Thursday, 27 January 2011

Bhopal: pinning down responsibility

Bhopal is to India what Chernobyl is to the Ukraine: a catastrophic accident that lives on not just in the minds but in the physical bodies of those affected.

At least, 3,800 people died (unofficial figures are nearly double) when the US-owned Union Carbide factory sprung a toxic gas leak back in 1984. Thousands more were crippled. Even today, hundreds of children in Bhopal are born with congenital birth defects.

There is little debate who was at fault, as Asia editor Rajesh Chhabara explains in a detailed account of the incident in Ethical Corporation’s recent Classic Case Studies briefing. Union Carbide (now a fully owned subsidiary of chemicals giant Dow Chemical) tried alleging sabotage by a disgruntled employee. No evidence has ever emerged. Instead the facts point to sloppy safety measures brought on by cost cutting and management oversight.

The Bhopal disaster highlights an interesting and largely unacknowledged aspect of corporate responsibility: namely, how ill defined its borders still remain. Just where does ‘responsibility’ start and where does it stop?

Technical responsibility clearly falls at Union Carbide’s door. It was the company’s over-full holding tank that leaked. Legal responsibility should be equally as clear. It’s not. At the time, the US headquarters of Union Carbide said it wasn’t responsible for day-to-day operations of the plant. That fell to its subsidiary, Union Carbide India Limited, in which it had a 50.9% stake. Union Carbide eventually paid up $470 million in compensation, but said its legal liabilities ended there.

As for the personal responsibility of the company’s management, Union Carbide’s chief executive has deftly dodged any number of civil and criminal cases. Seven other senior executives were recently found guilty, two and a half decades after the event. All obtained the right of appeal, as Chhabara observes in his blog. So no-one - neither the company nor those charged with running it – are left carrying the can.

Where things get really confusing is moral responsibility. In paying up, Union Carbide says it met its “moral obligations” to the victims. Campaigners say the payment was immorally low (roughly $1,000 for every victim). There’s still the clean up bill to think about too.

As the guilty party’s current owner, does Dow Chemical have a responsibility to meet Union Carbide’s shortcomings? It’s a biblical conundrum – the son paying for the sins of his father. Technically the case is clear. A flat ‘no’. Legally, the answer is less clear-cut. Dow Chemical did, after all, see fit to meet Union Carbide’s asbestos liabilities in the US. Double standards, campaigners say. Not our mess, Dow Chemical replies.

Is it time to change the rules? Should, as Ethical Corporation asked five years ago, the rules of limited liability be changed for cases of gross social and environmental damage?

This tragic story does have one silver lining. As Chhabara points out, the Bhopal gas tragedy woke the international chemicals industry up to potential safety hazards. Under the ‘Responsible Care’ programme, launched in the wake of the disaster, the industry now boasts a comprehensive certification system.

To quote from the initiatives own statement: “Responsible Care is a commitment, signed by a chemical company's Chief Executive Officer (or equivalent in that country) and carried out by all employees, to continuous improvement in health, safety and environmental performance, and to openness and transparency with stakeholders.”

Nothing on the scale of the Union Carbide leak has happened since. The question of who should take ultimate responsibility for the Bhopal crisis, and how, remains unresolved. However, the lessons of responsible management have – hopefully – been learned.

Monday, 24 January 2011

UNEP in Nigeria: services up for sale?

The United Nations Environment Programme (UNEP) means well. It describes itself not immodesty as an “advocate, educator, catalyst and facilitator” for the world’s environmental problems. In essence, it’s the green wing of the United Nations.

UNEP does this by promote dialogue, disseminate information, develop regional strategies, host climate change debates and generally hold the hand of environmental authorities in transitional economies.

With the best intentions (namely, there’s no-one else with the clout to do so), the UN agency is expanding its brief to actually digging up data, not just sifting it. Since 1999, UNEP has carried out on-the-ground mitigation studies in twenty-five countries.

