Wednesday, 13 July 2011

Unilever’s Sustainability Plan: “almost insanely ambitious”

First there were the sustainability plans of retail giants Tesco and Marks & Spencer.

In the mid-2000s, Tesco began by setting goals for increasing locally-sourced products, making their stores and transportation of goods more efficient, and investing large sums into sustainability research.

Meanwhile in 2007, M&S introduced its lengthy and much more comprehensive Plan A, aiming to make both broad and specific improvements in areas including climate change, waste, and natural resources. The firm now has 180 targets to hit, with a solid record of achievement to date on many of them.

But in 2010, Unilever became the bigger kid on the block (in terms of turnover anyhow) of sustainable business when the corporation launched its ten-year Sustainable Living Plan.  The firm is four times as large as M&S.

Now, just over six months in, implementation of the plan has achieved initial success, yet will soon face achieving long-term goals that may prove to be impossible to realise without substantial help from partnering companies.

An analytical report on the plan, published in the July-August edition of Ethical Corporation magazine, examines Unilever’s notable progress while pointing out the challenges on the horizon and how partnership can help.

Unilever’s plan sets out specific quantifiable targets for the company to achieve over the next ten years.  The plan is composed of four pillars: improve health and well-being, reduce environmental impacts, enhance livelihoods, and support people.  

Its main goals include making Unilever’s entire agricultural sourcing 100 percent sustainable, halving the waste associated with the disposal of their products, and making drinking water available to 500 million people.

With such extreme tasks, the company’s aspirations are “almost insanely ambitious,” admits Unilever advisor John Elkington in the briefing published by Ethical Corporation.

Through the plan thus far, Unilever has provided 20 million people with safe drinking water, runs all of its Netherland factories on renewable energy and use only sustainability certified cocoa in its ice cream products, states the report.  The company also offers more sustainable product offerings and provides all of the company’s branches with tools to evaluate sustainability progress.

But in spite of these early achievements, the report reveals that Unilever is now facing challenges in terms of meeting its biodiversity improvement goal and evaluating the water use of its factories, products and consumers.  Additionally, consumer-based targets remain Unilever’s most difficult commitment because of marketing’s limited effect and one-on-one training’s expense.

As such, the report shows the report shows that the key to the success of Unilever’s plan lies not only in speeding up their progress, but more importantly teaming up with outside companies to accomplish their goals.

 “The ground breaking scale of Unilever’s commitments means it has big challenges ahead – challenges that will have to work with others outside the company to achieve,” says Mike Tuffrey, director at consultancy firm Corporate Citizenship and a long-term advisor to Unilever in the report.

So far, Unilever has reached out to conservationist charity WWF to work on its biodiversity targets and non-profit group Water Footprint Network for its water goal.

If Unilever manages to successfully collaborate with outside companies, the corporation’s bold plan stands a chance of accomplishing not just its individual targets but also its overarching objective of inspiring companies to tackle more ambitious sustainability goals, according to the report.

To read Ethical Corporation’s complete Unilever briefing, go to this link.

Friday, 1 July 2011

Fukushmia & Tepco's kamikaze ethics

A group of Japanese pensioners shot to fame last month when they volunteered to lead on the clean-up of the Fukushima Daiichi power plant. Their rationale was straight forward: should they develop cancer, it will take ten to twenty years until the condition becomes fatal. And by that stage, they’ll be dead anyway. The press labelled them the ‘Kamikaze Pensioners’. To belittle their stance is cynical and unfair. Amid the tragedy of the tsunami that hit the Japanese coast earlier this year, examples such as these demonstrate the remarkable Japanese trait of solidarity and self-sacrifice.

It’s just a shame that Tokyo Electric Power (Tepco) has not shown a similar calibre of ethical commitment. Jon Entine’s recent feature article in Ethical Corporation details a raft of incidents dating back over decades that raise serious questions about the company responsible for operating the Fukushima plant. Faked safety reports, internal cover-ups and blackballing of whistle-blowers seem par for the course at the world's largest privately-owned electricity utility.  
Entine highlights two critical failures in the Tepco case that are relevant to any sector. The first centres on the relationship between companies and their regulators. In Japan’s power sector, cosiness reins. That breeds complacency and, worse, collusion. Politicians and civil society need to be awake to such scenarios and hold regulators to account. 

