At this month's Sustainability in the Food Supply Chain conference in London, the speaker Per Bogstad, a manager at the Rainforest Alliance, pinpointed a central issue in the 'Radical Shift' agenda when he highlighted the differences between private companies that exist primarily to make profits, and non-governmental organisations that exist to protect the environment or human rights.
"You could argue that we're in conflict with one another, but there are fantastic results when we work together," he reported.
In fact, the notion that a private company exists solely for profit is a relatively recent idea, as described in an influential New York Times article by the late Milton Friedman, published in 1970 (see Business has to want to be good, for more about this).
The approach to economics and management that has been fashionable in recent decades has been orientated towards an analysis of finance, rather than of the organisation and the community in which it operates. This has led to an understatement of the extent to which collaboration within the workforce, reputation in the perception of consumers, and sustainability in terms of overall practice can all make a positive contribution to profits.
Per Bogstad reported that in Rainforest Alliance Certified farms there is often an increase in yields, of up to 20 per cent, through smarter overall practice, such as better management of water and a more committed and productive workforce. Adoption of the certification is accelerating; not just with newer trendy brands like Costa Coffee, but also more established names like McDonalds.
"Sustainability has become embedded in FMCG [fast-moving consumer goods] companies," he told the conference, attended by around 100 specialists in sustainable supply. "It is mainstream. Ten years ago you couldn't have spoken in those terms."
For rainforest certification, farms have to meet exacting standards on forest protection, labour standards, sanitation and prevention of pollution.
Taking the commodities cocoa, tea and coffee, production by certified farms is still below five per cent of world trade, but the rate of increase is impressive: in the case of coffee, there has been a 36-fold increase since 2003. Taking the example of tea, major brands including Unilever's Lipton; Tetley tea and Taylor's of Harrogate all have ambitious plans to convert to Rainforest Alliance Certified production by the middle of this decade. Mars and Kraft are making similar commitments with regard to cocoa.
Collaboration was a major theme at the conference: within companies, between specialists in different companies sharing ideas on non-competitive matters; between organisations and their customers and partners. High levels of teamwork and an understanding of the interdependence of different constituencies are essential to meet the highest standards in smart supply.
Conversations and sharing of ideas are essential for innovation. This calls for a radically different mindset and organisational structure to the formal corporation with its hierarchical departments. The adaptable company has to harness the input and expertise of all its staff and partners.
New forums for sharing ideas are thriving. The 2degrees network, which has 16,000 members and is growing at the rate of 1,000 each month is, among other activities, helping the supermarket giant Tesco achieve its aim of reducing its carbon footprint by 30 per cent this decade.
The AIM-PROGRESS charter creates a forum in which consumer goods firms can share ideas on responsible sourcing. Its chair, David Lawrence of Diageo, explained how, while respecting anti-trust laws to maintain competition, different firms in the same sector can use the same audits to check for ethical practice. "There are over 5,000 audits on the common list, available to members," he said.
The astonishing achievements of some of these consumer goods companies, their suppliers and the non-governmental organisations that advise them, are multiple: better pay for workers, better yields for farmers, better protection of wildlife, more reliable supplies, high quality goods for supermarkets, reduced carbon output from smarter use of transport – leading also to reduced costs, reduced waste through re-use of by-products.
The 'old normal', in which it was assumed that commercial success had to come with human or environmental victims, is exposed as a cynical and damaging belief. The scope for further progress is limitless.