Now, as Ethical Corporation’s Eric Marx explains
, it’s facing its biggest job to date: surveying the Niger Delta. Over the last half century, an estimated 9 billion barrels of oil have seeped out into this highly-politicised corner of Nigeria.

On the face of it, the project is meeting its objectives. Since its inception in October 2009, the 100 strong UNEP team has taken 1,200 samples and charted 300 spill sites.

All is not well, however. Though key groups among the delta’s Ogoni population are backing the process, many Nigerians and environmental groups remain sceptical. The study, they say, is being financed by oil major Shell – the main private operator in the region. The findings will, they continue, therefore be compromised. That allegation was given a boost when the chief of the UNEP mission blamed 90% of spills on oil ‘bunkering’. That’s to say, common thievery.

Shell is adamant that it is standing aloof from the scientific process of monitoring and surveillance. Nor is it the primary financier. More than half (55%) of the $100 million, three-year project is being picked up by the Nigerian government as majority partner in Shell’s Nigerian joint venture. Shell owns 30%. France’s Total and Italy’s AGIP have a 10% and 5% stake respectively. All partners are paying a commensurate percentage.

At a broader level, the project has raised a larger question: as Marx asks, is UNEP for sale? How objective can the agency be when ultimately it is accountable to and funded by its member states. Speaking to Ethical Corporation, UNEP’s executive director Achim Steiner says the agency is not in the business of “legal liability attribution”. That may be so, but truthful science should point a finger in the general direction of the perpetrators. Whether UNEP is willing to be seen as overtly criticising one of its member states – or their key partners – is the issue at stake for the sceptics.

There’s another side to the debate, of course. UNEP, it could be argued, are the environmental equivalent to the Red Cross. Their stance as expert insiders without a political axe to grind gives them access and behind-the-scenes negotiating power that few (no?) other organisations enjoy.

Extending the reach of their stakeholder engagement efforts should help UNEP strengthen its apolitical credentials. That’s what it did in Sudan with some success. Finding well-resourced local partners in the Niger delta is not an easy task, however.

UNEP’s final report is due out at the end of this year. In some ways, it’s a poisoned chalice. Too damning and it faces overstepping its impartial brief. Too lenient and critics will accuse it of bias. The best solution is to stick rigourously to the science. There is safety in numbers, of the statistical kind. UNEP’s role is too important to get embroiled in finger pointing. There are others with far more experience in the blame game who can be left to do that.

Tuesday, 18 January 2011

Executive Remuneration: fat cats v's the future

If Britain’s Liberal Democrats had their way, they would limit bankers’ bonuses to £2,500 per year. It doesn’t look like they will, however. UK banks are readying themselves for a predicted £7 billion bonus season. As the bank tills ping back open, the Conservative-dominated Coalition stands accused of a climbdown on a promise to curb “unacceptable bonuses”.

No one likes fat cats. Much of that, let’s be honest, derives from envy. Not always, though. Sometimes the public’s dislike is justified. Why should BP’s Tony Hayward walk away with a £1.045 million handshake after overseeing one of the worst environmental disaster in US history (not to mention leaving an £11 billion hole in investors’ pockets)? Pay should be commensurate with performance. When bankers so spectacularly failed during the recent financial meltdown, their pay packets should be adjusted accordingly.

Away from the contentious issue of bankers’ bonuses, however, giving your top dogs an annual ‘extra’ has a well-attested business rationale. It’s there in industrial and organisational psychology 101. In sum, bonuses are supposed to motivate those managing certain assets to work those assets harder and more profitably. Hence a large chunk of executive pay comes in the form of share rewards. Perform well and the share price goes up. And then everyone wins, both the managers (executives) and owners (shareholders) of those assets.  

