food waste into compost). Holmes noted that CERO has also been active with the Boston Recycling Coalition, soon to be rebranded as the Zero Waste Coalition, to “push the city to take on a zero waste campaign.”

CERO’s ambitions go beyond being a successful waste recycling business. Looking to the future, it imagines developing an eco-energy park, in which the organic waste they collect is processed in anaerobic digesters. The digesters then produce fertilizer and biofuel to generate electricity that would open opportunities for other spin-off enterprises.