Nobel Laureate Milton Friedman once said: “The social responsibility of business is to increase profits.” This may still be true in the confines of the boardroom. But this kind of “greed-based” thinking that ruled the corporate roost for decades is giving way to a kinder, gentler strategy in the post-Enron world of the 21st century. Where the battle for customers is not only waged on price, format and merchandising, but on a company’s record of good citizenship and social responsibility.
Elsevier Food International, Vol.9, Number 3, September 2006 Len Lewis

In an effort to garner some positive press and do the right thing, every company from Big Tobacco and high-tech firms to global retailers like Wal-Mart and Tesco are loudly proclaiming themselves good corporate citizens and taking up matters including Fairtrade products, the environment and a host of social issues. On top of that, most multinationals have established departments with their own executives and staffs to oversee corporate social responsibility on a global scale. As a recent editorial in The Economist stated: “Corporate social responsibility, if nothing else, is the tribute that capitalism everywhere pays to virtue.”
“We’ve discussed it a lot and the best description of CSR is how you make your money, not how you spend it,” said Mike Kelly, head of corporate social responsibility in the UK for KPMG, London.

The EU versus the US
Mike Connor, publisher of Business Ethics magazine believes the definition is far broader. “Some people believe it’s about including multiple stakeholders and being accountable to a triple bottom line – financial, social and environmental goals. But where it starts is really a matter of opinion,” he said. “There’s also a substantial difference between European companies and those elsewhere in the world. There is a much greater sensitivity to corporate responsibility in the EU.”
However, Chiquita International believes these are global initiatives. “In the past, we had the reputation of being a company not particularly concerned with social responsibility,” said George Jaksch, senior director of corporate responsibility and public affairs, Europe, noting that in the late 1990s the company was bombarded with false allegations of illegal business practices in Latin America. Since then, strong partnerships with unions and environmental groups have been extremely advantageous. “CSR programmes have cost money and continue to require resources. But we regard it as one of the best investments the company has ever made.”
Many companies share Chiquita’s sentiments these days whether the motive is pure altruism or sparked by a need for positive press. However, as Connor noted: “In this day and age corporate responsibility is simply good business. I don’t care about motivation.”
In an effort to cut road miles and curtail an estimated 6,000 tonnes of carbon dioxide emissions annually, Tesco will become the first retailer in the UK to move products on specially-built environmentally-friendly “green trains” that also reduce noise and vibration.
Wal-Mart, which has ducked its share of brickbats from social and environmental groups, has invited former vice president Al Gore to speak at its in-house working group on environmental issues. Gore’s documentary film on global warming, An Inconvenient Truth, recently opened to critical acclaim in cinemas nationwide.
Whole Foods, often considered one of the most socially and environmentally aware companies in the industry, has pledged an additional $10 million to support locally grown food and to make long-term, low interest loans to small farmers and other producers.
Marks & Spencer, long time advocates of ethical consumption, is switching its coffee and teas to Fairtrade products by April. Meanwhile, Wal-Mart’s British unit, ASDA, is seeking advice from the UK’s Fairtrade Foundation about applying the principals of fair trade to British produce growers. Waitrose has done the same to make sure that the principals of fair trade apply as much to UK farmers as it does to those in emerging countries.
Meanwhile, Lidl, whose critics consistently accuse the chain of fostering an atmosphere of “fear and intimidation” has begun selling Greenpeace magazine, the first magazine to be sold at the chain other than the Tabloid Bild. Recently, the chain also added some Fairtrade and organic products to its merchandise mix.

Establishing in-house networks
However, the greatest changes have been the overarching philosophies that have led to the establishment of separate departments within corporations to deal with CSR issues.
“I think it’s due more to cultural reasons than anything else,” said KPMG’s Kelly, noting that titles and departments related to CSR are more prevalent in Europe than in the US.
Connor of Business Ethics magazine agreed, noting that the EU governing body has embraced CSR to a much greater degree than the US administration. However, in the US there is a greater emphasis on compliance or business ethics in the narrow sense due to regulations like Sarbanes-Oxley that was introduced as a solution to corporate corruption.
Whatever the reasons, CSR has become an essential part of doing business globally, according to industry observers. “The entire issue of ethics in management and the social responsibility of companies is becoming more important than ever and companies have to be equipped to handle all kinds of situations,” said Jaksch.
However, Chiquita, as other companies, has tried to avoid having different strategies in different countries. “We have a corporate responsibility steering committee that was established in 1998 and meets regularly to go over common themes and operate on an international rather than local scale,” he said, noting that the committee consists of representatives from all business units. “The first thing we did was put together a set of principles that encompass our core values embracing such things as integrity, respect and responsibility. The company also published a code of conduct in 2000 that sets a common standard for all workplaces connected with Chiquita.”
Kelly concurred that CSR is essential in both existing and emerging markets. “We talk about the global village. CSR can really be a license to operate in emerging markets. It’s about creating a trusted brand which has economic, social and environmental impact. In retail, if you come in with a good brand and a good reputation for treating employees fairly, it changes the conversation when you’re moving into new markets. It’s a huge business advantage and the best companies have a focus and drive that takes CSR to the heart of the business,” said Kelly.

