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Almost three weeks after the notorious West Virginia chemical spill at the Freedom Industries storage facility contaminated the entire water supply over a nine-county area, you'd expect the crisis to be winding down, especially since authorities declared the water safe to drink days ago. However, it just keeps getting worse. In the latest developments, the amount spilled was revised upwards, water quality issues are still ongoing, and West Virginia Gov. Earl Ray Tomblin has written to the Federal Emergency Management Agency pleading for long-term help.

We noted before that the West Virginia chemical spill provides an unfortunate textbook case for what not to do in private sector hazard mitigation and disaster planning. The spill originated from private property, and it affected a privately-owned water supply system, the owner of which, West Virginia American Water, was also woefully unprepared for potential hazards to its Elk River intakes.

Combined with gaping holes in government oversight, the result was a perfect storm of corporate irresponsibility.

New developments in the West Virginia chemical spill

To recap briefly, on Jan. 9, crude MCHM - a foaming agent used to wash coal - was discovered to be leaking into the Elk River from a Freedom Industries storage tank, just 1.5 miles above the water intakes for West Virginia American.

By the time the alert went out, the chemical had entered the nine-county system, including the state capital of Charleston -- affecting hospitals, schools, government agencies and businesses as well as 300,000 residents. The alert advised using water only for flushing toilets, forcing those affected onto bottled water.

Last week, officials began declaring the water safe to drink, but hospital visits with chemical-related symptoms consequently skyrocketed, indicating that the all-clear was premature.

Also last week, a company official privately admitted to investigators that another chemical, "PPH, stripped," was involved in the spill.

This week, the bad news continued on Jan. 27, when the West Virginia Gazette reported that Freedom Industries revised its estimate of the spill amount upwards, from 7,500 gallons to a new estimate of 10,000 gallons (for many more updates, follow West Virginia Gazette reporter Ken Ward, Jr. on Twitter, @Kenwardjr).

The result, predictably enough, is that nerves are still on fire throughout the area as reflected in a Town Hall meeting on Monday night over continuing water quality issues, leading to an impassioned letter from Gov. Tomblin.

Letter from Gov. Tomblin to FEMA

Gov. Tomblin's letter to FEMA is well worth a read in its entirety. It outlines in devastating detail the severe, long-term impact that a relatively minor incident -- and a highly preventable one, at that -- can have over a widespread area.

Here is a key excerpt:

One source has estimated that hotels and restaurants have lost $1,000,000 in revenue a day while other businesses have had to close part of their operation...A detailed analysis of this event is not possible at this time, but I am certain it will show a total economic loss for the citizens, businesses, and governments of this area that will exceed the direct emergency protective measures we are providing many times over.

Tomblin also addresses the consequences of early communications failures and the apparently premature all-clear declaration, stating that:

...many people no longer view their tap water as safe and are continuing to demand bottled water to meet their potable water needs. It is impossible to predict when this will change, if ever.

With Freedom Industries now filing for bankruptcy, once again taxpayers will be left holding the bag for a company's disengagement in its host community -- reflecting the out-of-date mindset that job creation and environmental protection are opposing forces.

Somewhat ironically, as this disaster has been unwinding in West Virginia, a swing in the opposite direction has been occurring in Philadelphia, as that city enters a new stage in a long term partnership with EPA to embrace environmental protection as a a vital matter of economic development and quality of life.

Image: Freedom Industries tank farm (cropped) by iwasthere

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Readers please note: In an earlier post on this topic (here), we stated that Freedom Industries was the distributor for a chemical manufactured by Georgia Pacific Chemicals, a company under the Koch Industries umbrella. We did not state or imply that the GP chemical was involved in the spill, but readers may have inferred that the chemical was stored on the property. GP has provided clarifying detail (here).

By Emily Oliver

Since entering the mainstream, Airbnb has faced a host of challenges that could derail it from realizing the $1 billion annual revenue Forbes predicted. As well as legislators very publicly calling for enforcement of tax avoidance, commentators also accuse Airbnb of accelerating gentrification. But there’s a hidden challenge which could already account for significant hidden revenue loss. The Airbnb community itself erodes the company's revenue by avoiding fees through "off-site" deals. But the motivation behind these deals could be transformed by altering Airbnb’s business model.

Ironically, doing so could also indirectly address those other challenges too.

