On the 17th of February Sabine Denis, manager of Business & Society, presented a new book to a large audience at the Federation of Enterprises in Belgium. The book is based on some thirty in-depth interviews with captains of industry. The focus is on how companies tackle social and ecological challenges by fully integrating these values in their business models. This implies much more than financial support for good causes, or doing socially responsible business in the traditional sense. In that regard there is currently also quite a lot going on in the agricultural and food sectors. Vredeseilanden sees opportunities in this new approach to 'business models'.
Trendsetters stick their necks out
In 2008 the financial and economic crisis in the US and the 'old continent' struck hard. In the slipstream of the crisis Paul Polman, CEO of Unilever, launched the Sustainable Living Plan. This plan was simultaneously presented in New York, London, New Delhi and Rotterdam and was the blueprint of a new business model of the food giant which is globally active. The target for 2020 is clearly formulated: halving the environmental impact while doubling sales. Sustainable smallholder farming is one of the levers to reach the target. Unilever wants to source 100% of their agricultural raw materials from sustainable farming by 2020.
Unilever are leaders, but are currently no exception anymore. Large food companies like Mars and Nestlé or retailers like Colruyt and Walmart make projections and they all reach the same conclusions: scarcity of land, water and raw materials, erosion, deforestation, global warming, population growth and growing inequality are threatening the future activities of their businesses. What's more, the growth will not be realized in the so-called developed countries, but in growth countries like India, Brazil, South-Africa, Mexico, Indonesia,... according to Thomas Leysen, chairman of KBC in a remarkable interview in Mo*: “There is little growth in the West but the question is how much growth is realistic here, from an ecological point of view, a.o.. It is a fact that for years we had artificial growth based on growing debts... and if growth is still possible, poorer countries must be given priority. Politicians, business leaders and trade-unions still apply all too often an old paradigm to their thinking, one in which growth is the top priority. From now each of us must begin to completely reverse our perspective on growth.”
Logical consequence: making our production and consumption patterns more sustainable in our own society will perhaps be of great importance as part of a world-wide battle plan for more sustainability, including poverty reduction.
From awareness to action
Vincent De Clippele, a Belgian and one of of Nestlé's top managers, concedes in a newspaper interview (De Morgen, 19/10/2013) that his company needed the pressure by Greenpeace among others to take action in the palm oil issue. At the same time we see that food companies no longer consider social and ecological sustainability as mere risk management strategies, but that they increasingly recognize the importance of sustainable smallholder farming.
Scientific panels, such as that of the IAASTD (2008) or studies by FAO/IFAD (2013) for instance affirm the potential strength of this farming model, because of its social and ecological resilience and the answers it can provide to economic and social challenges. The question rises which realistic strategies and innovative action plans can be developed that can provide sufficient evidence for the concept and can test how realistic it is. Modern markets are gaining ground in developing countries but the requirements that producers have to meet are also much higher: quality, volumes, food safety, environmental requirements,... If smallholders want 'to take part' in these modern markets producers' organizations will have to be strengthened, access to credits will have to be made easier, quality, guaranteed quantities and marketing will have to be developed. Innovation is only possible if farmers' organizations, companies and authorities put their cards on the table and co-operate.
The importance of a level playing field
In a Mo*-column (October 2013) Sabine Denis refers to a recent study by UN Global Compact on business sustainability, which shows there are still a lot of challenges. 67% of the CEOs interviewed believe that without radical change the target to provide 'a decent life' for 9 billion people (2050) is unattainable within the capacity of the planet. Individual efforts by trendsetters in the business world may be interesting, but will not make the difference. They are curbed by the market that cannot account for the 'business value' of sustainability. Also consumers send out mixed signals and investors are reluctant. We are still waiting for a substantial expansion of sustainability.
The most amazing conclusion of the CEO poll: 83% of the top leaders questioned make an appeal to governments to intervene actively. This does not imply that business leaders no longer have confidence in what they can do themselves, but that they realize that they cannot do it on their own and that the rules have to be changed to create a level playing field: rules for everybody so that trendsetters no longer have to face a silent majority that do not care and so gain a competitive advantage.
An income for farmers
More than ever food companies will have to search for new producers, if only to assure future supplies of raw materials. Producers, if well organized, will only be able to meet the increasing demand provided they can guarantee volumes and quality (environmental requirements included). The several links in the chain will, more than ever, need each other. They have an interest in transparent and fair price agreements, in risk sharing and long-term contracts. Vredeseilanden for its part wants to play the role of matchmaker or broker between the producers and trendsetters in the food sector which fully integrate social and ecological components into their business models.