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Serco, one of the UK’s leading environmental service providers has published new research investigating the impact of recycling incentives.

The study shows that authorities with recycling incentives schemes recorded an average 8% increase in recycling which was accompanied by a 4% reduction in landfill. 25% of residents said that recycling incentives encourage them to recycle more whilst 75% of them suggest they are already recycling as much as they can.

Serco and Eunomia used the ‘Nearest Neighbour’ concept to establish disposal and recycling trends which benchmarked the performance of the authorities against that of 27 other authorities without reward schemes.

This is the first time that the performance of recycling incentives has been examined by industry professionals and experts.

Robin Davies, business development director of environmental services at Serco said: “In a difficult financial climate, Serco is supporting our local authority partners in harnessing the potential of recycling incentives to help increase recycling rates and thereby keep costs down. This new research provides important information in relation to both the costs and impacts of incentive schemes enabling them to make better decisions.”

Picture credit: © Sjholden7 | Dreamstime.com
 

Lloyds, the UK banking group, has promised that within six years 40% of its 8,000 senior employees will be women, up from the present 28%.

It is the first UK FTSE 100 company to set a formal target for placing women in senior positions.

The group has made the announcement as FTSE 100 companies are being urged to ensure that a quarter of their directors are women or face legally binding quotas. Another threat to impose quotas has been made by the EU.

Lloyds’ resolve is accompanied by a commitment to annual goals for lending to small and medium-sized businesses and first-time home-buyers.

António Horta-Osório, Lloyds’ chief executive, said: “Rebuilding a sound reputation founded on the highest standards of responsible behaviour is key to the industry’s long-term success. But words alone are not enough to change public perception and regain trust.

“We must be able to provide meaningful commitments and allow ourselves to be independently measured against those.”

Fiona Cannon, Lloyds’ diversity and inclusion director, said: “Creating an organisation that is meritocratic is good for everyone, not just for women.”

Vince Cable, the UK business secretary, observed: “Too few women occupy the top positions of our companies today. Yet the evidence is clear – those businesses with diverse senior management make better decisions, and that is reflected on the bottom line. This is not about political correctness. This is about good and profitable business sense.”

However, Ruth Lea, an economist and director of the London-based Arbuthnot Banking Group, warned: “I don’t think positive discrimination is the best way forward for women. It breathes tokenism and suggests that somehow women cannot make it on their own merits.”

Picture credit: © Smith John | Dreamstime Stock Photos
 

Heavy criticism of high bonuses from business and political figures has been directed again at the UK’s Barclays Bank – where chief executive Antony Jenkins has attempted to shine up the institution’s image after the Libor scandal and the reign of his predecessor Bob Diamond.

The attacks began when Barclays announced pre-tax profits were down last year by 32%, from £7.6bn ($12.6bn, €9.2bn) to £5.17bn, and 12,000 jobs were to go, but overall staff bonuses were to rise 10% to £2.38bn, compared with shareholder dividends of £856m. Bonuses in the investment part of Barclays rose by 13%.

The Institute of Directors, the UK business leaders’ organisation, questioned how Barclays could justify bonuses almost three times as big as shareholders’ payouts.

Roger Barker, the body’s corporate governance director, asked: “For whom is this institution being run?”
He believed shareholders should challenge Barclays: “Their approach to the banks continues to be supine. We would like to see shareholders take a more aggressive role in the governance of the bank, and in light of Barclays’ fragile reputational recovery we would urge the bank to ensure that the chairman of its remuneration committee remains an independent director.”

Criticism by the institute was “significant”, said Pension & Investment Consultants, the pension lobby group.
Analyst Andrew Coombs at the global bank Citigroup said: “The higher investment bank compensation figure appears to have disappointed shareholders, who thought they would get a better piece of the pie.”

Frances O’Grady, general secretary of the TUC, the unions’ alliance, complained: “While many at Barclays are celebrating their bonus bonanza, hard-pressed families still experiencing the financial pain of the recession – a recession caused in part by the reckless actions of the banks – will be struggling to make sense of it all.”