Hidden revenue loss

Around 80 percent of people I've either hosted or stayed with on Airbnb have offered off-site deals, i.e. tried to avoid fees by organizing outside the platform. Almost all mentioned they’d done other off-site deals. As many were for longer trips than the original booking, they would have generated higher fees for Airbnb, so this represents significant, ongoing potential revenue loss. It also marks a breach of trust, purely spawned by differing profit interests between Airbnb, the company, and Airbnb's community.

Airbnb’s response

Airbnb polices these off-site deals rigorously. I've received messages informing me that booking enquiries have been blocked because a user tried to contact me regarding an off-site deal. They clearly reminded me to abide by the site rules - and fees. Airbnb also automatically blocks any websites and email addresses from its postings.

I don’t entertain off-site offers for practical and idealogical reasons. Having helped to set up peoplefund.it (the first crowd-funding site for ethical projects in the U.K. and another peer-to-peer platform), I believe Airbnb has been very skilfully set up to facilitate trustworthy behavior -- offering insurance, a help line and numerous verifications. I’m also a big fan of the the service model’s potential to shift value away from corporates towards communities. But I’m sure plenty of other hosts don’t share this perspective. So, off-site deals are likely to continue while the business model continues to focus on generating profit for its private and venture capital owners.

An alternative

Instead of the widely predicted IPO route, Airbnb could actually increase its revenue by becoming a Subchapter T, or co-op, a suggestion outlined by California lawyer Janelle Orsi. This would transform the motivation for off-site deals through surplus profit-sharing and a shared sense of owned responsibility. Like Orsi, I’d be thrilled to make an investment or contribute a percentage of every transaction towards community ownership.

These community-owned models aren’t new, marginal or incompatible with the type of revenues Forbes predicted for Airbnb. Both REI (a co-op based in the U.S.) and John Lewis in the U.K. (a High Street shop owned by its employees) have multi-billion dollar annual revenues.

Wider impact

Off-site deals are hardly the biggest challenge for Airbnb - but becoming a Subchapter T could indirectly address those seemingly bigger challenges, too. The shared sense of formal responsibility could encourage hosts to pay taxes on their rental income and discourage illegal sub-letting. This could check Airbnb rental incomes - which critics say are increasing property prices and gentrification in some neighborhoods.

While the wider impact is speculation, Airbnb shifting towards a triple bottom line model might not be as far off as it sounds. Wired recently featured Fast Co. editor Ariel Schwartz’s prediction that a public company would become a B-corp in 2014. Before January 2014 was up, Schwartz wrote an article on the first purchase of a B-corp by a public company. Campbell’s purchased a healthy baby food company that is bound by its corporate charter to maximize social and environmental responsibility.

Supporting infrastructure

Infrastructure is emerging to support these triple bottom line business models. The long-awaited Obama American Jobs Act aims to support crowd-sourced equity. This could support businesses transforming their ownership model, as well as provide a funding path for early- and mid-stage organizations to avoid the venture capitalist model Airbnb is built on. Education is catching up too; alternative economic models are now widely included in the syllabi of top universities.

But I have an inkling the most effective solutions for the challenges these business models are likely to face will come from outside the traditional education models. Massive Online Open Courses (MOOC’s) such as Udemy offer flexible and affordable online courses anyone can access. For more depth, the Institute for Leadership and Sustainability offers a rather maverick, experiential-learning approach in its PGC and MBA courses -- summed up by its director who asks, "Why do academics make it so boring?" Its modules (like sustainable exchange - which includes peer-to-peer models like Airbnb) are taught both remotely and outdoors in nature. It can even be paid for in Bitcoins.

Sell out, loose out

Right now I’m still head over heels in love with Airbnb - despite the shortcomings I see in its model. I’m writing from San Francisco (Airbnb's headquarters) on a trip made possible because I host and guest with Airbnb.

As well as helping me achieve a lifestyle I’ve dreamed of, I believe Airbnb could be part of a shift towards a flatter, fairer economic landscape. But, if Airbnb continues to pursue profit, or if was aquired, I’d think twice about accepting off-site offers. I wouldn’t wax lyrical about the platform – converting a dozen friends into regular Airbnbers. And it wouldn’t be hard for one of Airbnb’s competitors – or a new one -- to take advantage of this by establishing a more trustworthy model. The extraordinary passion I’ve met amongst other Airbnbers has persuaded me that a significant, and highly active, section of the community, would very simply dump Airbnb on the spot too.

But I trust Airbnb. For now.

