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 Nestlé 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.

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

 

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.

Toyota Recall: 'can we fix it?'

For a while, Toyota had it all. It was the automotive equivalent of the prom queen: the Japanese automaker was loved by investors, crooned over by the media and – most importantly – trusted by consumers.

And then it all went wrong. Allegations about dodgy accelerator pedals saw it compelled to announce a massive recall in late 2009 and early 2010. Most of the fall out occurred in the US. But recalls in China, Europe and Japan had the rest of the world raising eyebrows too.

A year on and it seems Toyota is still not out of the woods. Yesterday, the doyen of ‘kaizen’, or ‘continuous improvement’, announced yet another recall. A further 2.2 million Toyota and Lexus (a Toyota subsidiary) models are to be withdrawn from the roads in the US. 

The obvious question is ‘where did it all go wrong?' Excessive growth, concludes Stephen Gardner in Ethical Corporation’s special Briefing on Classic Corporate (Ir)responsibility Case Studies. Toyota’s international growth has been nothing short of spectacular in recent years (Revenue shot up 41.5% between 2005 and 2008). But at what cost? Answer: quality oversight. In short, the rush for market share won out against “Toyota’s traditional, methodical” approach. 

Perhaps the more pertinent question, however, is ‘where to go from here?’ The European Academy of Business in Society’s director-general Simon Pickard provides some helpful hints: acknowledge your faults, implement ‘clear and transparent’ systems of redress, accept customer criticism, cooperate with regulators and increase quality assurance.

Toyota was guilty of being slow in coming forward. While the company was going global, the company’s management was busy staying local. So when crisis struck, Toyota’s hierarchical decision-making structure reduced its agility to respond. As for its transparency, a hearing by the US lower house judged the company’s initial responses as “ambiguous”.

To Toyota’s credit, it’s since gone all out to turn the situation around. The tone started from the top. Company president Akio Toyoda went on record with a comprehensive mea culpa. “We pursued growth over the speed at which we were able to develop our people and our organisation.” That’s some confession. To follow it up, he ordered a “top-to-bottom review” of its global quality assurance processes. New safety initiatives are also being rolled out.

Toyota also has revved up its communications - another all-important step in crisis situations. Advertising campaigns, media interviews, free phone customer service numbers and dedicated websites – all have been used to reassure customers and send the message out that the company's cars are (or soon will be) safe.

Reputations famously take a lifetime to build and only a few minutes to lose. Toyota remains in a PR mess. How it acts now and in the coming months will be critical to winning back consumer confidence. Its response measures so far look sound. In the long run, they should - to borrow from author H.G. Wells – prevent the crisis of today becoming the joke of tomorrow.

Biodiversity: it's a dependency thing

Five years ago, UK tobacco firm British American Tobacco (BAT) released a public statement on biodiversity. It is far from the first company to have done so. The issue of biodiversity  (in short, ‘the totality of genes, species, and ecosystems of a region’) has become a hot concern for businesses in recent years. Last October’s Convention on Biological Diversity meeting saw almost as many suits as scientists in attendance.

What stands BAT’s commitment apart is its explicit recognition that it not only has an impact on biodiversity, but a dependency too. That turns biodiversity from a straightforward risk issue (hedging against reputation loss or avoiding litigation) into one of future strategic importance (most clearly, protecting production and supply).

The notion of ‘biodiversity dependency’ is only just appearing on corporate radar screens, as Ethical Corporation’s recent Briefing on the subject spells out. That’s too bad. Healthy ecosystems are responsible for public goods such as clean water, fresh air, sufficient food and a stable climate – services on which all businesses rely. Seen as such, biodiversity becomes less about saving the panda and more about protecting the bottom line.

It is strange therefore that more companies are not taking BAT’s lead in trying to manage the issue. A recent study by specialist investor group EIRIS finds that only 6% of companies with high impacts on biodiversity has sufficiently robust policies in place.

One reason could be that managing impacts on biodiversity is no easy task. BAT, for example, pledged to embed biodiversity management into all its operations around the world. “It was a nice phrase, but no-one really knew what it meant”, admits Paul Laird, corporate partnership manager at the Earthwatch Institute, an international environmental organisation and a member of the BAT Biodiversity Partnership.

After much experimentation and several wrong turns, the tobacco company came up with its Biodiversity Risk and Opportunity Assessment tool (known as BROA). It'is essentially a three-stage process. The first step comprises an initial desk-top exercise designed to identify potential direct and indirect impacts on local biodiversity. The second involves a field-based assessment of those possible impacts. And the third requires local management to address these impacts.

One of the unique requirements of the approach is for BAT’s operating companies to work with a local partner. This is seen as giving the process credibility, as well as providing an external, expert perspective.