Corporate Responsibility advocates are not blind to the appeal of such thinking. They want companies to improve their non-financial performance. They know general business case arguments can get them so far. Those that live in the real world of business and not in do-gooderville know they can get a whole lot further if they can link their agenda to executive pay. A CEO will nod benignly and make vague commitments on responsible business if he has nothing at stake personally. He’ll be sure to pick up the phone and make it happen, meanwhile, if he knows his bonus is one the line.

The move from theory to practice is taking time. Precious few companies have integrated corporate responsibility into senior management pay. Among Europe’s 300 largest companies, the percentage is under a third (28%), a study by specialist analysts EIRIS finds. Those that have, have done so in a way that could be best described as “opaque”, according to Ethical Corporation writer Stephen Gardener.

The reasons are easy to identify, but tricky to fix. First, there’s the deep-seated issue of corporate culture. Remuneration policies lack transparency, full stop. Companies start making noises about confidentiality and commercial sensitivity as soon as the light shines too brightly on their pay schemes. More importantly for corporate responsibility, the metrics for identifying the drivers of value with respect to non-financial factors are not there yet. Even in measurable areas, such as accident rates or greenhouse gas emissions, establishing a direct causal link between the top dog and the target is not straightforward. To do so requires very strict vertical integration.

That’s not to say companies aren’t trying. Gardener highlights the example of Dutch paint and chemicals firm AkzoNobel. Half of the share allocations that the company’s directors receive is dependent on the company’s average positioning over a three-year period in the Dow Jones Sustainability Index. It’s not just the board that is impacted. AkzoNobel’s top 600 managers are similarly incentivised. In the same vein, shareholders at banking giant ING recently approved a remuneration plan that links 40% of the variable element of directors’ pay to sustainability targets. Again a sizeable number (this time, 200) of senior managers are directly affected.

It’s notable that both cases derive from the Netherlands (Dutch life sciences group DSM and mail operator TNT are other examples). Dutch law makes executive remuneration packages subject to a binding shareholder vote. Shareholders in countries such as the UK, France and Germany also vote on executive pay, but only in an “advisory” capacity.

There are some important lessons here. First, when it comes to remuneration, it’s investors (as asset owners) that hold the clout. They need to be convinced that sustainability impinges on their long-term interests. The arguments are there. They just need to be made more clearly and more urgently.

Second, investors need to act. If more countries adopted the Dutch voting norms that would certainly help them do so. Whatever the case, it can’t be left to company boards alone. However well intentioned they might be, the language will inevitably be general and the targets vague. Clear deliverables with direct lines of responsibility is what’s required if sustainability is ever to be seriously factored into executive pay.

Hopefully come bonus season we then can begin to talk about the future and not just fat cats.

Sunday, 16 January 2011

Kimberly Process: time to get tough

Blood Diamond had everything you’d expect of a Hollywood film. Action, crime, shooting, warlords, dead baddies, incorrigible anti-heroes and a concluding hint of redemption.

The film did more than just entertain. In 143 minutes of screen time, it arguably did more to highlight the issue of conflict diamonds than years of diligent work in the campaign trenches. Suddenly, the impact of illegally traded diamonds became big news. Consumers began to understand that their purchases could potentially be helping prop up nefarious regimes in far-off places. A small but not insignificant minority started entering jewellery stores asking about product provenance and not just price. For an industry that relies entirely on the image of its product, such questions could not be ignored.

To its credit, the diamond industry was not caught entirely on the hop. When the film was released towards the end of 2006, it was on its way to providing a response to consumer concerns. That response came in the form of a multi-stakeholder initiative known as the Kimberley Process. Featured in the closing scene of the film, the process essentially brings players together from across the spectrum – NGOs, governments and industry representatives – to weed conflict diamonds out of the international market.

In many ways, the Kimberly Process represents one of the Corporate Responsibility movement’s greatest successes. In a lengthy feature article in Ethical Corporation, journalist Eric Marx points out some indisputable advances. When the project commenced in 2003, conflict diamonds were estimated to comprise about 4% of all diamond sales. That number is now closer to 0.2%.   