Image credit: Emily Oliver

Emily Oliver works on triple bottom line projects from renewable energy to the arts, with people who are genuinely focused on positive change from corporates to startups.

 

By Shannon Houde

"I know it when I see it" - so said Mr. Justice Potter Stewart way back in 1964. He was, in fact, talking about the challenges of defining hardcore pornography in a landmark Supreme Court case, but his comment applies equally well to the "hard to define but easy to recognize" paradox of sustainability careers.

After all, they're notoriously evasive when it comes to pinning down a technical definition: the lexicon itself is riddled with unhelpful buzzwords that mean different things to different people, the talent pool is as heterogeneous as a Greek salad, and after that, well, nobody's quite sure what sustainability practitioners actually do.

It's a salient point for jobseekers. In a new, rapidly changing and complex industry, how can you figure out what a potential employer is looking for? And just as importantly, how can you communicate your own competitive advantage as a potential employee?

This past autumn, Net Impact London and I hosted a cafe style workshop with a diverse group of sustainability professionals to delve into these questions and seek consensus on the answers. Today, I'm sharing the four key outcomes of our discussion to help you drill down on the common skills, attitudes and values practitioners share to help you land your own dream sustainability job.

1. Embrace the ambiguity

The uncertainty around who sustainability practitioners are and what they do can actually be a major advantage for those entering the field. There isn't just one role or one route to a sustainability job, there are many. While this can make it harder to position yourself, it also serves as a useful reminder that to be successful in this field, you'll need to be flexible and responsive.

What's more, building on your strengths can help you carve out your own pathway. Sustainability jobs can exist anywhere within an organization; they can be broad and overarching or specific and niche and, increasingly, companies are getting on board with the idea that leaders should be supported, whichever department they sit in. There's no clear delineation on where the limits of corporate responsibility lie, either - the disentangling of responsibility from accountability is yet another multifaceted debate.

So embrace the ambiguity and figure out how to make it work for you.

2. Be an agent of change

Sustainability does not need to be in your job title for you to be a sustainability practitioner. Rather, "doing" sustainability involves creating change from within the system to move society towards your values. It can be the guiding star in almost any role, and following it takes a lot of passion and belief. But there are other important traits that will help you quantify the benefits of change and translate the story to help organizations realize that the financial bottom line is affected by social and environmental bottom lines too.

Soft skills including the ability to communicate, motivate and facilitate are crucial, while harder skills such as strategic planning, systems thinking, project management and financial analysis to demonstrate viability are also important to provide the evidential basis for change, as shown in this recent ISSP report.

3. Engage with conflict

As a sustainability practitioner, there will often be conflict between your personal values and the values of the organization you're working for. So what do you do? Well, you could run, but that won't change anything. Working from the inside requires you to engage with that conflict and try to influence the situation.

This means that you need resilience by the bucket load. How else will you stay true to yourself and maintain your passion in the face of resistance or failure? Perhaps you'll be constrained by a lack of resources, perhaps your organization's systems of measurement won't always support sustainability goals. While many companies have made progress by addressing sustainability issues at the level of policies and values, most are still exploring the ways and means of integrating such factors into management, and only a small minority have begun to integrate corporate responsibility competencies into leadership frameworks. Fewer still have actually begun to address the challenge of developing new performance metrics to explicitly account for social and environmental impacts.

The path to sustainability is uncharted for many companies, and, for sustainability practitioners, dealing with the shortfall between ideal and realistic outcomes is a key challenge. Make sure you're prepared for it.

4. Seek balance

Change requires both destruction and creation, and finding a meaningful balance between the two is an important task for sustainability professionals. To take an ecological perspective, it's all about evolution - building on what works and discarding what doesn't - to offer an improvement on what existed before.

But to ensure that both you and your company come out of the change process better and stronger rather than wrecked and gasping for air, it's important to manage the process - and that starts with empathy. Take time to listen to stakeholders' needs and fears and understand the global and local perspectives so that when you have a radical idea, you know how to translate the business case and subtly package it into a simple step that leads the company in a natural direction.

Echoing this is a recent report from Ashridge on the attributes necessary for responsible leadership. It found that openness, honesty and trustworthiness; respect for employees at all levels and commitment to employees' development, combined with a desire not to let unethical behaviour go unchallenged; a lack of complacency; and a mindset that questions "business as usual" were all "very important" to practicing managers.