The second lesson is more immediate to corporate management. How should senior company executives respond in the wake of an ethics crisis? Japanese leaders, more than most, are quick to accept responsibility for misdemeanours that happen on their watch. How different the reluctant response of BP’s TonyHayward after the Deepwater  Horizon spill to the mea culpa performed by Tokyo’s  president Akio Toyoda after the Japanese automaker’s recall crisis? Yet a company must be seen to take action as well, not just offer mere words. Following a major safety cover-up scandal at Tepco in the early 2000s, its chairman and president were made to resign - only to be then given advisory posts at the company. Other executives were demoted, but later took jobs at companies that do business with the utility.

Nobody could have predicted the tsunami. What happened at Fukushima was, and still remains, a tragedy. One’s left thinking, however, that if Tepco had taken stronger action in the wake of earlier ethical breaches, then it’s a tragedy that could have been mitigated.

Saturday, 25 June 2011

Ethical Competition: time to get real

Type ‘email’ into Google and what do you think comes up first in the search engine’s listings? Why, ‘Gmail’ of course. What’s wrong with promoting your own products? If you’re a search engine, quite a lot, as it turns out. Services like Kayak and Microsoft are complaining that Google’s is routing user inquiries unfairly to its own services. Now the Federal Trade Commission is investigating the anti-trust claims. If found guilty of abusing its dominant market position, Google could find itself facing its largest legal challenge yet.

In a way, it’s rich that Microsoft should be among those wagging the finger. (The US software pre-empted this latest spat with an anti-trust suit against Google in Europe back in April). For years, Microsoft used its near monopolistic position in the software market to browbeat and bully computer manufacturers into using its operating platform. It waded through endless lawsuits to carve out its place at the top. Now it’s behind the curve. The big fights are no longer over operating systems, but the interface between users and the internet. Microsoft’s own search engine, Bing, has been clinging to Google’s coattails ever since it launched. So could this be seen as a case of sour grapes? Of an underhand jab at a competitor? perhaps. But is that necessarily wrong? In our dog-eat-dog world, could it not just be described as ‘fair play’?

It is a question Mallen Baker considers in Ethical Corporation’s latest issue. Yet, interestingly, not in the context of Microsoft (and the rest) v’s Google. Instead, it’s another of today’s teutonic battles: Facebook v’s Google. A few months back, Mr Zukerberg’s  social media site was found to have hired a PR agency to push negative stories about Google privacy policies (internet freedom is a separate issue altogether, and one recently addressed by Rebecca MacKinnon in an Ethical Corporation podcast). On the face of it, what Facebook did smells wrong. But how wrong? Not legally wrong. No subpoena papers have arrived at the company’s shiny new Menlo Park headquarters. Wrong in the sense of its public image? Sure, but how many Facebook users have delisted as a result? Precious few, I suspect. Ethically wrong then? The questions get to the nub of Baker’s piece.   

“What Facebook did wasn’t nice. But then Google aiming to move into Facebook’s social networking area of dominance isn’t “nice”.

Ethics isn’t about ‘niceness’. If it were, it would have gone out of business a long time ago. It’s about principles and values. Those should certainly include a commitment to compete within the law. By that marker, Facebook and its PR agency are (as I understand it) within bounds. It should include provisions against spreading falsehood as well. Again, it’s not entirely clear if Facebook is guilty here or not. The whole affair still feels wrong, though. Which shows just how difficult it is to define ‘ethical competition’ in a competitive world. Companies should draw their own boundaries based on personal and professional conviction  – and then, within those parameters, go at it cats and dogs.

n.b. the opening statement of this post was correct at the time of writing. Rechecking now, ‘Hotmail’ comes out top. A change in algorithms in Menlo Park or are those Federal Trade Commissioners getting to work already? 