Yet the system has its shortcomings. All multi-stakeholder initiatives do. The most serious is compromise. When the initiative’s inaugural meeting was held in the South African town of Kimberley (hence the name), suspicions between the various sectoral camps were high. In such an atmosphere, multi-party collaboration represented a bold step. To get people on board meant smoothing the edges a little. No mention of ‘human rights’ is made in the definition of conflict diamonds, for example. Nor did (or does) the Kimberly Process have a permanent secretariat, paid staff or independent funding.   

The second big issue is one of teeth. Kimberly, the critics say, doesn’t have any. The Corporate Responsibility world has always been a big fan of voluntary, non-binding initiatives. Similar processes such as the Forest Stewardship Council and Ethical Trading Initiative depend on industry getting on board willingly. “Comfort in numbers”, The Economist newspaper calls it.

So what happens when a signatory doesn’t play game? Usually, they get kicked out. Other than the media fallout, typically there is little in the way of punitive action. In the case of Kimberly, even evicting non-compliant members is tricky. Every decision has to be consensual. So when member state Zimbabwe recently uncovered a huge diamond deposit in Marange and (according to investigations by non-profit group Global Witness) starting smuggling the uncut gemstones out through Mozambique, little could be done. Technically, Zimbabwe could veto its own suspension. The ones who ended up leaving were Ian Smillie and Martin Rapaport, two founding fathers of the initiative.

Cross-sector efforts will always defer to the lowest common denominator. Gradual, incremental change is the best non-mandatory processes can hope for. Kimberly has delivered, sort of. Most importantly, its basic tenets have all been passed into national legislation by member states. The fact that the industry’s biggest player (De Beers) is an active advocate has helped build traction too.

The time has come to toughen up, however. The chain-of-custody certification needs to be made more robust for one. The Responsible Jewellery Council has a draft in place. It needs implementing. So too with the Kimberly Process’ governance framework. With no professional staff or independent budget, its administrative and research capacities are hamstrung. After seven years, the moment has come to professionalise.

Distrust and complacency. Nothing else has done more to destroy cross-sectoral cooperation than these two chestnuts. Unless it moves forward, the Kimberly Process is in danger of falling victim to both. The tag of ‘PRstill hangs around its neck, as it does for many corporate responsibility efforts. That’s not always fair. Industries need time to shift practices. Examples of imperfect behaviour will invariably crop up. This is real life, however, not an academic exercise in management science. Or a fictionalized film, for that matter. One step at a time.

That a secretive industry such as diamonds should have come so far is remarkable. However, just as actors need to search out new roles to avoid being typecast, so too must voluntary initiatives continually improve if they are to maintain credibility. The message for the Kimberly Process? Toughen up. It’s high time for the next step.

Sunday, 9 January 2011

Brent Spar: ditching defence for dialogue

In the summer of 1996, Shell Centre was crawling with newly hired PR men and “expert” consultants. The headquarters of the Anglo-Dutch oil major was on crisis alert. Twelve months previously, a handful of Greenpeace activists had clambered onboard Shell’s Brent Spar oil storage buoy in the North Sea. The action sparked a standoff that was to wake the world to a new player: the activist NGO.

I was a Shell intern that summer, occupying a little noticed seat in public affairs. In the thick-carpeted offices above, the powers-that-be were sitting on a report from New York’s Stern School of Business. It contained a detailed cost analysis of the still unresolved Brent Spar fiasco. The final figure ended with lots of zeros, let’s put it that way. The troubled execs didn’t want a repeat.