Let me know what you think the key traits of a sustainability professional are in the comments section below.

With thanks to my fellow participants in the discussion: Gwyn Jones, Director at Association of Sustainability Practitioners (ASP), founder of Global Association of Corporate Sustainability Officers (GACSO) Ben Richards, Head of Sustainability at Radley Yelder Victoria Moorhouse, Senior Manager (Programmes and Operations) at the Sustainable Restaurant Association

Next month, I'll be looking at how to identify and access opportunities in sustainability, and how to define success in the short and long term. In the meantime, contact me today for a free 15-minute career coaching session to find out how I can help you target a creative career.

***

Shannon Houde is founder of Walk of Life Consulting, the first international career coaching business focused solely on the environmental, sustainability and corporate responsibility fields.

The Hershey Company announced this week that it exceeded its goal for sourcing certified cocoa. Hershey, the largest chocolate maker in the U.S., sourced 18 percent of cocoa globally in 2013 from certified farms. That is almost double the 2013 goal of 10 percent, which means one-fifth is being sourced through sustainable practices.

Hershey is on track to meet its goal of 100 percent certified cocoa by 2020, the goal it set in 2012 after much pressure by the advocacy group, Green America. The company’s next milestone is to reach between 40 and 50 percent by 2016. The certified cocoa is verified by independent auditors, including UTZ Certified, Fair Trade USA and Rainforest Alliance Certified. Hershey also announced that its Scharffen Berger brand reached its goal to source 100 percent certified cocoa by the end of 2013. All Scharffen Berger brands are now Rainforest Alliance Certified. Hershey’s Bliss chocolates and Hershey’s Dagoba organic chocolate reached the same goal in 2012.

"We are proud of our substantial progress in our first year of this important initiative to advance the well-being of cocoa-producing communities," said Terence O’Day, senior vice president and chief supply chain officer for Hershey's. "This is just one of many initiatives through local NGOs, national governments and development agencies to address child labor and improve the livelihoods of cocoa farmers around the world. These projects include leadership and economic training for women farmers, literacy, health and farm safety programs as well as the recent opening of a Hershey-supported primary school in western Ivory Coast."

Hershey’s announcements are part of the company’s commitment to support sustainable cocoa farming through its 21st Century Cocoa Sustainability Strategy - a plan to help cocoa communities grow sustainable cocoa. It includes the CocoaLink mobile phone program, launched in 2011 in Ghana and expanded into the Ivory Coast in 2013. The program uses mobile technology to give free agricultural and social training to rural cocoa farmers. More than nine in 10 Ghanaian cocoa farmers have access to mobile phones. Since its launch, the program has registered over 16,000 cocoa farmers in 550 communities in Ghana and provided over 300,000 text messages in the local language, plus addressed illiteracy through literacy training in communities.

The strategy also includes the Hershey Learn to Grow farmers and family development center. Launched in 2012 in Assin Fosu in Ghana’s central cocoa region, the center helps farmers improve crop yields and quality which, in turn, improves their lives. It improves the lives of 1,250 cocoa farm families, impacts more than 6,000 community members, and brings high-tech learning to rural farm villages. For example, Hershey launched a distance learning program allowing about 80 middle school students in classrooms in Hershey, Pa. and Assin Fosu to connect.

The technology is also used for training cocoa farmers on better practices. West Africa, namely Ghana and the Ivory Coast, produces 70 percent of the world’s cocoa beans. According to Hershey, West African cocoa farmers produce less cocoa per hectare than cocoa farmers in Asia or the Americas. Child labor is also common in West Africa. A Tulane University report on child labor in the cocoa sector in the Ivory Coast and Ghana found that 25 to 50 percent of the children in households in both countries work on cocoa farms. Children working on cocoa farms are “frequently involved in hazardous work,” the report states. The U.S. Department of State estimates that more than 109,000 children in the Ivory Coast alone work under the "the worst forms of child labor," and about 10,000 are trafficked or held as slaves.

Image credit: Andy Melton

Royal Dutch Shell's new ceo Ben van Beurden has announced that the company will not attempt to drill in the Alaskan Arctic in 2014.

The decision follows the recent Ninth Circuit Court decision against the Department of the Interior which raises substantial obstacles to Shell’s plans for drilling in offshore Alaska. The legal challenge was brought by a number of environmental and Indigenous groups.

“This is a disappointing outcome, but the lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014,” van Beurden said. “We will look to relevant agencies and the Court to resolve their open legal issues as quickly as possible.”