Sunday, 5 June 2011

Resource Nationalism: re-slicing the pie

Peruvians went to the polls today. Multinational extractive companies such as Newmont, AngloAmerican. Xstrata and Occidental Petroleum will be watching the results with apprehension. On the ballot list is Col Ollanta Humala, an ex-army officer who once led a military revolt (against President Fujimori, the father of the other candidate in today’s polls). Humala came to the fore in 2006, when he ran unsuccessfully against out-going president Alan Garcia.

Back then, fears that Humala was in the pocket of Hugo Chávez, the socialist president of oil-rich Venezuela played a critical role in his defeat. Just a week before Peruvians went to the polls five years ago, Mr Ch
vez took a 60% controlling stake in Venezuela’s huge Orinoco fields, hitting Exxon, Conoco, Chevron, Total and Statoil. Fellow ‘Chavistas’ in Bolivia and Ecuador were undertaking similar moves to wrest back control of their country’s national assets from foreign companies.

It’s not just Latin America where resource nationalism has been on the rise in recent years. As a special briefing in the latest issue of Ethical Corporation reveals, resource-rich countries in Africa and Asia are following suit. As global commodity prices soar, emerging economies (justifiably, it could be argued) want a bigger piece of the pie. It’s their pie after all. The implications for foreign investors companies are worrying. Around 80% of oil produced by Opec countries is in state hands. Foreign oil companies are now being pushed to develop oil sands, a costly and high-risk enterprise. Not because they want to, Ethical Corporation writer Eric Marx points out. But because the choices open to them are becoming increasingly limited.

So what’s the responsible company to do? In Venezuela, Exxon just walked away. That’s one option. But only if you have very deep pockets, and options elsewhere. These are multi-billion dollar investments in the main. Choosing to renegotiate tax arrangements is another option that’s buying companies time. Good environmental and social investment track-records are proving ever more vital too. Even Chinese companies, which have been pouring money into Africa’s mining sector over recent years, are facing local demands to ‘give something back’. Companies would be well advised to take the likes of Unilever and Standard Bank in undetaking full economic impact studies, which capture their indirect,as well as their direct, contributions to the economies where they invest. 

Marx looks specifically at India, where demands for greater resource nationalism have led to calls for mandatory social investments by foreign companies. In reference to the proposed measure, Indian prime minister Manmohan Singh told industry to see community investment as being in their own long-term interest. “Companies undertaking greenfield projects cannot see their factories and units as oases, cut off from the needs and interests of the community around them,” he warned.

Citing a range of experts from both industry and civil society, Marx builds a convincing case for companies to increase the social returns derived from their investments overseas.  Either that or face ever greater pressure from host governments.

In Peru, Humala has tried to distance himself from Mr Chavez and his brand of radical, nationalistic socialism. It might help him get elected (exit polls have him out ahead). It won’t, however, reduce popular pressure for foreign investors to share a larger slice of the pie. 

[6 June 2011: eds. Humala won the election by a narrow margin. Lima's stock exchange fell 8.7%, in apparent reaction to the socialist candidate's win] 

Friday, 27 May 2011

GMOs: are we in for a 'Spud Wars' summer?

The season for potato planting is upon us. Big deal. Spuds don’t usually justify a news item (or even a blog post). Nor would they now were it not for those provocative three letters, ‘GMO’ (Genetically Modified Organism). In northern Sweden, the controversial acronym has sent Greenpeace activists into a tizz. This week, they’ve been camped out at the gates of a warehouse stocking Amflora, a genetically modified variety of the humble tuber. The GM potato contains a gene that is resistant to antibiotics and should, the protestors say, be banned. The European Union, which legalised the creation of German chemicals group BASF last year, thinks otherwise.

A visit to GM Watch will reveal a catalogue of similar protests over recent weeks, months and years. Here's just a recent sample of headlines: ‘No Improvement in EU’s GMO risk assessment’, ‘Unlabelled clone meat allowed on shop shelves’, ‘Industrial poultry, GM feed and the RTRS’. The mainstream press may have wearied somewhat from their ‘Frankenstein Food’ stories of old. But passions among a large sub-set of consumers still run high.