When the Greenpeace campaign first hit, Shell’s response had been typical for the time. ‘Decide, Act, Defend’ (D.A.D) ran the motto of the day. The sensible, technical-minded folk at Shell (remember, this is a company dominated by logical engineers) had evaluated the options and made their decision. Legally, operationally, financially, even environmentally, sinking the buoy in the North Sea ticked all the necessary boxes. Now was the time to act. So a few mad (this was pre-political correctness; ‘misinformed’, let’s say) ‘greens’ took issue. So what? Shell had seen worse in its then ninety-year history. And when it came to defending, its army of PR pros and legal whizzes presented a formidable force.

What Shell hadn’t realised was that the rules of the game had changed. To be fair, at that stage, no-one really had. The internet was just taking off. Modern media was toying with satellite-fed imagery. 24-hour news channels were starting. The anti-globalisation movement was beginning to mobilise. Brent Spar was the “tipping point”, as a senior Shell spokesperson puts it in a detailed analysis of the case in Ethical Corporation’s recent ‘Classic Case Studies’.

For two months, Shell slugged it out the old way. Reason, it figured, would eventually win out. It didn’t. The oil major tried challenging Greenpeace on the science, notably the claim that Brent Spar would be sunk with 5,500 tonnes of oil on board (a mere 10 turned out to be closer to the truth). It succeeded in winning an apology from the campaign group. But by then the battle was lost. The TV footage had already been broadcast. The anti-Shell editorials already published. And the boycotts had begun. As Greenpeace’s membership department was becoming overrun, Shell realised it had to change tack.

Negotiations to decide an alternative solution kicked off. Those concluded almost three years later. By the time the fated buoy was tugged into a Norwegian harbour and dismantled for use in a ferry terminal, Shell was unrecognisable. D.A.D had been ditched. It was now all about D.D.A (Dialogue, Decide, Act). The significance was more than some jiggling in the letters. Shell was accepting the importance on ‘dialogue’. It was coming down from its ivory tower and talking to concerned parties. And not just friendly parties. Critics too. In doing so, Shell was admitting for that their voice was legitimate. It was also breaking new ground.

The idea had a persuasive internal logic to it: namely, if you could identify “issues” (as the in-house jargon had it then) early on, then you could nip them in the bud. Future Brent Spars were that way supposed to be avoided. The command to ‘Defend’ could also, theoretically, be consigned to the dustbin (pardon, recycling bin).

It sounds easy. In practice, it’s far from it. Identifying issues requires going out to speak to your ‘stakeholders’. But which ones? And how? And about what? In the early days, dialogue was a very structured affair; lots of focus groups and the like. Those still play a role. Now in the age of social media, however, approaches are changing quickly (as is companies’ ability to control the dialogue process).

In Brent Spar, Shell learned some important lessons. Not ignoring hostile voices is probably the most important. Being more open and transparent comes a close second. To its credit, the oil major did its best to adapt. It became one of the first big proponents of triple-bottom line thinking (‘People, Planet Profit’, as it coined it, with help from those experts – genuine ones, for once - at SustainAbility). Then came the ‘Tell Shell’ campaign, an early experiment in online dialogue. Next came weighty, well-meaning corporate social and environment reports. In short, Shell was out there testing and toying with the management theories and tools that were collectively becoming branded as “corporate social responsibility”.

Over the last decade and a half, stakeholder expectations have changed dramatically. So has their power to voice them. Those shifts lie at the root of corporate efforts to become more accountable, transparent and engaged. The Brent Spar affair meant Shell had to learn faster than most. Yet the lessons are equally relevant to all. 

Thursday, 6 January 2011

Business for Social Responsibility (BSR): more than just a love in?

I vividly remember the first BSR conference I attended. It was 2003. A three-day corporate responsibility jamboree in the subterranean conference hall of an anonymous Los Angeles hotel.

Fun? Not exactly. An ethical clothing catwalk was about as risqué as it got. Otherwise, it was mostly PowerPoint presentations and breakout sessions.

Yet I left on a high. Less for the specifics (too much podium time and too little nuts-and-bolts, I seem to recall), but more for the bonding between fellow believers. Where else would whispered conversations about supply chain metrics fill the corridors?

