Fruit Juice Australia News

How companies are turning climate to their advantage

Mon 25 June 2007

Special edition: Climate change

By Lorraine Heller

06/13/2007 - Climate change, so long ignored or even denied, can no longer be disregarded, and is forcing companies throughout all sectors to re-evaluate their practices.  And as with all 'obstacles', companies have started using climate change as a vehicle to promote what they do best: make business.

Corporate social responsibility (CSR) - or a focus on social and environmental practices in business - is emerging as a major way for firms to differentiate themselves in an environment of increased competition.

Many of the largest companies have started reporting on their social and environmental practices: in 2005, 32 of the 100 top US companies published stand-alone CSR reports, and this movement is being reflected in the food industry too.  According to a report published last month by the US Department of agriculture's Economic Research Service (USDA ERS), the top 15 companies in the food industry all did some form of CSR reporting last year.

This of course includes indications of companies' support of societal concerns, such as nutrition education, but environmental concerns also form a large - and growing - part of the equation.

Climate change is on everyone's lips.  The science is clear, the world is heating up, and industry is a major cause of this.  Governments worldwide are considering, or have already implemented, regulatory measures to reduce carbon emissions. Last week's meeting of the Group of 8 most industrialized countries emphasized the need for a global approach to the problem.

"It is time for new thinking, and a new inclusiveness.  We can no longer go about our business as normal," wrote UN secretary general Ban Ki Moon in a commentary in the International Herald Tribune before the meeting.

And companies are making changes to their business practices.  Some feel a moral responsibility, others feel the economic pressure.  But almost all hope to benefit from the way environmentally responsible practices reflect on their image.

Last year, ConAgra's CSR report went on for 19 pages.  McDonald's achieved 88 pages. 

According to ERS, the top five food manufacturing firms provided both a link to a site devoted to CSR reporting, as well as a dedicated CSR report.  These firms were Tyson Foods, Kraft, PepsiCo, Nestle and ConAgra Foods.

Several firms in the food industry, including PepsiCo and Tyson Foods, use the Global Reporting Initiative (GRI) index in their reports, another indication that this is something they are not taking lightly.  GRI, which began in 1997, is an independent institution with the goal of developing guidelines for CSR reporting.  The GRI index provides standardized guidelines for reporting progress on corporate economic, environmental, and social performance.

But reaching this level of commitment involves a progression through a number of stages.  According to a 2005 report in Harvard Business Week (Zadek), companies go through five stages as they move to greater social responsibility. These are:

The defensive stage:  companies are faced with unexpected criticism from sources such as media and social activists. The typical response is to deny the allegations or a relationship between the company's practices and negative outcomes.

The compliance stage: corporate policy is formed and observed, and is usually made visible to critics. Compliance is viewed as a cost of protecting the company's reputation and avoiding litigation.

The managerial stage: companies realize that the problem cannot be deterred by simple compliance or public relations strategies.

The strategic stage: companies learn how establishing strategies to address responsible business practices can give them a competitive advantage.

The civil stage: leading companies promote industry guidelines and actions to address societal concerns.

In terms of climate change, food companies are primarily in the fourth stage of this social responsibility model.  As with anything that can offer a competitive advantage, climate change has become the latest trend to aim for.

And although any incentive to help address this very immediate problem is a good incentive, unless these efforts receive political backing, they run the risk of being short-lived, like any other trend.   But that is simply something the world cannot afford.

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