Friday, February 22, 2013

Horsing around with our food

It is now for more than a month that we read about the horse meat scandal in Europe – or the ‘2013 meat adulteration scandal’, as it is referred to on its own Wikipedia page. Today we learned that the scope of the issue is by no means just linked to some obscure Romanian supplier. High street brands such as NestlĂ© and Birds Eye are now implicated and there is little hope that this will die down any time soon.

Scandals around food, and in particular meat production, are anything but new. The seminal event here is still the BSE scandal nearly two decades ago. But there are some remarkable differences with this latest one.

Initially, it is worth noting that the BSE scandal was around meat that was potentially harmful; BSE infected meat can cause Creutzfeld-Jakob disease which until 2009 has killed 166 in the UK (the then centre of the epidemic). Horsemeat as such is not harmful to health (though some contaminants have been discovered from medication horses were given to enhance performance, as most of the horsemeat seems to come from animals initially not destined to enter the food chain). In some countries horsemeat is considered a perfectly delicious and healthy (poor man’s) food staple.

The key problem is that we eat food that we don’t understand anymore. We buy a ‘Beef Lasagne’, but it is in fact a ‘Horse Lasagne’ (to varying degrees).

It is the breach of trust that upsets people. And it unveils another, much larger issue. The way we eat has been silently, but irreversibly, taken out of our control. Europe is hit with this scandal just in the midst of wider problems. The Euro crisis, and the fiscal problems of many European countries have created a scenario where people suddenly feel their lives are exposed to forces which are beyond their control. The horse meat scandal just adds to that fear, and it also points to one pivotal actor, namely the multinational food company that controls the supply of food.
“The 10 largest companies now control more than 15 per cent of all food sales – three quarters of which are made up of highly processed foods such as frozen pizza, burgers, biscuits and fizzy drinks.
This quote from The Independent newspaper highlights the core issue. The way we eat is now largely controlled by private corporations. The horse meat scandal just highlights the fact that private, profit oriented actors impact our lives beyond any individual control.

From a CSR perspective one could argue that the food industry has been overlooked for quite some time. Yes there were a number of movies about the topic, most notably ‘Supersize Me’, ‘Fast Food Nation’ and Food Inc.. A big issue has been obesity and how food companies contribute to this epidemic. But by and large, it were oil companies, tobacco companies or banks, which have been targeted recently here.

There are some interesting studies out – conspicuously authored by scholars in medical schools. Rob Moodie of Melbourne University or Kellie Brownell of Yale have put forward a very powerful argument: that food companies pursue exactly the same strategy as tobacco companies did three decades ago.

This stuff is worth noting – without going into too much detail in this blog. Especially Brownell in his analysis does not cast a very favorable light on CSR – as practiced by these companies. There is ample ground to argue that the food industry – even without considering the ongoing horse meat scandal – is one of the most irresponsible industries currently around. The reason is not that they struggle with the usual problems of supply chain issues (such as slavery in cocoa supply) or advertising or – you name it.

Food companies shape the way we live. In particular, it is conspicuous that the current scandal evolves around meat. It is just a plain fact that today we consume too much of it. You do not need to be a vegetarian or vegan to say this. Meat is a precious commodity, providing pivotal nutrients to humans, based on the death of other sentient beings. Traditionally, humans have always been aware of this special status of meat consumption. Just think of the rituals around meat consumption in many of the world religions – be it Judaism with its sacrificial cults or Islam with it's stipulation of ‘Halal’ rules. And even in a secular world some of these traditions have survived until today. I am writing this blog from Istanbul, where my local butcher has a webcam to the farm where the meat is sourced up on a screen in the shop. You cannot buy minced meat (the core issue of the horse meat scandal) in most Turkish butcheries; you have to pick a piece of meat in the counter and than it gets minced in front of your eyes – so no doubt about what you are eating. And: meat is expensive in Turkey. No $2 Lasagne here...

Which points to the general issue. Our food is no longer provided by local butchers, greengrocers, fishmongers or bakeries. We buy it from multinational brands. The way they do their job is one problem. This is what the current scandal is about. The other problem though is why we buy ready made meals, processed food, trans-fat infested snacks in the first place. It is an element of our lifestyle, where only little time is available for us to actually cook our own food.

Food production is the next big CSR issue. We need more research, more critical investigation, more clout behind this issue.
Photo by Gene Hunt, reproduced under the Creative Commons license.

