Thursday, 31 March 2011

Certification: a plea for harmony

You can’t move in modern supermarkets without the logo of one certification scheme or another jumping out at you. Some are short and sweet: ‘FSC’, ‘MSC’, ‘FLO’. Others are more long-winded: 'United Egg Producers Certified: Produced in Compliance With United Egg Producers' Animal Husbandry Guidelines' being a personal favourite. After decades on the margins, the big brands are beginning to weigh in. Cadbury has very publicly committed to take all its Dairy Milk fair trade. Kraft has pledged to buy up to 30,000 tonnes of Rainforest Alliance coffee by next year. Consumers should be cheering in the aisles. Some are. But many are not.

It seems a tad churlish to criticise social and environmental certification schemes just as they are going mainstream. Yet the sceptics have a point. Well, several actually. For starters, the people such schemes are designed to help – producers and consumers primarily – are being sold short. The former face extra costs from multiple schemes, while the latter are left confused by so many labels. There are conceptual shortfalls too. Certification generally implies a premium. Who should pay it? Producer, buyer or consumer – no one seems clear. Recalcitrants present another sticking point. Certification works where people care. (So the 20% of Brazilian soya that ends up in Europe needs an ethical stamp.) It’s not so effective where people are indifferent (i.e. the 80% or so of Brazilian soya destined for China).

The obvious step – as Rajesh Chhabara points out in Ethical Corporation’s latest issue – is for standards to harmonise. Farmers and consumers would welcome such a move. So too would companies, who must currently turn to a litany of standards to certify their full value chains. Harmonisation is easier said than done. For starters, every certification provider has its own emphasis and priorities (and, to put it frankly, their own turf to protect). Secondly, the issues under consideration are complex and wildly divergent.

At an industry level, however, signs of collaboration are emerging. Take Starbucks. The Seattle-based coffee giant has been working with its own certification scheme since 2004.
That covers 81% of its total coffee bean purchases. The remainder it buys from farmers certified under other schemes such as Rainforest Alliance and Fairtrade Foundation. The company is now working with TransFair USA and Fairtrade Labelling Organisations International to explore integrating its approach with that of Fair Trade Certified. It’s not a holistic answer, but it’s a start.

Ultimately, certification is a numbers game. There needs to be enough of it in the market to make it the de facto option of choice. Consumers need to buy it because it’s the only show in town. That works in specific geographies with specific products. Palm oil from Indonesia or hard wood from Bolivia, for instance. In mega-markets, however – which comprise the vast majority of agricultural commodities – certified products remain in the minority. Legislation can help change that. Consider fridges and HFCs. For certification providers to do it alone, however, they must converge and cooperate. As they are, they might win shelf space. They might even nab an entire aisle. But without greater harmonisation, the entire supermarket or shopping mall will always fall out of their reach.

Tuesday, 29 March 2011

Sustainable Agriculture: fact, not factoid

Factoids and facts. In the ‘Just Google It” generation in which we live, both proliferate. But an important distinction exists between the two. Factoids win you pub quizzes. Example One: 2010 was the International Year of the Potato. Example Two: almost a third of the 4,000 known potato varieties are grown in the Peruvian Andes. Facts, in contrast, demand that you get up and take action. Example: Peruvian glaciers above 5,000m (26,000ft) will have almost completely vanished by 2015. Why? Climate change. So what? No more potatoes.

It would seem a semantic distinction were the same story not being repeated the world over. The planet’s capacity to provide the food stuffs that keep us alive are under strain. Warmer temperatures and changing rain patterns are altering farming conditions and impacting agricultural productivity. Earlier this month, the New York Times reported on how Colombia’s coffee harvest is faltering because of higher temperatures and above average rainfall. That’s not just a worry for the country’s producers (many of whom are small farmers with diminutive incomes). It’s a concern for coffee drinkers too. Less supply means higher prices. Global brands such as Maxwell and Folgers have upped their prices by 25% since the middle of last year. 

Global agriculture is coming under threat just as demands on farmers are on the increase. Another jump-into-action fact: the world will have an extra two billion mouths to feed by 2050. And another: demand for agricultural products is expected to double over the same period. Without action, the prospect of food shortages looms large. Food price crises point to what could be around the corner. Over the last three years alone, the UN Food and Agriculture Organisation calculates that around 40 million people have been pushed into hunger due to food inflation.

The business world is beginning to respond. At this year’s World Economic Forum, a heavyweight coalition of seventeen multinational food and beverage companies took the podium to call for a “New Vision” for the world’s farming and food communities. Their goal? Sure future access to affordable and nutritious food. Their ‘roadmap’? To be decided.

In the search for possible answers, Ethical Corporation’s latest issue includes a Special Briefing about how large food companies are responding to the pending agricultural crisis. Walmart, Pepsico, Unilever Coca Cola, Cargill and Nestl√© are just a few of the enormous players in the food and beverage industry to have recently come out with big commitments around ‘sustainable agriculture’. Strategies range from improving farmer productivity through crop science to introducing environmentally friendly growing techniques (reducing soil loss, cutting back excessive nutrient use, minimising pesticides) and increasing the capacity of food processors (as in the case of General Mills' new 'Partners in Food Solutions' programme).