The management approach has its limits, however. The site-specific nature of this (and similar biodiversity assessment methodologies) makes aggregating data difficult. Identifying generic ecological improvements of landscapes or rating the company’s overall biodiversity performance is not yet possible either. Yet it's a start, and an example of what other companies could - adn should - be doing. 

n.b. Ethical Corporation’s recent Briefing on biodiversity provides a detailed overview of current management practices, as well as efforts to value ecosystem services. 

McLibel: responsibility, the hard way

Every company would like you to believe that responsible business is part of their “corporate DNA”. It’s not. Companies are no more “hardwired” to be responsible (or irresponsible) than us mere mortals.

Responsible corporate behaviour evolves from governing principles underpinned by nitty-gritty policies and everyday processes. It’s not a feel-nice philosophy. It’s a case of non-nonsense management mechanics.

So how do integrated responsibility management systems come into being? Companies have two basic options: the easy way and the hard way. 

 

The easy way involves the company taking a measured, calculated approach that chimes with its business operations and objectives. Principles are voluntarily decided; issues voluntarily assessed; policies voluntarily established; and then targets voluntarily set. Hey presto.

The hard way scraps all sense of voluntarism and demands that the company get up to speed across all its operations immediately. What’s more, as the company is doing so, every inch of its activities are publicly scrutinised with the attention of a forensic scientist.

That second option, essentially, marks the route taken by McDonald’s. When the global food chain threatened to sue two unknown UK campaigners for libel in 1990, it effectively waved goodbye to an easy ride.

Judy Kuszewski provides a detailed appraisal of what became known as the “McLibel” affair in Ethical Corporation’s recent Classic Case Studies report. The article charts the story of how two individuals and one protest leaflet gave rise to the longest court case in British legal history.

As a case study, the McLibel experience holds a dual message. First, avoid the law courts wherever possible. Even if the company wins (as McDonald's did, albeit in a pyrrhic sense), the negative publicity can be disastrous. (It’s a lesson that the world’s largest pharmaceuticals also learned in another classic case study covered in the report).

Second, it shows that the hard way has at least one upside. As Kuszewski's article indicates, several commentators maintain that McDonald’s has emerged as a better managed, more responsible company as a result. (Judge for yourself.)

Would it have preferred to take the easy way? Yes. Does it regret playing legal hardball? Almost certainly. But at least, the company can point today to a comprehensive management framework – and one that’s born from sweat and tears rather than genetics.

CSR & the Elderly: Grayson on Greydom

David Grayson has a knack for spotting what others miss. Back when Thatcher was busy privatising, he was bothering about the jobless in England’s industrial north. When the me.com generation were forever job-hoping, he was worrying about opportunities for those with disabilities. And when the corporate juggernaut was trumpeting global “CSR”, he was pondering the role of small business in the whole shebang.

In a timely essay in the latest issue of Ethical Corporation, Grayson turns his eye to another issue our youth-obsessed culture regularly overlooks: older people. Over one in ten (11%) of the world’s population are over 60. Better nutrition and better medical care will see that percentage double in the next four decades.

So what? So a lot actually. Businesses can’t afford to ignore the elderly, either on moral or commercial grounds. Take pensions. Who should pay for them and how? It’s just one of a range of issues relating to “intergenerational equity”. If you’ve not heard the term, get used to it. You’ll be hearing a good deal more of it in the future.

Here’s another phrase: ‘age friendly’. From a human resources perspective, management needs to think long and hard about how it treats its elderly employees. With retirement ages slipping, workforces are set to become older. As a minimum, that will require new, more flexible working patterns. It may also require some physical adjustments to workplace conditions, much as companies now accommodate the needs of the disabled. A multi-generational workforce also promises its own set of challenges; conflicting expectations, difficulties in communication, differential use of technology, diverse approaches to problem solving and innovation. Think Christmas dinner with the family - only on the factory floor.

As Grayson warns, expect ‘age friendly’ to soon enter the marketplace lexicon too. Advertisers, especially, need to wake up. Old people aren’t just for anti-smoking ads. Not only is airbrushing out the elderly discriminatory. It’s also short sighted. Remember the ‘pink pound’? Well the 'grey pound' will make it look like pocket money. The supermarket that structures his aisles for the less mobile; the mobile phone company that builds a device for the hard of hearing; the bank that introduces a tailored equity release scheme to finance long-term elderly care - all are sitting on mines of silver.

Moral responsibility towards the elderly presents business with a number of important management imperatives, both in the shopfront and in the back office. So too with commercial logic. Changing market demographics oblige companies to sit up and take note of the world’s senior citizens. “Anyone who stops learning is old, whether at twenty or eighty”, automobile pioneer Henry Ford liked to say. Companies, take heed and innovate. The elderly are here to stay.