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 Models: Getting Over Growth

Existing business models have to grow. It is a compulsion and it has a well known technical driver.

The technical compulsion for growth is embedded in the way we measure business success in terms of the return created for the investment made. This is well known: if you are lucky enough to have surplus cash and you put some of this money into a savings account then you expect to get more money out after a period of time. You expect your investment to grow.

For accountants in business, this growth is measured as the return or profit gained for the capital employed or invested. It is represented by the equation

                                          Profit before Tax
                                         Capital Employed.

It is the fundamental driver of business and economic growth. It is known as the Return On Capital Employed (ROCE). To get no return is not an option in business.

This kind of growth is a problem for its disciples appear to recognises no limits to growth; this is true even when society, nature and the planet suffers because of too much business growth. Because growth causes so many problems, degrowth is now being seriously proposed.

The Club for Degrowth as featured on The Worldwatch Website

The Club for Degrowth argues that degrowth is essential for over-developed countries such as the USA and the UK. But does this mean that businesses in such over-developed countries will stagnate or wither? No - not at all…. but we do need to reconceive what is actually happening.

For example, if we first reconsider the above ROCE equation, the “Profit before Tax” and put it into the context of the world that science now reveals. The world that science now reveals is complex with many inter-dependencies,  interactions and uncertainties. To encourage businesses to focus upon “Profit before Tax” in this complex world is like asking a tourist to navigate a rain-forest using a map of London.

The “Capital Employed” for any business is not just money invested. All businesses use functioning societies and environmental inputs and necessarily create their space in the planet’s eco-systems. This has always been the case, but for too long the formal information systems of businesses focused far too much upon money transactions alone and simply did not see the social and ecological relations upon which they depend.

In the complex, interactive, interdependent and uncertain world that we now know and experience, our businesses need to generate benefits according to more than one metric: they need to deliver a Triple Top Line (TTL) (McDonough and Braungart 2002) of social, environmental/ecological and economic gains. To achieve this goal, the ROCE equation needs to be recognised for what it really is, just one of the many tools now available to assess business performance in a Sustainability Balanced Scorecard (SBC).

The Sustainability Balanced Scorecard prepared from the ISIS (Cloverleaf) Concept
(ISD Book 2011, p. 297).

References
ISD Book. (2011). "Intrinsic Sustainable Development: epistemes, science  business and sustainability. Singapore: World Scientific Press.

McDonough, W. and Braungart, M. (2002). "Design for the Triple Top Line". Charlottesville, Virgnia: McDonough Braungart Design Chemistry. Available at <http://www.mcdonough.com/writings/design_for_triple.htm>. [Accessed December 2012].