So far, no one solution has won out. That’s not surprising. Early experiments in sustainable agriculture demonstrate that the right answers depend on a host of factors (geography, soil type, crop variety etc). Nor are the solutions in the hands of private sector alone. World farming requires a complete ‘redesign’, according to the authoritative Foresight Project report ('Global Food and Farming Futures'). For that to happen, it will require no less than an overhaul in public policy, market and trade systems, and consumer behaviour. A fact to act on if there ever was one. 

n.b. as well as an overview of the issues underlying sustainable agriculture, Ethical Corporation's Special Briefing includesexamples of best practice from the food industry as well as an examination of partnerships with civil society organisations.

Thursday, 17 March 2011

Sustainability Advisory: are the Big Four necessarily the best?

Most corporate responsibility and sustainability teams are skeletal affairs. That keeps them agile and obliges them to work closely with other functions (no bad thing). But the complexity and scope of the sustainability field is expanding fast. Little wonder that sustainability managers often turn to consultants for a helping hand. But who to call?

One piece of the management puzzle where consultancy demand is consistently high centres on performance measurement. Pressure is on corporations to collate and report on a dizzying array of non-financial metrics and targets. The result is a plethora of annual sustainability reports, some good, some not so good. Alone such information is subject to credibility challenges. Who’s to say the company is embellishing the truth or, more likely, omitting the ‘material’? With the stamp of an authoritative third party, these compendia of data begin to carry weight. Which is where the phone call to one of the Big Four comes in.

The Big Four (once eight) - PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte – are past masters at reporting and assurance provision. Even experienced sustainability practitioners can become lost in the modern day maze of protocols and standards. For the Big Four, on the other hand, the likes of ISAE 3000, AA1000 and GRI are their bread and butter. Three factors differentiate them from the rest: scale (Mongolia, Mauritania, everywhere short of Mars, they can cover), approach (labouriously methodical) and brand (centuries in the bean-counting game).

The Big Four might be best to sign off your sustainability report, but what about other tricky management brain-teasers? In response to that question, the all-powerful quartet has sought to beef up their sustainability ‘advisory services’ in recent years. The strategy has partially worked. In certain fields, their knowledge of processes and systems make them hard to beat (and, for many smaller companies, hard to afford). Operational strategy is one such area. Advising on internal audit, due diligence and governance are others. Their service offering in the sustainability space is far from universal, however. For big picture visioning, communication strategies or marketing advice (among others), companies would be advised to look elsewhere. On the strategy side, some of the consultancy heavyweights (Accenture, McKinsey, Bain etcetera) are building their sustainability capacity. For everything else, there now exists a slew of boutique consultancies and one-man bands. The choice can be confounding. Which re-introduces the original dilemma: who you goona call?

For an in-depth overview of the pros and cons of the Big Four’s sustainability services, see Judy Kuszewski’s feature in the latest issue of Ethical Corporation magazine


Tuesday, 8 March 2011

Big Society or Huge Skive? UK call to up corporate citizenship

Governing in times of austerity is an unenviable task. To try and take the edge of unpopular but inevitable spending cuts, UK premier David Cameron came up with an idea. He called it the ‘Big Society’. So what is it exactly? Well, according to the Prime Minister, it’s more than just a mask for government scrimping. It's an invitation to promote ‘community engagement’ and ‘social action’ by community and voluntary groups. 

UK charities, social enterprises and community groups aren’t so sure. Their budgets, they say, are being slashed just as the government is asking them to do more. British businesses could argue the same. Yet, the notion of the Big Society represents an obvious invitation to responsible companies to set themselves apart.

As Ethical Corporation’s recent UK Briefing reveals, UK business leaders claim to be getting on board. Its analysis of current government policy cites an authoritative survey that finds that than three in four (77%) companies say they could do more to increase their community investment.

That the Big Society should be all about voluntary action is nothing new. UK government policy of the last decade has all been about carrots, not sticks. The Coalition’s latest idea - ‘responsibility deals’ – comes from the same stable. Corporations are called on to negotiate ‘voluntary action plans’ on issues of public concern. Getting the food industry to tackle obesity is a case in point. If the private sector doesn’t act, the government says it will regulate. But will it? No one is overly convinced.

Responsible companies will find the current policy environment highly conducive. Never has the expectation, or need, for companies to behave as ‘corporate citizens’ (as UK terminology puts it) been higher. The problem lies with the laggards. The current Coalition shows little appetite for putting additional regulations or burdens on its recession-hit companies (unless its banker bonuses).

Yet business leaders who think they can get away with a Little Society vision (i.e. one of profits before people) will be in for a shock. As Ethical Corporation’s UK Briefing makes abundantly clear, businesses operating in the UK must answer to some of the world’s most vigilant consumers, media and campaign NGOs. Government policy might let irresponsible companies off the hook, but this powerful trio will do their damnedest to hold them to account.