Thursday, February 21, 2013

A 2 minute lesson on employee engagement for sustainability ... that will make you smile

Everyone knows that getting employees engaged in sustainability initiatives is tough. This fun little video shows why so many efforts go wrong and how "green jujitsu" offers green champions a better way forward. It's not saying anything new to anyone that has been in the field a while, but it gets the message across really well in less than two minutes ... and its great advice for getting started in employment engagement. As Gareth Kane from Terra Infirma, who put the video together says, "It's deliberately lightweight, but it carries an important message - ditch the eco-cliches and put yourself in your colleagues' shoes."


 Here's the original link on Youtube which tells you a little more about the green jujitsu approach - essentially using your employees strengths, habits and interests as an opportunity rather than a threat.  

Friday, February 15, 2013

Unilever and responsible capitalism: a "licence to lead"

Over the past two days, we've had the good fortune to hear up close what Paul Polman, CEO of Unilever, has to say about responsible capitalism and the role of Unilever in making the world a better place. Polman has been in Toronto speaking in the Bata Lecture Series on Responsible Capitalism hosted by the Schulich School of Business. And from what we've heard, Polman is in a different league to most of the other identi-kit CEOs out there. He really gets that business has to do things differently if its to succeed and prosper in the future. And so far, he's been backing that vision up with real progress. That's not to say that Unilever is anywhere close yet to being a truly sustainable company, but few CEOs of global multinationals can match Polman's grasp of the challenges ahead. And more importantly, few can match his visioning of where he wants to get to.

Polman says that what we need to do is change the conversation about social responsibility from one about a "licence to operate" to one about "a licence to lead". The former is about meeting your basic legal and ethical obligations. The latter is about building for the long term based on "growing our businesses in line with the needs and aspirations of the communities we serve". OK, he's hardly the first to talk about long term goals and win-win opportunities. But what's interesting about Polman is that when he talks about the long term, he really seems to mean it. Talking about a resource constrained planet, global hunger, infant mortality, and the like, Polman sees plenty of opportunities in bringing people out of poverty and giving them the products they need to live better lives. But he's not just thinking about the 7 billion inhabitants of the planet who are already struggling to get by, but the next 2 billion that will be born in the decades ahead. As many people know, under Polman's leadership Unilever has embarked on its hugely ambitious Sustainable Living Plan with, among other things, a goal to source 100% of its agricultural products from sustainable sources, and a plan to double their revenue whilst reducing their absolute environmental footprint by 2020.

As Polman made clear in his talks, much of the company's impact comes not just in Unilever's own business but in their value chain and among their consumers. Getting people to wash at lower temperatures and to shower for 2 minutes less can radically reduce the carbon footprint of their products in ways that far outweigh operational efficiencies. And who better to change consumers' behaviour than the marketing experts at Unilever? If they can make us buy a bunch of stuff that we don't really need (and let's be honest, a lot of what they still do is exactly about that), then they can certainly get us to burn less energy when we're doing it.

What was inspiring about Polman's vision though is not so much the big goals they've set, but the framework they're trying to achieve it within - radical transparency, collaborative action, and brands that all have a social purpose. To you or me, it may look like a bar of soap, but to Polman, "we're not in the business of making soap, we're in the business of saving lives" as he said about their Lifebuoy product which aims to improve hygiene in the developing world.

Of course, getting a licence to lead is not just about getting a renewed licence from customers, but also from shareholders. A long term vision doesn't often sit well with short term focused investors  Polman moved quickly on this when he was first appointed CEO of Unilever in 2009 - within weeks he had stopped offering quarterly guidance ("I figured no one would fire me in my first month" he quipped). And trading investors they didn't want for those they did want - i.e. those with a little more patient capital - has been a critical element in Unilever's transformation.

So far it is clearly bearing fruit - progress towards the many goals of the Sustainable Living Plan has been good and the performance of the company is better than ever. Polman appears to be well on the path to finding the holy grail of matching economic growth with social prosperity. But as he acknowledges, the path will not be easy one, and Unilever won't be able to do it alone. As he said, even if Unilever meets its ambitious goals, it won't have succeeded unless other companies have joined them. "We're just a pimple," said the leader of one of the world's largest packaged goods companies.


Friday, February 8, 2013

The beautiful game? You bet!