Responding to the news, Greenpeace International Arctic oil campaigner Charlie Kronick said: "Shell’s Arctic failure is being watched closely by other oil companies, who must now conclude that this region is too remote, too hostile and too iconic to be worth exploring. In an era of declining profits, increasing costs and unprecedented levels of public scrutiny the Arctic is simply not worth the risk." 

Greenpeace maintains that Shell has spent over $5bn on its Alaska programme since 2003, and has failed to drill a single well after a series of problems during a drilling season in 2012.
 

Korea’s big three shipbuilders - Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries - say they are committed to making a fresh start with ethics in 2014 after a number of bribery scandals last year. The three companies are the world’s largest shipbuilders with a combined order value of US$37.4 bn last year.

Bribery emerged as a major problem when the shipbuilding industry suffered a sharp drop in orders in the wake of the global economic slowdown.

Hyundai Heavy Industries (HHI), the nation’s largest ship manufacturer, held an “ethics management resolution” event. HHI chairman’s and more than 150 high-ranking executives, including ceos from affiliates, signed a pledge to pursue ethical management.

“We need to be reborn through major reform,” said the company which has pledged to tighten discipline and strengthen punishments for illegal activities.

Prosecutors recently detained 12 former employees of HHI for taking bribes from suppliers, and arrested three employees from HHI suppliers. Prosecutors said the HHI employees received about KRW 3.6bn in bribes from suppliers since 2007.

The shipbuilder said that since the scandal last year, it has added emphasis on law-abiding management, appointing a president-level executive to oversee ethics, and creating an ethics “compliance unit.”

The compliance unit will pursue programmes to prevent illegal activity and institute systems to monitor business procedures.

Daewoo Shipbuilding and Marine Engineering has already restructured its management ethics. Last November it separated audit and ethics management teams and doubled the number of auditors. The shipbuilder also accepted the resignation of 10 executives. Last year, prosecutors indicted more than 50 people including employees from both Daewoo Shipbuilding and its subcontractors for bribery.

According to the prosecution, a group of executives and employees at Daewoo Shipbuilding collectively took about KRW 3.5bn in bribes from the company’s subcontractors.

Prosecutors have mounted major investigations into Samsung Heavy Industries for bribery and accounting fraud in recent years.

However, only one employee was taken into custody for bribery last year. In his New Year’s message, the president emphasized that establishing a clean corporate culture will be a priority.

Meanwhile, analysts say that despite these scandals, the big three shipbuilders are aiming high this year.

According to a report from Woori Investment and Securities, the three major shipbuilders are likely to set their 2014 targets 10% higher than last year.

Woori speculated that the three would aim for a total of $45bn in revenue.
 

I really wish I could take credit for that headline but I can’t. It belongs to one of my favourite British poets, Roger McGough. The first line goes like this: “There are fascists pretending to be humanitarians.”

The poem came to mind at the beginning of this year following the Dennis Rodman/Kim Jong-Un debacle. Rodman’s protestations that by taking a trip to the oppressed country he wasn’t letting down the downtrodden people of North Korea and his admission that talking about human rights really wasn’t his job, made me incensed. What is that tiresome, trite phrase? ‘With great power comes great responsibility’ …just change the ‘power’ to ‘media power’ and you get my point.

And talking of ‘power’, another power was involved. Indeed, the showcase basketball match, performed to celebrate the dictator’s birthday, was originally to have been sponsored by Paddy Power but just before Christmas the Irish bookmaker pulled out citing “changed circumstances”. The change of heart came just after Kim Jong-Un ordered the execution of his uncle.

While Paddy Power has a reputation for ‘alternative’ marketing, who on earth thought it was a good move to sponsor Rodman’s visit? I did approach Paddy Power for a rationale but none was forthcoming. Paddy Power had previously defended its position – in sponsoring an earlier trip of Rodman’s to North Korea – telling The Daily Telegraph: “Paddy Power has an existing relationship with basketball legend Dennis Rodman and is supporting him, at his request, in his mission of basketball diplomacy.” Let’s be honest, if Dennis Rodman really feels it is right to be going to North Korea, he is wealthy enough to pay for it himself. ‘Basketball diplomacy’ indeed.

