Behind the Mars Bar: looking deeper for sustainable food companies

Mars is the world’s largest privately owned food company with $30 billion in revenues and more than 65,000 workers around the world in 2012. It produced its first ever sustainability report recently in 2011. It was also one of the first big companies to deliver its CSR report on Facebook.

In a refreshing claim to appreciating longer time frames Paul Michaels writes in Mars's Five Principles report:  “As a private company governed by the Mars family, we think in terms of generations, not quarterly returns.” But the company does not take the step of recognising natural times scales.

Mars do have a high impact upon farming practices so adopting natural time scales would not be out of place in the company. Mars does after all call for a joint industry effort to scale up positive impacts for cocoa farmers and achieve higher yields without compromising limited natural resources so longer, more natural time scales are definitely required.

But perhaps the most significant step that Mars have taken lies in their Five Principles report. As one of the five principles, Mars have adopted Mutuality which they describe as follows:

·         A mutual benefit is a shared benefit; a shared benefit will endure.

·         We believe the standard by which our business relationships should be measured is the degree to which mutual benefits are created.

·         These benefits can take many different forms, and need not be strictly financial in nature. Likewise, while we must try to achieve the most competitive terms, the actions of Mars should never be at the expense, economic or otherwise, of others with whom we work.

According to Mars, the mutual benefits need not be financial in nature and yet they are to be the standard by which their business relations should be measured. Indeed rummaging around their website reveals a wealth measured in non-financial benefits including the sponsorship of science.

So how is Mars able to recognise these revolutionary steps in business management? At one level there is a simple answer that all companies can implement and that is they pay full attention to the knowledge we now possess of the world in which we live. A new Primal possibility of knowledge is present in the world and we are slowly taking advantage of all its exciting opportunities to make the world a better place.

The other answer is not so simple and it is likely few major companies can implement it in their present form. It is an answer that has to do with Keynes’ 1933 article on National Sufficiency:  “But experience is accumulating that remoteness between ownership and operation is an evil in the relations among men, likely or certain in the long run to set up strains and enmities which will bring to nought the financial calculation,” (see The Accountant’s Economic Revolution in the PR blog, 25^th November 2012).

Mars is a private company. It does not have to worry about maintaining a position in the financial markets. In this sense Mars has greater freedom to adapt to the emerging Primal knowledge of our world; it is not for example constrained by overweening and restricting notions of Modern good financial performance. But Mars does have remote operations created and maintained throughout its supply chain; it therefore needs to ensure that the dictates of financial performance do not reduce overall Mutuality to considerations of dominant economic aspects.

Oxfam is more critical of Mars. In its assessment of the Big 10 food companies, Oxfam ranks Mars with a 30% score which is a “Poor” performance lying in fifth place behind Nestle, Unilever, Coca-Cola and Pepsico. Middle-ranking Mars received low scores with regards to supporting women and protecting land rights, but did better with transparency and small-scale farmers. 

Big 10 Food Companies Sustainability Scorecard
Taken from Oxfam's "Behind the Brands" Report

The Accountant’s Economic Revolution # 02

“We need a Revolution of Capitalism to balance return on financial, natural and social capital.” So said Peter Bakker at the Prince's Accounting for Sustainability Forum at St. James’s Palace on December 19, 2012.

 

 

Peter is the president of the World Business Council for Sustainable Development (WBCSD) and a widely experienced business man from the Netherlands – find out more about Peter.

 

In his speech, Peter told us that if we are to have a future then business and accounting needs to change. In spite of all the business and accounting initiatives so far implemented, there has been nothing like enough progress. 

 

The Global Accounting Revolutionary Group

Peter made these points in contribution to the Accountant’s Economic Revolution:

 

#1 - Business as usual is not an option for a future-proofed economy. Too many business models and strategies are dependent on the notion that current economic principles and capitalism are static.  This is naïve. 

 

#2 - The conventional model for capitalism is found wanting in terms of the benefits to the majority of society, the impact on the planet, and even in terms of continued economic prosperity. 

 

#3 - Capitalism requires a new operating system, and needs to be re-booted if we are to avoid the ultimate recession or worse total collapse.

 

#4 - Business [and accounting] needs to listen to what the scientists are telling us. We must incorporate the knowledge around the Planetary Boundaries in the setting of priorities for solutions.

 

#5 - We need to consider whether current company reporting provides the right information for this radical transformation.

 

#6 - Sustainability performance needs to be integrated into strategy.

 

#7 - We must change the (accounting) rules of the game.

 

#8  - It is a revolution, a revolution of capitalism, not with the aim to overthrow it, but to improve it in a way that balances the economic, the natural and the social dimensions.

Follow this link for a summary of Peter's speech.

Sustainable Business Model: Recognising the Relations

A first step in developing a sustainable business model is being able to see business for what it is. If we conceive of a business in monetary terms - as monetary accounting and finance does - then we fail to recognise the rich set of non-monetary relations that are essential to maintaining a business.

In the past when businesses were conceived in only monetary terms and their success was measured crudely as extra money created, business managers and owners could become systematically blinded to the social and environmental harm their businesses caused. Back in 19th century Victorian England when the country was being industrialised, the negative social impact of business was so bad that Karl Marx dedicated his life to fight against business, the capitalists as he named them. Marx of course developed a political ideology to which China still adheres.

In our own times, businesses that do not recognise their social, environmental and ecological impacts are a major cause of unsustainable development. This is a well known fact. There are many initiatives that try and make businesses formally recognise more of the relations upon which their (and our) long-term survival depends - whether the managers and owners see the relations or not. These initiatives include: the Global Reporting Initiative, Environmental Management Accounting,  the UN Global Compact 2010-2012, KPMG Sustainability Reporting Guidelines, SustainAbility 2008 Guidelines and the growing number of sectoral reporting schemes in such as Mining and Metals, Food Processing, NGOs, Airports, Apparel & Footwear, Construction & Real Estate, Events, Logistics & Transportation, Media, Oils & Gas, and Telecommunications.

This approach is to be admired since it marks a potential sea-change in the way we assess and value business performance. However this approach does not get to the root cause of the problem. It does not provide an alternative conception of what business relations really are: instead this approach attempts to take the traditional narrow monetary concept of a business and add-on other relations. This creates many problems among which the question of boundaries is paramount.

If we do not provide a fresh core-concept of what a business really is and attempt to advance sustainability by reporting alone, then we loose sight of what the business boundaries are. This is an inevitable consequence which is analogous to trying to alter the direction airplanes take by looking at and reporting on their slipstreams.

What are the boundaries of business sustainability reporting?
(Van Wensen et al. 2011, p. 108)

Instead of “chasing tails” and trying to make the world more sustainable with reports alone, we can redefine a business at its core. We can rethink what we now know about business activity - and add back those relations that were not recognised in businesses 200 hundred years ago when their foundations were laid. We can now recognise that a business, any business, is part of complex social, environmental and ecological relations as well as economic; and we can redesign a business so that it does - as a matter of routine - add value to all these relations.

Reference

Van Wensen, K., Broer, W., Klein, J., and Knopf, J. (2011). “The State of play in Sustainability Reporting in the European Union.” CREM B.V. and Adelphi Consult., Brussels: European Union.