Jenkins, who has waived his bonus for a second time, said in justification: “We employ people from Singapore to San Francisco and need the best people in the bank to drive sustained returns to shareholders.”

Many MPs have dismissed his claim that high remuneration is needed to “compete in the global market for talent”.  

Picture credit: © Grondin Franck Olivier | Dreamstime.com

At the time of writing I am waiting to hear details of how bookmaker Ladbrokes is going to measure success in its promise to link executive pay to efforts to tackle problem gambling.

The Ladbrokes move has followed growing calls for the use of fixed-odds betting terminals (FOBTs), dubbed the “crack cocaine of gambling”, to be banned.

In a letter to gambling minister Helen Grant - revealed by Sky News - Ladbrokes chief executive Richard Glynn said responsible gambling performance measures would be written into senior executives’ remuneration. The letter also included a pledge to promote the industry’s Code for Responsible Gambling in its shop windows.

When I asked Heineken Asia Pacific recently about its responsible drinking initiative, the Heineken Sunrise Campaign - where party-goers were encouraged to drink responsibly in order to be in their best form to catch a beautiful sunrise – my question “Will the campaign be deemed a success if less beer is sold?” fell on deaf ears. Similarly my ‘As a business, doesn’t Heineken want people to drink more beer, rather than less?’ and‘how do you sell CSR programmes like this at board level?’ went answered.

A survey of 215 senior business leaders conducted by Business in the Community published last month found that individual employee objectives often do not align with the organisations corporate responsibility goals leading to behaviour which goes against those business values.

Commenting Stephen Howard said: “Without responsibility being truly built into the DNA of companies, trust in business will continue to plateau. It is time for business leaders to think differently about how they create the right culture within their business and the practical steps they can take to turn values into action.

“Indeed, chief executives and investors must move beyond financial value as the only recognised metric of business success. By adopting an integrated approach, reporting on the added value of responsible practice business, and rewarding responsible behaviour, business can form a new and more powerful contract with society – and re-claim its rightful place as an engine for social change and innovation.”

I began this year lauding the efforts of pharma giant GSK which announced that its sales personnel would no longer be rewarded by hitting individual sales targets. Instead they’ll be recognised for their technical knowledge and their quality service.

Measuring the success of many CSR initiatives is one of the industry’s holy grails. When financial targets aren’t the whole equation, success criteria have to be very carefully defined. I await with interest what Ladbrokes comes up with.

And take heart too that, according to BITC’s Leadership Report, nine out of 10 chief execs believe that they have a greater social purpose than simply returning a profit and 70% think too much attention is given to short term business goals.

 

Michael Boag, md, Stroz Friedberg, an intelligence and risk management company, discusses the need for business to grasp the nettle of third party risk

The failure to conduct appropriate due diligence on third parties poses an ever increasing risk to business, as regulators and law enforcement across the world step up their pursuit of organisations and individuals involved in alleged cases of bribery and corruption. If recent reports are anything to go by, the compliance programmes of some UK companies may prove woefully inadequate, with only half of all UK businesses polled said to be vetting their external suppliers for UK Bribery Act (UKBA) compliance.

The consequences could be high - not only can legal action under legislation like the UKBA and the US Foreign Corrupt Practices Act (FCPA) result in fines into the hundreds of millions, companies can also be debarred from public works and government procurement or face civil legal action, not to mention the incalculable cost of reputational damage and the accompanying loss of business.

While local agents, distributors, licensees and joint ventures partners may not be employees, firms are increasingly being held liable for the corrupt actions of these third parties.

The UK Ministry of Justice has provided specific guidance on the Bribery Act, which states that organisations must apply “due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks”. The US Department of Justice (DOJ) and Securities & Exchange Commission (SEC) have also reinforced the importance of due diligence, with their FCPA guide stating that “Risk-based due diligence is particularly important with third parties and will also be considered by DOJ and SEC in assessing the effectiveness of a company’s compliance program”.
 In response, companies must develop an appropriate due diligence strategy, which should start with a risk assessment of the third party relationship, to ensure that the depth and rigour of the due diligence process is proportionate to the risk.