Founded in 1996, San Francisco-based Business for Social Responsibility (BSR) has established a name for itself as North America’s premier practitioner membership group. It has a tested ability to convene and convoke. But do such organisations need to do more than provide a love-in for lonely corporate responsibility practitioners?

Very much so, argues expert commentator Mallen Baker in Ethical Corporation’s latest issue. Based on an extended interview with current president Aron Cramer, Baker’s profile of the US membership group shows how BSR has gradually broadened its reach.

First is geography. Before, 95% of BSR staff used to be based in the group’s San Francisco HQ. Now only about 40% are, with the remainder mostly in Asia. As business looks East for future opportunities, BSR has gone with it. A wise move.

Second come services. It’s not all about cuddly get-togethers any more. BSR has branched out into consultancy services in a big way, developing particular expertise in areas such as stakeholder engagement, supply chain management and reporting.

It is also getting its hands dirty. It has undertaken on-the-ground projects in more than 75 countries, including direct work in factories in China, Mongolia and Peru.

Much of BSR’s influence remains in its power to convene. The focal point has not shifted from the annual conference, but that too has changed. According to Cramer, the audience is more international in scope and more varied in function (lawyers and communications experts are just some of those found treading the floorboards). The content of the parallel sessions is also more detailed and action-focused than previously (good to hear).

Corporate responsibility (CR) membership groups are not without their struggles. In tough times, subscriptions are often the first to go. Even in the good times, membership fees rarely cover costs. Hence, BSR’s move into consultancy.

It is the role of groups such as BSR to keep moving the agenda forward. Companies need to be challenged if they are to continually improve their performance. BSR can cajole, where NGOs might simply criticise. That in itself is a powerful contribution. As long as they keep pushing at the boundaries of the debate, their relevance will remain intact. And hopefully their internal finances too.

The Netherlands and CSR: Moths or Behemoths?

For a small country, the Netherlands has more than its fair share of big companies. Aegon, AkzoNobel, Heineken, ING, Philips Electronics, Royal Dutch Shell, TNT, Unilever – the list rolls on. Many will be familiar to those that follow sustainability indices. There are a dozen Dutch multinationals in the benchmark Dow Jones Sustainability Index.

But does big necessarily mean beautiful? That’s the question behind Ethical Corporation’s recent Country Briefing. The answer all depends, author Stephen Gardner concludes, on who’s doing the beholding.

If it’s a box-ticker, then ‘yes’. More than six in ten (63%) of major Dutch companies produce an annual sustainability report – a figure far in advance of European counterparts such as Germany, Italy and Spain.

Internationalists are also likely to answer positively. From the days of the Dutch East India company, the Netherlands’ sights have been firmly set overseas. It’s a perspective to which its modern multinationals have remained true. As with its government, private companies rank international development highly. And not just in cash terms. Programmes such as the Sustainable Trade Initiative are making strides in spreading efficient, ethical standards away from home. Their supply chain record is no less impressive. The vigilance of Dutch campaign groups and investors has a lot to do with that.

For others, big means bad. Not all Dutch companies are whiter than white. Global bank ING, for instance, has recently come under scrutiny for its holdings in controversial companies”, such as cluster bomb and landmine component makers.

But for most, big simply means cumbersome. Dutch companies have a reputation for following, not leading. Most are a century-plus old. That slows the dynamo somewhat. As Gardner puts it: “Though Dutch companies are among the best, they are generally not the very best, or they are the best only in certain areas.” Shell stands as a case in point. It recently slipped from the Dow Jones Sustainability Index, the first time since the ranking’s inception over a decade ago. The reason has yet to be published. Problems in the Niger Delta could be to blame. But more likely, the company just stood still and let others go past it.

