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ESG Implications of Financial Decisions

Dr. Sofía Garcia-Torres, Dr. Leyre Goitia Berriozabal, Mr. Jon Emaldi-Abasolo, Dr. Mikel Larreina Diaz
Deusto Business School

Fagor Electrical Appliances (FED) origins can be traced back to a small workshop in Mondragon (Basque Country) dedicated in 1956 to manufacturing burners and oil stoves. This workshop also represents Mondragon Corporation's (MCC) backbone, a prominent example of cooperative experience.

In early 2013, the auditor raised FED's negative working capital (€192 million in 2012). The company was allowed to continue operating only if it could get external financial assistance, which MCC and the local government agreed to offer. However, when another bail-out was requested in October 2013, MCC cooperatives were faced with a difficult choice: continue to support FED's plans or stop funding them and allow MCC's cornerstone's collapse.

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