Determining “best practices”
Moreover, Kelly and others believe there is such a thing as “best practices” when it comes to CSR programmes. “The best way to approach it is to keep it simple. People appreciate clear and straightforward messages. For example, paper has a very visible impact on the environment. So if a business as a whole saves 38 sheets of paper a day, it comes out to one more tree left standing at the end of the year. This is clarity of message with an economic link. Some of the campaigns in the food industry centred on healthy eating have also been effective, according to Kelly. “The industry is not saying you shouldn’t eat certain foods, just that you should eat certain things in moderation. This is educating consumers and says the industry knows what’s best.”
The Fairtrade campaign in Europe is another example of a simple programme every company can adopt. “It’s entrepreneurial and tells everyone that if they use these products, the people who grew them will get a better deal. I was in Brussels the other day and I saw Fair Trade written in Walloon, a Flemish language. I couldn’t understand a word but the clarity and consistency of message is such that you knew what it was about,” he said.
Overall, Kelly does not think that there’s any one big CSR issue that is not being addressed these days. As such, corporations and non-governmental organisations have better relations. “NGOs will never change their minds about particular issues. But I think we’ve moved away from an adversarial position with them to one which is more partnership driven.”
He cited the example of one retailer, Kingfisher which has worked with NGOs like Friends of the Earth and Greenpeace on alternative composting and fertilisers. “They wanted to get the NGO view on which products were better. This made them a stakeholder and when the retailer moved to peat-free compost it was the Friends of the Earth that put out the press release on it,” he said.

Engaging NGOs
Since retailers are under increasing pressure and public scrutiny due to product sourcing, pricing, nutrition and packaging they have to know how to engage these NGOs and which ones to engage. “Evaluating whether it has a justifiable grievance and real support is the first step. Then you can prioritise which ones to engage,” according to Kelly.
Connor agrees that NGOs are key. However, the definition of an NGO is also becoming broader. “There are large ones like Oxfam, Amnesty International and Greenpeace, but also a lot of ad hoc groups that have the benefit of the Internet and may be important to a company’s future and how consumer opinion is formed,” he said. “Fairly or unfairly, they can have a dramatic impact on a company’s reputation.”
A case in point is McDonald’s which has aggressively introduced healthier menus in the past year along with environmental moves to reduce waste. “They joined a group called Ceres, a coalition of companies and activists. Why? Because Ceres is an institutional investor that handles the pension funds for the City of New York,” said Connor.
Chiquita has seen a dramatic change in relationships with NGOs, said Jaksch. “Engaging with stakeholders in constructive dialogue is one of the fundamental skills you need to develop for a credible corporate responsibility programme. We meet regularly with many of them. It’s been very helpful in giving us information that keeps us on our toes,” he said, noting that the company has particularly close relationships with two NGOs, The Rainforest Alliance and a coalition of NGOs called the Sustainable Agriculture Network, which has access to every worker, workplace and document. “It’s been a great source of continued improvement for the company.”

Standard practices
Chiquita also has ties to SA8000, which is a social standard developed by a coalition of human rights experts and trade unions that summarises the international legislation and conventions on human rights in the workplace, including the prohibition of child or forced labour and the obligation to pay fair wages and insure health and safety systems. “It’s the best practice standard for human rights in the workplace and we’ve incorporated it into our code of conduct because auditors visit farms on a regular basis. And all our farms in South America have a certificate of compliance based on standards from SA8000.”
In Europe, Chiquita and other companies are watching the development of BSCI, the Business Social Compliance Initiative, an alliance of over 50 European retailers such as Metro and Migros in Germany, Switzerland, the Netherlands and Sweden. “These companies have decided to work together in establishing real improvement in human rights conditions in supplier countries in the developing world,” said Jaksch.
“It’s in our interest that retailers demand social responsibility from their suppliers. They exercise substantial influence and if they are willing to work together to establish a common standard it’s very important. We’re hoping retailers worldwide will join this effort,” he said.