An effective due diligence programme makes it easy to see how organisations that focus on getting it right tangibly reduce their corruption and bribery risk. Take a recent example, where due diligence had been conducted into a potential joint venture partner in Africa. This had identified allegations that an executive at the prospective partner had, while an executive at another firm, been accused of paying a bribe through the son of a government minister. Although he had not been officially sanctioned in the country, numerous local sources confirmed that the allegation had real merit. A serious corruption red flag had been raised and the firm backed off the joint venture. The decision also helped avert the potential of serious reputation damage by becoming involved with a local partner with a less than stellar reputation for integrity.

 Proportionate risk-based due diligence helps organisations highlight key red flags that a tick box approach would almost certainly miss.Putting in place an anti-corruption due diligence programme that reflects strong governance and a commitment to ethical practice, which can withstand scrutiny from a growing legion of regulators, must be a top priority.
 

Whistleblowing is a complex issue for businesses.

History tells us that many corporate disasters could have been prevented if companies had listened when concerns were raised.

Staff had reported worries about open ferry doors five times when the Herald of Free Enterprise sank in Zeebrugge. Sherron Watkins reported her concerns about Enron’s accounting five years before she felt compelled to blow the whistle outside the organisation.

Regulators and authorities recognise the need for the public to be protected from such risk and malpractice.
The Combined Code of Corporate Governance requires UK listed companies to have whistleblowing arrangements in place or explain why not.

Bribery Act
The Ministry of Justice includes whistleblowing as a key bribery prevention measure in its guidance on the UK Bribery Act. And in the financial services sector, the Financial Conduct Authority has its own Whistleblowing Desk, but actively encourages firms to set up appropriate internal procedures as well.

Yet although 90 per cent of large firms have formal whistleblowing procedures in place, a survey by the Institute of Business Ethics found that while one in four employees was aware of misconduct, more than half choose to stay silent. An Eversheds’ report last summer found that 43 per cent of whistleblowing lines are unused.

There are a number of reasons for this. Culturally whistleblowing still has connotations of betrayal, be it the idea of ‘snitching’ at one level or the more serious issue of denunciations at the other. The latter can be particularly challenging for organisations operating internationally, as they will need to work hard to create a culture where such reporting is considered acceptable.

This is time consuming, as local legislation, employee protection and data protection rules need to be taken into account. According to Transparency International, the UK is one of only four EU countries with robust legislation in place for the protection of whistleblowers.

Confidentiality
Anonymity and confidentiality also need to be balanced. Ideally, confidential reporting should be encouraged.
Anonymous reporting can make it harder for organisations to get to the root of a problem and resolve the issue successfully. However, in certain situations, anonymity may be required by law or be more appropriate.
Organisations need to instill confidence, so that staff know they will be protected if they raise a concern.

So how can businesses make whistleblowing work?

Whistleblowing is most effective when it operates within an open-door culture where employees are actively encouraged to raise their concerns and can do so without fear. In such organisations, problems are likely to be aired earlier and can be addressed long before they develop into crisis management issues.

When concerns are discussed openly, this also reduces the negative connotations of whistleblowing, making the notion of speaking up far more acceptable. Indeed, in the very best organisations, blowing the whistle is really the last port of call, operating as a backstop if other measures have been tried and failed.

Senior management are responsible for setting this tone, ensuring that an open and ethical culture is embedded throughout their organisation.

A clear understanding of good corporate behaviour makes wrongdoing easy to spot. It is also far more likely to be reported and dealt with.

In addition to creating the right culture, companies need to ensure that the right training is given, that stakeholders know how to raise concerns and that concerns are acted upon.

Training must cover three key areas: how to raise a concern, how staff will be protected and how the concern will be dealt with.

Training should emphasise that staff are encouraged to raise issues with line managers, are empowered to blow the whistle when necessary and can do so without fear. It should make it clear that the whistleblowing line is for raising concerns about danger, risk, malpractice or wrong doing that affect others. Issues to do with an employees personal situation should be dealt with by the grievance procedure.

Hotline training
But it is not just the hotline users who need training, those designated to receive calls must also be taught how to handle the various concerns raised.