Yet the Netherlands is not without its ethical innovators. It’s just a case of where to look. The real action is happening at the other end of the telescope, among the moths not the behemoths. The Dutch know these small, nimble players as “double goal” firms. Triodos Bank, the ethical finance pioneer, is perhaps best known. Its fames for using its $3 billion balance sheet to finance those “working to make the world a better place.” Others - like union-founded bank ASN, local brewer Gulpener and pro-organic fashion label G-Star Raw - are less well known. (The Briefing includes a case study of carpet manufacturer Desso’s cradle-to-cradle production approach should anyone need convincing).

Of course, there’s always a danger that the Netherlands’ ethical minnows might sink rather than swim. In an age of austerity, government incentives are few and far between. That said, the Dutch government does now apply sustainable purchasing criteria to all public contracts.

But government support is confined mostly to the realm of the rhetorical. “Inspiring, innovating and integrating” runs the current mantra from the Staten-Generaal (the Dutch Parliament). If you’re on the look-out for examples, it’d be as well to think small as it would big. 

Cocoa Conundrums: Ghana, cocoa and sustainability

How would you like your chocolates, sir, wrapped or wrecked?

As retailers watched their sales plummet during the recent recession, one product held its own. Chocolate, that indulgent irresistible concoction of cocoa beans, plant oil and fine-cut sugar.

Yet the world’s confectioners are looking worried. Why so? If bumper Christmas sales are anything to go by, the world has lost nothing of its sweet tooth.

The problem lies not at the tills. Rather it’s the input end that is occupying industry minds. World cocoa prices are creeping up and up. 2009/2010 saw the cost of chocolate’s raw ingredient more than double. Part of that was down to market speculation. But problems on the farm are playing a major role too.

Nowhere is the root issue more in evidence than in Ghana [See Ethical Corporation article: ‘Ghana’s glass and a half of sustainability’. The West African nation recently struck oil. That’s helped its foreign reserves. Even so, agriculture still comprises almost two-fifths of the economy and over half the jobs. And agriculture in Ghana, by and large, means cocoa. Thirty percent of national GDP derives from the crop.  

Those stats are looking shaky though. Year on year, cocoa production levels are falling. Travel out to the fields (as Ethical Corporation’s founder Toby Webb did late last year) and the reasons for the slump are clear to see. The workforce is aging, pests and crop disease are spreading, irrigation is failing and many of the tropical Theobroma cacoa trees are slowing dying.

Why the emerging crisis? Economics. Farmers don’t get paid enough. The government guarantees a minimum price, which last October increased by a third to $2,260/tonne. Much is lost to middlemen, however.

Increasing the price presents one obvious solution. The fair trade movement, which pays a premium to cooperatives for ethically-produced cocoa, is beginning to make that happen. In the Kuapa Kokoo Farmers Union, Ghana boasts the world’s largest FairTrade cooperative. Its sales got a shot in the arm when Cadbury announced the conversion of its Dairy Milk brand to 100% FairTrade. In the first eighteen months, Kuapa Kokoo’s 62,000 members collectively received over £2.3 million in additional premiums as a result. FairTrade is no silver bullet though. Only 3% of Ghana cocoa sales are certified. That means 97% still out in the cold.

Industry groups have tended to concentrate on the other side of the income-generation coin; namely, increasing productivity. Initiatives such as the World Cocoa Foundation’s Sustainable Tree Crops Programme are working to upgrade cocoa growers’ traditional low input-low output technologies. This public-private partnership has also concentrated on increasing marketing efficiency, diversifying farmer income and strengthening public policies. Ten years on, it’s time to bring scale to the approach. That’s happening, slowly. Last year, for instance, the industry-led Cocoa Livelihoods Programme committed $40 million to finance on-the-ground activities aimed at improving farmer competitiveness and productivity.

As with many sustainability challenges, experience is disproving the belief in one-size-fits-all answers. The problems besetting Ghana’s cocoa industry - youth migration, child labour, poor productivity, low incomes, etcetera – are all interlinked. A posteriori, the solutions need to be too.