Ethics in sports has become a big talking point. In North America, we are just at the end of a humongous news cycle on Lance Armstrong’s ‘confessions’ on the Oprah Winfrey Show. Armstrong’s story very much turned – as many ethical issues tend to – into a story of character, personal integrity and individual morality. Even though most people know by now that doping in cycling is endemic and that he is probably much more the product of entrenched practices in the business of professional cycling. We have commented on ethics in sports here and there in the past and this week’s installment of scandals in professional sports seems another good occasion to add some observations from a business ethics angle.

We are talking about the news from Europol (the pan-European crime investigation unit) revealing large-scale match fixing activity in global professional football (or soccer, for our North American readers). They claim to having identified 380 manipulated games (at all levels) and 425 individuals implicated in making some €8m by betting on games with individual players, referees or officials accepting bribes up to €140,000 in one case! The international network of criminals betting on football games by bribing those with influence on the outcome of the games was allegedly run out of Singapore. With football being a multibillion industry itself this case of corruption seems to have all the trimmings of a good business ethics case.

To understand the reasons, dimensions and mechanisms of such an ethics scandal we always find it useful to look at the structure of an ‘industry’ and the basic characteristics of the environment in which it operates. Our colleague Wolfram Eilenberger (former University of Toronto Philosophy Professor and football wonk)  has done so in an interview this week on German radio. Here are some of the take-aways.

Uncertainty. ‘Folks go watching football because they don’t know the outcome’, Eilenberger cites the legendary German coach of the 1954 world cup winning team Sepp Herberger. Uncertainty is a core element of football – but also its Achilles heel. It is a game which despite any such intimation has never been able to be fully determined by money, skill, legacy or past glory. Just one example: when Roman Abramovic took over the English Premier League Club Chelsea F.C. in 2003 with endless amounts of cash, despite a buying spree of the top players and coaches, it still took the club seven years to finally win the ultimate prize in European football, the Champions League. This has always been the fascination of football. It is at once the strongest temptation to manipulate the game and the reason why this betting scandal is also its greatest threat.

Rare events. Football is not basketball or cycling. Success is not measured by many scores, many moves, multiple chances and efforts on the pitch, or by a long period of competition. It may be one lucky goal – or even in some cases in a tournament no goal at all - which may win the game for one side. It is therefore a relatively minor effort to link bets to the outcome of football games. It is not about orchestrating a complicated team of actors, or manipulating a complex set of circumstances. If you can somehow influence this one event, this one goal (or its absence for that matter), you can have a fairly strong handle on the outcome of the game.

Small number of key actors. Closely connected is the fact that in order to manipulate the outcome of a football game you only need to manipulate a relatively small number of actors. Most prominently the referee, the goalkeeper, and maybe one of the key strikers would come to mind here. The temptation then to bribe these individuals is very high as the limited number makes it not only economically more viable but would also allow for better chances to keep the entire thing under the carpet. This then makes the manipulation of the game relatively easy (compared to other sports). For a referee: an extra penalty given, another red or yellow card can very directly change the result; for a goalkeeper: to deliberately jump into the ‘wrong’ corner at a penalty kick, to make simple ‘errors of judgment’ which lead to a goal; for a striker: to make the ball miss the goal, to make a ‘sloppy’ pass or to give a corner kick to the opposite side.

Global execution networks. The scandal uncovered by Europol involves a global network of actors based in Asia (most notably Singapore), which operate from different jurisdictions, use opaque channels of communication and dispose of a clandestine network of financial transactions.

All these characteristics apply to other infractions in business ethics. Insider trading comes to mind, where often a small number of players, focusing on rare events (such as the insider information about an impending innovation, losses etc of a company), in a climate of uncertainty (such as the stock market) collude in global networks to perpetrate their crimes. We discussed the recent example of Raj Rajaratnam and his small network of executives perpetrating one of the largest insider scandals in recent history.

Currently, the debate on how to tackle this form of corruption is in full swing. The majority of suspects are allegedly in Germany, Turkey and Switzerland. Obviously one focus is on how to change the incentives of the few individuals who can change the outcome of the game. A clear indication seems to be incentives: often match fixing occurs (or starts) on lower level leagues or leagues with relatively low pay of players and referees. That seems to be one of the reasons why the English Premier League shows relatively lesser cases of criminal incidents in this context. By the same token, the debate now seems to focus on increasing the punishment of convicted game-riggers.

It remains to be seen if this approach is going to work. It currently seems that the very nature of football seems to invite this specific type of crime. And very little seemingly can be done about it without avoiding changes in the fundamental structure of the game.

Photo by gnews pics. Reproduced under Creative Commons Licence.