According to Public Concern at Work, this is not the case on over half the companies they surveyed in 2013.
A whistleblowing policy should be aimed at all stakeholders and this should be reflected in the way it is promoted.
Details of the process should be visible on the company website, inside the organisation and through direct communication with relevant customers, suppliers, shareholders and other third parties.

Finally whistleblowing must be correctly acted upon. Ideally the process should be managed as independently as possible from the day-to-day running of the organisation.

Companies must be seen not just to listen, but also to act. Public Concern at Work has found that there is a critical gap between the number of times a person will report a problem before they give up (1-2 times), and the number of times on average a company receives a report before it acts (3-4 times).

Getting the culture, process, training and communication right may not be easy, but it is the best way to make a whistleblowing system work.

It also means that businesses are more likely to find themselves addressing a problem rather than managing a crisis.

Leo Martin is director of business ethics advisers GoodCorporation. GoodCorporation has recently launched a Whistleblowing Framework designed to help organisations test and measure the effectiveness of their whistleblowing procedures. 

Tax evasion and avoidance may be different in law, but in the eyes of the general public, they often amount to the same thing, which means there is a strong corporate reputation and governance argument against avoiding tax.
Patricia Mansfield Devine reports 

Over the past few years, news headlines have been full of the issue of corporate tax evasion and avoidance.

Tax evasion is the illegal non-payment of taxes, such as not accurately declaring earnings. Tax avoidance, in contrast, is legal non-payment of taxes, such as shifting profits across borders to a jurisdiction where taxes are lower.

However, evasion and avoidance may be different in law, but in the eyes of the general public, they often amount to the same thing, which means there is a strong business argument against avoiding tax.

At a time when wages have stagnated, benefits and services have been cut and many people’s standard of living has dropped, it often angers the public to see how little tax some companies - particularly giant multi-nationals - actually pay. The result has been a series of grass-roots sit-ins, occupations and demonstrations against some of the best-known tax avoiders such as Google, Amazon and Starbucks, and the emergence of an Action Plan by the OECD to tighten the loopholes that multi-nationals have used to their advantage.

The OECD launched its Action Plan in July last year, at the request of the G20 finance ministers. Called the Base Erosion and Profit Shifting (BEPS) Project, it identifies 15 specific actions to equip governments with the domestic and international instruments to deal with the problem of tax avoidance. In December, the organisation published a timetable for planned stakeholders’ input into BEPS, which will be discussed at the next OECD meeting, in September this year.

The view that tax avoidance is unethical is one that is strongly held by NGOs fighting poverty.

“There is no doubt that tax avoidance is unethical,” says Murray Worthy, senior economic justice campaigner at War on Want.

“What it really means is large companies and rich individuals not paying their fair share for public services, and the welfare state and other things that the people in this country rely on.”

There is a spurious argument that tax avoidance is legal, says Worthy, “But that’s simply because the rules haven’t caught up with the way that big companies are operating.

“There is nothing about what these companies are doing that is somehow different from being illegal,” he continues, “other than that the rules haven’t caught up and made their actions illegal yet.”

The tax rules that currently exist in the UK are out of synch with the way companies are now able to structure their businesses, says Worthy, and the Government could do much more to tighten them up, particularly when it comes to British overseas territories such as Bermuda and the British Virgin Islands, where companies can use financial vehicles to avoid paying taxes in the UK.

“Most people don’t believe that’s just ‘tax planning’,” he says.

“They think if companies are using complex methods to avoid taxes that something needs to be done.”
Complexity in tax avoidance is also something specifically discouraged by the Confederation of British Industry (CBI).
“It is right to highlight and try to root out businesses that evade or aggressively avoid tax,” says the CBI’s senior press officer Mark Hadley.

“The CBI does not support abusive tax arrangements which serve no commercial purpose.

“We encourage UK businesses to only engage in reasonable tax planning that is aligned with commercial and economic activity and does not lead to an abusive result. The Government recently introduced a General Anti-Abuse Rule (GAAR) which is there to determine and combat artificial and abusive tax avoidance schemes.”
Campaigning at grass roots level, particularly against firms such as Starbucks, which has a strong UK high street presence, has done a great deal to push tax up the political agenda, but there are those who doubt its true effectiveness.

