Embedding corporate responsibility in sustainability strategies

Embedding corporate responsibility in sustainability strategies

On the occasion of the 4th Commodities Global Summit organised by the Financial Times in Lausanne on 13 and 14 April 2015, the leading traders in agricultural products, including Cargill, Olam and Barry Callebaut, wholeheartedly agreed on the importance of sustainability.

The CEOs of the leading trading companies are calling for sustainability on the basis of the following observations:

Firstly, companies recognise the major impact of their activities on the environment, local populations, access to water and land, and consequently on the living conditions of populations in the producing countries in general. This responsibility was also stressed, during the discussions at the Beau-Rivage, by Mick Davis, CEO of Xstrata until its merger with Glencore. After decades of denial, the recognition by the traders of their responsibility for the impact of their activities on the populations of developing countries producing commodities can only be welcomed.

Secondly, these same companies recognise that their reactions to civil society campaigns – e.g. denouncing deforestation in Malaysia and Indonesia, or even child labour in cocoa plantations in West Africa – resulted, initially, in limited philanthropic actions, such as the construction of a school or a clinic, along with numerous communications and CSR reports.

It is only in a second step that "ambitious" but limited sectoral initiatives were launched, such as the Roundtable on Sustainable Palm Oil (RSPO) and CocoaAction, which is supported by the eleven main players in the value chain, including Cargill, Nestlé and Barry Callebaut. Companies now want to move beyond this reactive stage and to develop "100% sustainable" value chains. The leaders, including commercial banks (ABN Amro), have themselves noted that pressure on brands and reputational risks are moving up the production chain, which means that they need to develop a far more "upstream" approach to sustainability, through social and environmental impact studies. They therefore advocate dialogue with communities and sustainable management of land, water, etc. They are calling for sustainability to become a "strategic imperative", to be embedded throughout the trading companies' value chains.

The convergence of these arguments with the instruments recently adopted by the United Nations and the OECD on corporate responsibility is striking and welcome.

This is exactly the approach that is defined in the 2011 UN Guiding Principles on Business and Human Rights, and again in the 2011 OECD Guidelines for Multinational Enterprises. At the heart of these instruments, approved by the Swiss government, is indeed the establishment of a due diligence procedure, whose primary objective is to identify, prevent and remedy any negative impact on human rights by companies throughout the value chain and to report on the measures taken, thus a primarily preventive goal.

States, the private sector and NGOs broadly agree on these international standards that codify, in detail, what States are able to require of undertakings operating from their territories with respect to human rights and the environment.

But these principles still need to be effectively applied by enterprises in order not to remain a dead letter.

On 21 April 2015 a broad coalition of Swiss NGOs, including SWISSAID, launched a popular initiative aimed at making a "due diligence" process compulsory in Swiss law, requiring companies to respect human rights and the environment in all of their business activities to ensure the effective implementation and operation of these principles at the heart of their business strategies. Such a binding regulation would form the basis of companies' responsibility in terms of their sustainability strategy. The practical arrangements for this due diligence may be established in close cooperation with industry, so as to integrate the specificities of each sector.

Sustainability needs to leave the stage of communication (only) in order to become rooted in risk management – for the sake of the environment as well as for the human rights of the populations concerned – and in corporate compliance, and therefore become an integral part of the highest level of strategic decision-making within companies.