Recent years have seen huge advances in GM technology. Who could have imagined filling your grocery basket with ‘pluots’ (a hybrid of plums and apricots), ‘lematos’ (lemons and tomatos) or ‘grapples’ (grapes and apples)? Or heading down to your local pet store and buying a GloFish (a modified florescent zebrafish)? Gimmicks aside, GM goods now proliferate in our food chain. American dairy farmers, for instance, are now saying the days of non-GM organic milk are numbered. (The warning follows the decision by the US Department of Agriculture earlier this year to legalise GM alfalfa, an essential feed for dairy cows).

Yet the fundamental arguments are much the same as when GMOs first burst onto the commercial scene. In the one corner, you have a vocal consumer lobby - perturbed about the technology’s potential health and environmental impacts. In the other, you have the biotech industry – rich, powerful and intent on arguing that GM is the future for a resource-stretched planet. The result has been a heated and often vitriolic clash. None more so than Monsanto’s head-on collision with European regulators and the general public back in the late 1990s.

As part of Ethical Corporation’s collection of landmark events for the corporate responsibility movement, Ben Schiller examines this mother of all battles. Some of the lessons are particular to the time and the industry. Playing with science – particularly when it’s linked to something as fundamental as the food we eat – is, and always be, an emotive subject.

Other lessons, however, are more generic. Most revolve around communications. Sat in St. Louis, Missouri, six hours behind London, Monsanto’s PR team were always one step behind the news agenda. The US company's advertising wasn't always the wisest either. (An early set of ads were rules as misleading by the UK watchdog). Schiller examines the PR battle in depth. The ultimate lesson? Regretable as it sounds, good news will never trump bad. Companies just have to hope journalists will eventually grow bored and move on. For GMOs, that strategy seems to have worked of late. But the coming potato harvest could see the horror headlines return. Does a ‘Spud Wars’ summer lie ahead?   

Sunday, 22 May 2011

CR professionals as 'master storytellers'

Sustainability professionals are used to being called names. ‘The company’s conscience’, on a good day. ‘Corporate cost centre’, on a bad one. Yet how many have had the term ‘master storyteller’ thrown at them? Few, I’d wager. More’s the pity. So research by the Doughty Centre for Corporate Responsibility suggests, at least.

Narratives comprise an intrinsic part of every company’s identity. No one narrative is the same. A company’s history, its sector, its values, its culture and, above all, its people craft what such a narrative is and how it is told. Composed within this narrative is a separate yet significant sub-narrative: namely, a company’s sustainability ‘story’. Unpicking that story marks a critical part of persuading employees to buy into the whole sustainability agenda. Which is where the story-telling skills of in-house sustainability experts come in. By working with employees to understand why and how their organisations support sustainability objectives, those employees become inspired to start taking action. So the theory goes. But how to go about putting it into action?  

In a guest essay in the latest issue of Ethical Corporation, Doughty scholars David Grayson and Melody McLaren propose three straightforward steps. First, talk to key stakeholders inside and outside your company to assess your current sustainability ‘story’. Second, engage and support individual employees to act as sustainability change agents in order to improve that story. And third, tell your revised sustainability story through use of the company’s formal communication channels as well as through informal social networks.

All sounds like a curious fiction? Then ask the consumer communications gurus at Saatchi & Saatchi. Few understand the influence of a good story better than they. Which is exactly why Wal-Mart turned to them. Working with Saatchi& Saatchi S (the PR firm’s new corporate responsibility outfit), the global retailer hit on its ‘Power of One’ concept. The idea? To help its two million employees develop personal sustainability plans. That gave birth to a second, even more ambitious initiative: its Connect the Dots (Do One Thing) campaign. The campaign aims to engage one billion people as ‘change agents’. Their small, consistent actions will – Wal-Mart tells them – combine to deliver large-scale sustainability solutions. Now these are powerful narratives – even if neither example, as yet, has an ending.

Adam Werbach, global CEO, Saatchi & Saatchi S
“Some companies are already realising profits by putting sustainability at the core of their business. Not with top-down directives from executives, but from dozens, even hundreds of small steps taken by people at every level of their companies.”