“There are some areas where it has paid off,” says Worthy, “for instance the abuse of hiding the true owners of companies - the Government has announced a register of beneficial owners, but there is much more that still needs to be done.”

The business argument
However, it is not simply a moral issue, believes Worthy - there is also a strong business argument for not avoiding your fair share of tax.

A public backlash entails business risk. When Starbucks was occupied in a grassroots boycott, it took months before the company’s sales started to recover. This kind of adverse publicity does long-lasting damage to a company’s reputation.

To avoid being tarred with the same brush, the CBI encourages its members to undertake narrative reporting to provide a broad and meaningful picture of a company’s business.

Last year the organisation published a business-led voluntary Statement of Tax Principles, which is intended to promote and affirm responsible business tax management by UK businesses. The Statement encourages businesses to seek to increase public understanding of the tax system in order to build public trust in the system, and asks businesses to consider how best to explain more fully to the public their economic contribution and taxes paid in the UK.

Measures that businesses could take, he suggests, include an explanation of their policy for tax management and the governance process that applies to tax decisions, along with some details of the amount and type of taxes the firm is paying. “A straightforward one-page narrative report on the company website would probably be sufficient,” he says.
The business community is actively engaged in a broad set of initiatives to promote tax transparency, he adds. “Business supports global action on high-level profits reporting to tax authorities [as in the G8 commitment that was negotiated at Lough Erne in 2013] which will allow tax authorities to design more focused and targeted audits, without placing disproportionate extra burdens on businesses.

“In addition, there is an international register of beneficial company ownership, the BEPS Action Plan, and efforts to support developing countries in designing and enforcing effective tax rules – all of which the CBI supports.”
However, it is important to avoid a broad-brush approach that puts all businesses in a single basket, he says: “Especially in the media. If this continues, then it could risk making the UK a less attractive place to do business.”
All eyes are now on the OECD meeting in September, but War on Want, for one, will not be inputting directly on this occasion. “[The meeting] will be trying to fill in the big cracks,” says Worthy, “but there are still lots of weaknesses, such as treating individual arms of companies as separate traders - this is not how multinationals work and we won’t see big changes until that’s addressed.”

Of most concern, he believes, is the backlash from the US on the digital economy, as the US has refused to accept any specific wording on digital trading, leading to less detail in the proposed agreement, and also the rules on permanent establishment - the presence that a company needs to have in a country before it can be taxed - might be changed.
There are many political and technical problems, says Worthy, and importantly no developing countries are involved. The new OECD measures won’t benefit many of the world’s poorest, he says, and the tax system needs to work for the majority of people in the world.

Political battle ahead
One instance he cites is that the anti tax haven rules being discussed are not binding on individual governments but have to be signed off by individual members, which could result in a stiff political battle.

“The UK Government is trying to get companies to shift their headquarters here,” he says, “and it wants to be able to offer tax incentives. Anything that impacts the City will be opposed by the UK Government, which is keeping an eye on financial instruments reforms such as the use of derivatives to avoid tax.”

From the business perspective, says the CBI’s Hadley, the CBI is supporting the multilateral efforts at the G20 and OECD level to modernise international tax standards. “But as the UK seeks to shape this agenda it must not crush recent competitive gains,” he says.

“We must co-ordinate reforms with other countries so UK firms are not disadvantaged. A unilateral approach that creates competing regimes risks uncertainty for businesses and increases the compliance burden.” 

The year 2014 is “unlikely to see the spectacular equity returns” enjoyed during 2013, but it will be a year in which assets in a logical manner can be managed, according to Amy Domini, founder and ceo of Domini Social Investments (www.domini.com), a New York City based mutual fund family.

 “What lies ahead for responsible investors during 2014?” asked Domini in an investor communiqué this February. “Certainly new products, particularly those that are cleaner or more local, certainly a more predictable stock market, and probably enhanced interest in the value added by utilizing social and environmental considerations when choosing investments,” she added.