Rodman’s comments are as mealy mouthed as Russian president Vladimir Putin’s comment that gay athletes are welcome to the Sochi Olympics –that kick off this month - with the proviso “as long as they don’t promote homosexuality”. How welcoming do you find that? It cannot be right that the IOC is condoning the whole issue by turning a blind eye. Just look at Principle 6 (of the Olympic charter): it states: ‘Sport does not discriminate on grounds of race, religion, politics, gender or otherwise.’ It’s crystal clear to me.

And the ‘wrongness’ and sadness of the situation reminds me of another poem- the incredibly brilliant and moving Black Roses by Simon Armitage, a poetic sequence written in the voice of Sophie Lancaster, a 22-year-od attacked in a Lancashire park on a summer night in 2007 and who died several days later. She – and her partner – were attacked for being Goths. Attacked for simply choosing a different style of dress from their attackers. In hindsight it was described as a hatecrime and the Sophie Lancaster Foundation was set up subsequently as a charity to oppose all forms of victimisation. At one point the poem reads:
“Do they find offence at the studs in my lips, or the rings in my ear?
Are they morally outraged by what we wear?
We are kindly creatures, peaceful souls, but something of our life aggravates theirs,
something in their lives despises ours.
The difference between us is what they can’t stand.”
 

Vera Kurochkina, UC RUSAL Public Relations Director, explains the aluminium giant's role in Russia's burgeoning social enterprise sector
 

Once upon a time two frogs fell into a bucket of milk. Both tried to jump out, but the sides were steep and slippery. Seeing little chance to escape, one frog gave up and sank. The other frog also had little hope, but kept trying. Eventually, its efforts turned some milk into butter and the frog could escape jumping out from hardened surface. The second frog in today’s reality could be compared to a social entrepreneur who keeps trying to make change where traditional methods of solving challenging social issues do not work.

Social entrepreneurship is not new in Russia. Its prototype was alive and well back in the 19th century through dozens of so-called ‘houses of industirousness’ founded by the father John Sergiev, canonized and known as St. John of Kronstadt. In the last decade Russia has accumulated rich experience in social initiatives. Business across the country implements hundreds of social programs, taking responsibility for the welfare of the society while social entrepreneurship has become more and more popular.

Since early 2013, RUSAL, a key player in the global aluminium market, has been working on a new corporate social initiative. In March 2013 Centers of innovation in the Social Sphere (CISS) were opened in the Krasnoyarsk, Sverdlovsk and Irkutsk regions. CISS provides a regional networking infrastructure for social entrepreneurs with the aim of raising awareness in the field and creating a public-private communication platform. CISS has been jointly developed by RUSAL and the Russian Agency of Strategic Initiatives. In April 2013, a Social Entrepreneurship School was launched by the CISS providing applicants with educational training.

The school offers courses in finance, law and business planning as well as courses about new business opportunities on both a regional and local level. Moreover, students can bring their draft projects and develop them into business plans at coaching sessions. The key project areas are education and leisure centres for children; tourism for the disabled; youth internet-portals and media; the reconstruction of historic buildings and monuments; energy efficiency; and clothing manufacturing for ex-imprisoned women. In six months the Centre provided training for 100 entrepreneurs.

The training of those engaged in business in the Social Entrepreneurship School is the first phase of RUSAL’s social entrepreneurship initiative. The second phase is the presentation of projects created by the School’s attendees. The third phase aims to support successful business leaders and monitor their activities accompanied with seed funding. The final goal is to create favorable conditions for the implementation of society-oriented business projects and, as a result, finding a solution for challenging social issues.

RUSAL focuses on attracting people with active entrepreneurship positions as well as business leaders and society-oriented NGOs in CISS to debate regional social issues and to look for creative ways to overcome them through the implementation and realization of social entrepreneurship projects.

The company’s goal is to introduce a set of successful cases of social entrepreneurship as a breakthrough in overcoming social issues. With this in mind, RUSAL is planning to work more closely with foreign partners to bring best global practices to Russia and share best Russian practices globally.
 

Both The Hershey Company and Cadbury maker, Mondelez International, say they have made siginficant progress in their moves towards a sustainable supply chain for palm oil.

Mondelez has achieved Roundtable for Sustainable Palm Oil (RSPO) coverage for 100% of the palm oil it bought in 2013 – two years ahead of schedule.