The Cadbury Cocoa Partnership provides an illustrative example of just such a holistic approach. Launched in 2008, the £45 million programme rests on the principle of helping farming communities to help themselves. Among other developmental benefits, UK chocolate manufacturer Cadbury (now part of Kraft) hopes the 100 communities in the scheme will become FairTrade certified. Mars’ Partnership for African Cocoa Communities of Tomorrow programme (known as IMPACT) has a similar community-led development focus.

“You can’t just stand at one end of a big, long complex supply chain and just expect it to continue ad infinitum”, says David Croft, head of sustainable agriculture for Kraft UK, in a recent Ethical Corporation podcast. Not if you want Ghana’s cocoa industry and others like it to stay afloat that is. And not if you want a box of chocolates for Valentine’s either.

Big Pharma, Big Question: Access to Medicine

 Simon Nkoli died at the age of forty-one. The year was 1998. Cause of death, AIDS. He was not the only one. The HIV/AIDS pandemic was running rampant at the time. Hundreds of thousands in Nkoli’s home nation of South Africa had already contracted the disease. Millions more around the world were falling victim too.

The human immunodeficiency virus that lies at the root of the AIDS disease is indiscriminate. Rich or poor, developing world or developed, HIV ruthlessly eats away at the immune system. The pharmaceutical trade, in contrast, is heavily discriminate.

As Nkoli lay dying, patients in richer countries with better health systems were fighting off the disease. Behind their successful struggle lay groundbreaking anti-retroviral drugs. Developed at great expense, the drugs did not come cheap. Access, logically, was restricted to those with deep pockets.

Nkoli, an apartheid activist and gay rights campaigner, didn’t think restricting access to life-saving drugs was fair. Again, he was not alone. His death triggered a small but influential group of gay activists to establish the Treatment Action Campaign. The Campaign’s message was straightforward: increase access to HIV treatment. The idea found a passionate and influential advocate in the then president, Nelson Mandela.

Fast forward three years and the scene had expanded in scope and profile. Around the world, manufacturers of generic drugs were popping up with low-cost alternatives to Big Pharma’s antiretrovirals. A new law in South Africa could, theoretically, open the door to the import of the cheap generics.

Activists and HIV/AIDS sufferers saw the move as a lifeline. The pharmaceutical industry saw it as the death knell. Amassing their collective weight, 39 international pharmaceutical companies challenged the South African government in the courts. The global reaction was immediate. And it did not lie in the companies’ favour. Big Pharma quickly, albeit reluctantly, backed down.

Ethical Corporation’s recent ‘Classic Case Studies’ picks up the story from there, describing how the global pharmaceutical industry has had to develop new business models to deal with changing societal expectations.

Like all CSR stories from the last decade, the industry’s journey has been an iterative one. From philanthropically-motivated donation programmes, Big Pharma has experimented with price innovations, patent pools and new research streams. By its own confession, it hasn’t yet got all the answers.

A recent report by the World Health Organisation finds many essential medicines remain “unaffordable” to poor people. If practices don’t change, UN Millennium Goals on access to medicine will fall wide of the mark.

The lessons from the story are multiple and open-ended. More must come. This is an evolving story. Yet what all the various parties agree – companies, governments, citizen groups and health agencies – is that collaborative solutions hold the most hope.

Today, the pharmaceutical industry boasts some of the largest and most serious cross-sectoral initiatives of any industry. Low medicinal access is not just an issue of high prices. Weak health infrastructure and sub-standard local capacity play their part too. Working together could just resolve these.

It’s too late for Simon Nkoli. But not necessarily for the millions of others currently suffering from treatable diseases.

n.b. other stories from the Classic Case Studies report include the Bhopal disaster, Exxon Valdez, the McLibel case, Brent Spar, Monsanto’s European fall out over genetic engineering, the Kimberley process, Trafigura’s toxic spillage and Toyota’s global recall.