 The executive, who manages around $1 bn in liquid assets for high net worth families at the Sustainability Group in Boston, asserted that these trends already evident. It would seem good news for the ethical investor.

 The desire for more direct and useful products has, in recent years, led institutional and ultra-wealthy investors to buy venture capital funds that promise to seek out and invest in segments of the sustainability market such as clean land or hydro-culture, solar power or ‘bottom-of-the-pyramid’ wealth creation. Nevertheless she noted: “These investment vehicles demand long-term commitments with no liquidity. That isn’t for everyone.”

 In response Domini Social Investments launched Nia Global Solutions, an equity portfolio that seeks to bring some of these concepts into the public market. Meeting the strictest of sustainability questions, Domini started with their own a basic universe of 2,800 companies. Only three worked for Nia. Today the firm now has a pool of about 43 [companies] to work with in managing the portfolio.

 Noting that there is likely to be a “big new effort” in the socially responsible investing world” she stated: “Bringing the concepts of high impact investing into the public equity setting is filled with challenges, but the industry has long heard the call from investors for something cleaner and more consistent with personal values than what they’ve seen to date.” Domini asserts too that 2014 will see a growing “acknowledgement that Environmental, Social and Governance (ESG) research adds value.”

 The Domini Social Equity Fund (Investor shares) returned 32.85% in 2013, outperforming the S&P 500 Index, which returned 32.39%. So, something is working. Meanwhile, the Domini International Social Equity Fund (Investor shares) outperformed its benchmark by more than 2%, returning 25.77% versus the MSCI EAFE Index’s 23.29%.

 The market will also start to see “the development of real products for the public’s new interest in the ideas of ‘Slow Money’, Sustainable Agriculture, Fossil-Fuel Free investing and High Impact.” On fossil-fuel free investing, she added: “It’s real and it’s going to become an industry standard. The challenges of investing without fossil fuels have been well stated, but they lack moral validity.”

 Separately, AIM-quoted Impax Asset Management (www.impaxam.com), which is focussed on investing in alternative energy, water, agriculture and related markets and manages £2.4bn for investors globally, late this January reported strong investment performance in 2013 for all its listed equity strategies, relative to global markets, relevant benchmarks and peers. Impax’s flagship investment trust, Impax Environmental Markets plc saw a robust +33.2% performance in the past calendar year.

 Ian Simm, Impax’s Chief Executive, commenting said: “It’s been a long time since the outlook for environmental markets and resource efficiency stocks has been quite as good as it is right now. The next 12 months look promising across all our investment strategies, buoyed by a broad-based cyclical recovery from the deepest downturn in living memory.”

The £5.94m Guinness Alternative Energy C fund continued its top ranking amongst UK Registered funds over the past year to 31 January 2014 with a cumulative +50.46% return versus past three- and five-year performances at -19.28%/140th rank and -9.01%/122th, respectively. The one-year performance was nevertheless a decline over +67.62% witnessed as at the end of December 2013 and mirrored dented investment returns amongst leading funds here and across the four other sectors.

Premier Ethical A Inc., a £67.06m fund, was runner up this time on a +27.85% performance versus +56.45%/2nd rank over past three years and +117.75%/8th over last five. Sarasin Sustainable Equity USA P US$ fund came in third top with +26.33% against +31.74%/17th over past three years. Kames Ethical Equity B Acc., a £407.94m fund, has been an extremely consistent performer: fourth over the past year (+26.10%), sixth over three years (+47.36%) and fourth over five (+134.11%). SUNARES bottom ranked again on a past one-year view.

For US Mutual funds, Firsthand Alternative Energy fund outstripped sector peers over the past year with +80.86% - but down from +93.71% for the year to end of December 2013 and contrasted with -10.29%/199th over three years. The $414.40m Eventide Gilead N fund came second over the past year (+48.43%) against +80.26%/1st over three years and a pulsating +216.43% over five. Despite producing +47.29% last year, Guinness Atkinson Alternative Energy was weak over the past three years (-24.87%). Epiphany FFV Latin America A bottom ranked here for the past year (-18.95%).