“Achieving 100% RSPO is an important milestone toward our long-term commitment to only buy palm oil that’s produced on legally held land, doesn’t lead to deforestation or loss of peat land, respects human rights, including land rights, and doesn’t use forced or child labour,” said Dave Brown, vp of Global Commodities and Strategic Sourcing. “We recognize the need to go further, so we’ve also challenged our palm oil suppliers to provide transparency on the levels of traceability in their palm oil supply chains. Knowing the sources of palm oil supplies is an essential first step to enable scrutiny and promote improvements in practice on the ground.”

In the first months of this year, Mondelez International will review results from suppliers and publish an action plan during the second quarter 2014 to give priority to supplies that meet the company’s sustainability principles, and eliminate supplies that do not, by 2020 at the latest.

In addition to achieving its commitment to source 100% mass balanced RSPO certified palm oil more than a year ahead of its original 2015 commitment, The Hershey Company has annouced it will also work with its suppliers to achieve 100% traceable and sustainably sourced palm oil by the end of 2014.

“The Hershey Company is committed to continuous improvement and transparency in our sustainable sourcing efforts,” said Frank Day, Vice President of Global Commodities. “Our move to source 100 percent traceable palm oil is the latest step forward in our efforts to ensure we are sourcing only sustainably grown palm oil that does not contribute to the destruction of wildlife habitat or negatively impact the environment.”

While The Hershey Company is a smaller consumer in the palm oil market, the additional step of 100 % traceability will assure that the palm oil in its supply chain is produced using the most rigorous sustainability practices. To achieve this, suppliers will be required to independently verify that sources do not contribute to deforestation or the destruction of wildlife habitat; do not clear high carbon stock forests; do not contribute to peat land expansion; nor operate in compliance with local laws and regulations.

In November, Hershey’s palm oil sourcing efforts were recognized in the World Wildlife Fund’s 2013 Palm Oil Buyers Scorecard, where Hershey scored 10 out of a possible 12 points with 12 being the highest score.
 

The market for breast milk substitutes is a highly contentious ethical area, especially for investors. The FTSE4Good criteria for the category – launched last year – is an attempt to build industry dialogue. Does it represent a giant leap or a just a baby step, asks Liz Jones

When it comes to ethical investment, breast milk substitutes (BMS) have been a contentious issue. Even defining what a BMS is can be problematic.

David Harris, director FTSE ESG, explains that for the past three decades industry’s definition of what constitutes a BMS product has been at odds with that of NGOs: “What are breast milk substitutes? Infant formula? Yes. But what about baby juices, baby cereal, and most controversial of all follow on milks? All of these products could be regarded as substitutes or supplements for breast milk, it depends how they are used. Some NGOs have set out that the infant formula industry created the follow on category to get around the provisions of the WHO Code.”

NGOs and the baby milk industry have been in conflict over the issue of breast milk substitute marketing for over 30 years. The difficulty therefore in establishing worthwhile collaborations between industry and NGOs around child nutrition “have been nigh on impossible and the cause of much frustration among major global health and development foundations”, says Harris.

Part of the sector’s controversy lies in the fact that it is a highly emotional category. In the past there has been questionable infant formula marketing in some countries which led to women buying formula they couldn’t afford, not making it up properly, using dirty water and some babies ultimately dying as a result.

Dominic Schofield, director of Multinutrient Supplements Initiative at Global Alliance for Improved Nutrition (GAIN), agrees. “There’s been a bad history. Companies haven’t met international standards for ethics. As an overlay on that there’s a tangle of ideological issues. People’s views differ – some see the need for a patronistic approach via government, others don’t. There has been a lot of effort and acrimony between all the interested stakeholders.”

The point of departure, he says, is that it is important to both promote and protect the need to breastfeed. But there are lots of issues that make it difficult for breastfeeding to be an option and on top of that there is the fact that alternatives to breastfeeding are promoted and that can have an impact on infant health. “Marketing needs to be limited so that there is no negative impact,” Schofield maintains.

The ongoing stand off on BMS has meant that for a long time no official body has been prepared to try and build any middle ground in fear of being shot down. That changed last year when FTSE stepped into the breach with a new set of criteria to identify best practice for companies and their approach to BMS marketing.

Setting standards
Most BMS companies work to the WHO code of practice. But as Harris points out, it is interpreted by NGO and companies in different ways. Similarly some governments implement it, some don’t. The basis for FTSE’s criteria is the contentious dilemma of what constitutes a BMS product. For FTSE it is infant formula and complimentary foods if marketed for babies under six months as well as follow on milk marketed to babies up to 12 months old. “ “Because there are different views, we have created a standard that many would view as going beyond the code especially in higher risk countries,” said Harris.

