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 Nestlé 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.

DM

Photo by Gene Hunt, reproduced under the Creative Commons license.

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.  

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.

  

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.

The top 5 CSR trends for 2013

For years now we have summed up the main events of the past year in our end-of-the-year post. Before we are too far into the New Year we thought we should also ratchet up the game a little by sharing our two cents on what the future might hold in store for the world of CSR. In doing so we are partly inspired, partly informed by other players in the CSR world, such as ethical corporation magazine, BSR or just means, albeit our outlook is neither as gloomy nor as rosy as some of our colleague’s. Here is what we think business should watch out for in 2013 when it comes to CSR:

Trend 1: Governments are back!

One of the basic tenets of the CSR movement in business has been it being voluntary and meeting social expectations above and beyond the law. Well, that sounded good and no doubt many companies have done well in this regard. But after four years of ongoing (and new) financial crises all over the world and some of the more recent scandals it is also fair to say that business has enjoyed a rather long leash over the last decades, thanks to deregulation and globalisation. The fallout of the tax evasion scandal in the UK or the BP disaster in the US however have shown that governments are no longer all that happy to just take ethical business behaviour on trust alone. It’s no longer just carrots – the sticks are back out. After four years of virtually no prosecution of any Wall Street bankers responsible for the financial crisis, Obama has just appointed a former star prosecutor as the head of the SEC – for many a sign of a more ambitious control of Wall Street. And it is not just in the US where a second term president can now (hopefully) govern without too much concern for special interests. At this week’s Davos meetings UK Prime Minister David Cameron – the self declared most ‘pro business leader’ you could find – announced more coordinated efforts within the G8 to clamp down on the blatant tax evasion we have witnessed in the past.

What does this mean for CSR? In some ways it is good news for those companies who are serious about their CSR. After all, if ethical behaviour is just voluntary, the more responsible ones face those ‘first mover disadvantages of CSR’: if you are the only one that does not bribe, that does pay taxes or decent wages in Africa – your competitors will get the contracts, lower their costs and outcompete you. Companies therefore in some ways have an interest in levelling the playing field through regulation. The smart ones have understood this and rather than lobbying against it understand that they can be part of the solution. An example for a promising initiative in this context is the ‘Council of Clean Capitalism’ set up by the Canadian CSR magazine Corporate Knights which brings businesses together in creating a broader regulatory system that incentivizes responsible behaviour at a systemic level.

Trend 2: Make-or-Break on Climate Change!

Cancun, Copenhagen, Durban, Doha – the spate of UN Climate Change Conferences aimed at finding a successor of the Kyoto Protocol have so far led to nothing and are considered by many as a sick joke. Much of it to the ‘credit’ of business hampering and obstructing progress in many ways, as a recent study exemplifies. This said though, it does not mean that Climate Change is off the agenda for business. On the opposite, in accordance with Trend 1 above, we see that many national (i.e. Australia), regional (i.e. California) or even municipal (i.e. the C40) jurisdictions are moving on the topic with, yes, regulatory systems, be it cap-and-trade, carbon tax or other approaches.

For business this is not necessarily the best outcome. While global agreements provide a long term framework for adapting to the issue business now is confronted with a patchwork of approaches, systems and jurisdictions. With considerable regulatory activism in the area this enhances uncertainty and risk. This will be exacerbated by the fact that events like Hurricane Sandy (causing even Mike Bloomberg to acknowledge climate change as real!) make the effects of climate change more palpable. This area of CSR is just going to be a major issue on the 2013 agenda.

Trend 3: Beware of CSR Fatigue!

In a recent book just published some of our colleagues talk about ‘The end of CSR’. While we are not buying this line totally, it cannot be overlooked that CSR fatigue is spreading far and wide. Not only has CSR been totally ‘incorporated’ and has become a mainstream practice for most large businesses, it has also not prevented the scandals we had the opportunity of talking about. After all, most of the culprits in those incidents, including the major banks at the heart of the financial crisis, all have very much to tell us on their websites about the wonderful things they are doing in the CSR, sustainability or corporate citizenship area.

One trend then we can observe and which will continue to shape CSR practices is a move towards the core value creation of business. This may not be as comprehensive as Unilever’s ‘Sustainable Living Plan’ but it will certainly shape CSR instruments. The latest ‘G4’ revision of the reporting guidelines by the GRI, for instance, will move CSR related reporting away from being a separate ‘side show’ to becoming an integrated part of the financial reporting of companies. This trend will also be exacerbated from the regulatory side (see Trend 1 above): the SEC has recently adopted a rule to disclose the use ofconflict minerals for companies, which given the track record of this type of SEC rulings, will have significant impacts on the way companies implement responsible supply chain practices. While we don’t necessarily expect an avalanche of regulation here the trend is likely to become stronger in 2013.

Trend 4: The Action is Moving South!

In the 2013 ranking of Global 100 Most Sustainable Companies in the World, launched in Davos this week, the number two is the Brazilian Natura Cosmeticos. And they are just one of five Brazilian companies who made it into the top 100. For us this is indicative of a trend. The so-called ‘developing’ world is no longer  just an awkward backwater whose role in the CSR arena was at best to cause many companies in the Global North to clean up their supply chains. It is increasingly where the action is. Entire new areas of CSR, such as social innovation or social entrepreneurship have been initiated from the Global South. Think only of Mohammad Yunus and the Grameen Bank, which can be seen as a symbol of this movement. But we also see it at other levels. Indian and Chinese governments have long moved into initiatives to regulate and incentivize CSR for their companies. And we have also seen in 2012 that the story of Chinese multinationals moving into Africa as the new robber barons is likely not to go on forever: Chinese companies are facing exactly what Western companies were exposed to some years ago – with the Chinese government issuing the first Guidance for Social Responsibility for Chinese companies abroad in 2012.

Trend 5: Watch Social Media!

OK, somehow social media has come of age a little and we would be the last to pull that rabbit out of the hat in 2013 and sell it as the hottest new thing in town. In some quarters the cacophonic ubiquity of social media has led to its self defeat to the degree that some have even lamented in the past year its ineffectiveness in drawing attention to corporate scandals such as Apple in China.

The biggest change then is not the that social media is used in the CSR context, but that as a tool it has now passed the ‘hump’ on the adoption curve: it is no longer just for youngsters; rather 57% of those 50 to 64 years of age and even 38% of those over 65 are now engaged on at least one social network. From a CSR perspective this means that no longer a little blog or discussion forum to engage with the usual suspects of young activists, journalists or students is the future. Rather, the main channels of engagement and communication for business are changing. We talked about CSR fatigue above, and it is here where we will see the most significant changes in the way companies communicate. It is moving ‘from stats to stories’. Rather than putting out the annual alibi report document, social media amplifies the communication of real life impacts, of how people are affected, the need for discussion rather than one-way information, and the absolute imperative of time. CSR communication is not just putting out a report once a year, but it is about informing on a regular basis, close to events, with responses and updates in real time. The good news then is that social media will be less linked to activism or campaigns – but beware: the thirst for information facilitated by social media asks for more ongoing and regular engagement in CSR and will expose business to a much more direct and visible scrutiny by the general public.

Image by ND Strupler, reproduced under the Creative Commons License