CSR and Sustainability, Human Rights, Stakeholders, Supply Chain

Palm oil in Liberia just another example of how companies must ‘prove’ social value

Just the other day, I was listening to the BBC Radio 4 podcast “In our time”, hosted by the inimitable Melyvn Bragg.

The particular podcast is on Utilitarianism, popularly associated with Jeremy Bentham and later John Stuart Mill and others.

Utilitarianism is at once both simple and complicated.

The phrase “greatest good of the greatest number” to justify actions is commonly associated with it.

Jeremy-Bentham-quote-2

As relevant today as ever, particularly in emerging markets

But there’s much more to it than that.

Many of the ideas of the philosophy of social good, and how it’s manifested and encouraged, go back as far as Plato and Epicurus.

The reality of making difficult decisions in business is more complex than applying the paradigm of “greatest good of the greatest number” when you look at doing so through the lens of social utility. Whose utility do you prefer?

Today, a decision is made in Jakarta, Singapore, New York or London that has an impact on communities in Africa.

Which group is more important, shareholders, suppliers, employees, or impoverished communities?

The answer of course, for large companies, is “all of them, more or less equally, depending on your timescale”.

I add the point about timescale for a reason. As we all know, you can focus on one group over another for quite a while.

But eventually, if you want to be a sustainable business for the long term, you can’t have a favourite stakeholder. (tempting as it is to ask CEOs, when I meet them “which is the best stakeholder?” in a serious tone)

A utilitarian philosopher interpreting Bentham’s et. al.’s work in this modern sense would likely agree. As would an impoverished citizen of an emerging economy nation.

Which brings me to today’s news about campaign group Global Witness, palm oil company Golden Veroleum and Liberia.

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Liberia is one of the toughest places to operate

The campaign group’s allegations are here, and the company response is here.

The main thrust of the argument is that the company is taking advantage of Liberia’s impoverished state of affairs and a supportive government to treat communities badly in one of the world’s poorest countries.

Several friends of mine have been to Liberia in recent years, working on palm oil projects, development and mining.

I’ve spoken to them in depth about the country and it’s clear the situation is extremely complicated and very challenging, to say the least.

Companies have no doubt made mistakes, sometimes serious ones. Meanwhile NGOs have not always been terribly well co-ordinated either. I was told by one expert there are more than 400 of them in the country.

I won’t comment on the Global Witness / Golden Veroleum spat here. I’ve not been there, I don’t know enough about the case.

What’s interesting to me is the language used, and what the argument represents.

With regard to language, there are lots of emotive terms used, and in some cases, broad brush wording by Global Witness. The BBC picked up on this in interviews today.

There are also lots of clear denials, a substantive and fast response, and some clearly laid out justifications of existence by the company.

Golden Veroleum talk about jobs, about economic development and long term investment, alongside how they behave every day. As they should.

The language used, and the case in general, represents an ethical business dance as old as trade itself.

The 1790s Blood Sugar campaign may be one of the earliest examples of campaigners taking on companies over impacts halfway around the world. Back then of course, it was a lot simpler. A lot more black and white, if you’ll excuse the term, used in its sense of stark contrasts rather than race.

What’s new now of course, is that there is more awareness of what happens around the world. There are more people who care, and there are more opportunities to communicate, and do so instantly. This we know, ad infinitum.

Which brings me to my point.

It’s this: Companies, no matter the veracity of particular cases and allegations, are going to have to work a lot harder in future to demonstrate that they add value. I’ve blogged on this many times before.

We’ve seen companies dip their toes in the waters of producing national impact reports, and/or sectoral or issue based reports on impact in the last decade or so. These are alongside their sustainability reporting.

These have been useful exercises, but what was clear from our recent conference of leading companies, NGOs, academics and investors (some findings here) is just how much more there is to do here.

In the modern sense the area is not yet even a teenager, if we apply human years.

Added to that, social science and economic methodologies are often either too broad in the latter case, or too theoretical in the former.

Nestle

First of many to come no doubt

So some progressive companies seek allies in NGOs, non profit consultancies, specific studies by academics or consultants as a practical alternative solution.

There isn’t space to go into specific examples here, but if you have read this far, you probably know some of them already.

These are imperfect, often incomparable pieces of work. But the best of them are the best we have.

The state of the art is evolving. It’s not yet a science and perhaps it shouldn’t be, given how expectations evolve quickly.

One thing is clear, companies not yet working in depth with a variety of stakeholders to get to a relatively agreed point of agreement on what constitutes social value in the eyes of both a utilitarian philosopher, or an impoverished citizen of a desperately poor nation such as Liberia, cannot start soon enough.

Shareholder and reputational concerns aside, ongoing scandals can decide elections.

Politicians will have little loyalty to a company eventually judged to be lacking social utility in the court of public opinion, unfairly or otherwise.

For readers who made it this far, and are interested in the history of ideas, often still largely untested, which can improve society, this may be of interest

Upcoming relevant business meetings by Innovation Forum:

How business can tackle deforestationA make or break issue for Asia’s corporate reputation
28th-29th September 2015, Singapore – For full agenda and speaker list go here.

Ethical Trade and Human Rights Forum (with ETI)
Transforming supply chains for responsible business at scale
October 19-20, London – For draft agenda contact Boris.Petrovic@innovation-forum.co.uk

How business can tackle deforestation
Innovation in sustainable forestry: Technology, risk and collaboration
November 2-3 London – For more information go here.

Sustainability: Why current consumer engagement fails – and how to fix it
November 9th-10th 2015, London – For more information go here.

Sustainable seafood sourcing
How business can manage global risk and collaborate for sustainable improvements
November 25-26 2015, London – For more information go here.

How to engage with – and improve the lives of – smallholder famers
March 2016, London – For draft agenda contact Boris.Petrovic@innovation-forum.co.uk

For general inquiries contact: Charlenne.Ordonez@innovation-forum.co.uk

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