MAP Clean Technology Fund I top ranked European Funds with +124.37% over the past year, beating LSF Asian Solar & Wind A1 with +119.00% versus -17.97%/998th over past three years). The €8.34m Asselsa Small & Mid Caps Switzerland fund ranked fifth over one year (+46.96%) versus +22.44%/264th over three and +100.19%/151st over five years. SUNARES lagged the sector returning -30.65% over the past year and -56.32% over past three.

The UK Individual Pensions sector displayed the best peer group average over one- and three-year periods (+27.37% and +38.43%, respectively). Top ranked for the past 12 months was FL/Premier Ethical EP Pension fund (+28.26%) against +57.97%/13th over the last three years, followed closely by Sanlam/Kames Ethical Equity 8 Pension fund (+27.93%) versus +50.98%/17th over three years. Sanlam/Kames Ethical Equity 8 Life fund scooped top spoils in the UK Insurance sector posting +25.75% over the past one year versus +45.94%/12th over three.

A new collaboration between key players in the global tea industry has been launched by sustainability non-profit, Forum for the Future.

The Tea 2030 partners include four of the seven companies responsible for 90% of the world tea market: Unilever, Tata Global Beverages, James Finlay and Twinings, together with the Ethical Tea Partnership, Fairtrade International, IDH, Rainforest Alliance, S&D Coffee and Tea and Yorkshire Tea. It is also supported by the International Tea Committee.

The initiative calls for the sector to find legal ways to collaborate – while continuing to compete – to turn tea from a standard commodity into a ‘hero crop’ which benefits the millions who work in all parts of the industry as well as the wider environment and economy. 

Collaboration will focus on three key areas: sustainable production, market mechanisms and consumer engagement.
Forum for the Future has published ‘The Future of Tea – A Hero Crop for 2030’ which identifies the challenges facing the industry including climate change, population growth, and competition for agricultural land and water. It presents four possible scenarios for the year 2030 which are designed as a tool to help businesses plan for the future and develop sustainable products and business models.

The Forum’s report and Tea 2030 initiative launch coincided with the publication by the Institute of Human Rights at Columbia Law School that showed that Indian tea plantation workers are paid less than £2 per day and live in inhumane conditions. “The living conditions on the plantations presented some of the most conspicuous violations of Indian law,” the report states.

The report, “The More Things Change... The World Bank, Tata and Enduring Abuses on India’s Tea Plantations” , is the result of a three-year study in which researchers visited 17 plantations in Assam used by Amalgamated Plantations Pvt Ltd (APPL), a company in which Tata Global Beverages (owner of the Tetley brand) holds a stake. The report also criticised a widely welcomed employee share-ownership scheme established with finance from the World Bank’s lending arm, the International Finance Corporation (IFC). Workers said the scheme was pushed by APPL with “threats and duress” but little information or independent advice.

APPL said the Columbia report was “incorrect and misleading in some parts, which are injurious to our interests and defamatory”. The company operated within all laws on pay and conditions and “believes in continuous up-gradation of standards of working and operations”.

Peter Rosenblum, Columbia Law School’s professor of human rights and the report’s director, told Ethical Performance: “APPL is able to rely on the fact that very few people ever go to the plantations to verify their claims. As we document, the IFC has never supported an unnanounced audit. Workers claim that they have never encountered an auditor in the labour lines. Worse, they are all quite familiar with the word ‘audit’ because they are systematically ordered to prepare for them in advance: clean up, paint buildings, move patients out of the hospital, etc. We could have called the report “Hidden in plain sight” because everything we identify is easily verified and well-known to those who live in the plantation world.”

Dr Ann-Marie Brouder, principal sustainability advisor, Forum for the Future commented: “The issues raised in this report, such as labour and human rights, are unfortunately not confined to tea alone and are common to other agricultural sectors; hence the solutions will only come from wider collaboration outside of the tea sector, involving national and regional governments, unions and NGOs.

“The tea sector is aware of and facing up to its problems, and through collaborations such as the Ethical Tea Partnership and Tea 2030, exploring how these problems and future challenges can be tackled.”

The World Bank has said it will hold its own inquiry into the allegations.