So far, only one company out of the big five manufacturers – Nestlé – has met the criteria – which has been independently verified by external third party agencies in four countries.

Janet Voûte, global head of public affairs at Nestlé emphasizes the company’s full support for the WHO code. “It is a sensitive area because you’re dealing with serious nutritional issues. Nestle is fully supportive of the 6 months breastfeeding line and we want to underline that. Breast milk is best. Infant formula is for women who can’t or choose not to breastfeed. You have to understand that the WHO code was issued to member states and what is regrettable from all sides is that fewer than 40 states enacted legislation. The challenge that has arisen from that is that there are various interpretations and that leads to confusion.”

Voûte believes that the FTSE4Good Index and the inclusion of their criteria and the transparent sharing is the beginning. “You do see an evolution in the dialogue and it’s improving. Ideally, FTSE4Good helps raise the industry standard. Other companies will apply for inclusion and standards will rise… However, it’s not an end in itself.”

Voûte believes that transparency is key to the FTSE4Good process. “It’s the only way forward,” she said.
It’s not an unusual process for Nestlé either. As a company, it is the way it now approaches business. For example, in the responsible sourcing of palm oil and the issue of child labour in the cocoa supply chain.

As a business, Nestlé convenes with shareholders including NGOs regularly to discuss issues and problems. It’s all to do with its vision of Shared Values. “We sit down together and talk about issues and their solutions,” she said.

A recent example of this was a meeting with Oxfam which led – in the last 6 months – to Nestlé signing up to the Women’s Empowerment Principles. “This is an example of where direct dialogue can give results and result in change,” said Voûte.

While many companies publish summaries of such verifications (like Apple, Gap and Nike on supply chain labour), most are loath to publish them ‘warts and all’. As part of the FTSE4Good criteria, verifications are published in full. “It’s a big step for a company to allow third party verification of their practices and then for it to be published in full,” said Harris.

This is being done to try and build trust and dialogue between parties on what the key issues are and how to make progress in this complex and difficult area.

While Nestlé has received inclusion on the index, the report does highlight grey areas where there is room for improvement. In Nestlé’s case, third tier distribution is an area flagged for improvement. Some supermarket promotional displays go against the code despite Nestlé trying to educate their distribution chain covering 10,000s of distributors and retailers. “It’s a massive job,” agrees Harris.

Changing attitudes
Harris does see attitudes changing. Indeed in late October 2013 FTSE4Good hosted a BMS workshop bringing together some child health and nutrition NGOs together with Nestlé for the first time. It was the first time they had sat down together. This was a direct result of Nestlé receiving FTSE4Good verification and winning inclusion to the index.

FTSE is in dialogue with all the major BMS manufacturers. The index is reviewed twice a year – the next time is next month (March 2014) - and while Harris can’t say anything, another BMS company is very close to securing inclusion.

More companies on the index is a must. Schofield comments: “More than one company has to get onto the index. Some companies have improved their practices and dialogue has opened up. FTSE has created a vehicle for engagement and that is good for everyone in the sector. However, the debate has got to move on from civil society versus industry. Hopefully once on the index, companies will feel the need to stay on it, their performance in these areas will need to be more predictable and that means that the criteria to act ethically can be strengthened.”

At the end of the day FTSE is a company that services the investment community and there is a limit to what FTSE can do to bring companies and NGOs together on this issue.

However Harris has high hopes for the future: “I’d love to see something similar to the Ethical Trading Initiative for the BMS market come out of this - where NGOs and industry work together and collectively decide on a verification process for their members.”

Harris maintains you can compare the situation to the fashion industry 15 years ago when it was beleaguered by supply chain labour standards and sweat shops.

“Progress was made once NGOs and retailers and fashion brands began talking and working together through such platforms as the ETI,” he explains.

Investor interest
Dominic Schofield says the FTSE4Good Index is an exploration; an alternative to a system, that has “provided a new opportunity for engagement”.

“It’s a huge contribution to create an environment where advances can be made in nutrition. From Gain’s perspective, not only does it raise industry standards but it raises the sector in the investor’s sights. It helps investors understand this dimension which is particularly important with the rise of interest in social impact investment.”

The index is “a pathway to transformation,” he says. “It’s one more tool in the kit and while not the be-all and end-all. It is the lever to change.”