Wednesday, September 22, 2010

Hershey's real real CSR report

Christine Arena, CEO of SparkUp and great CSR author, blogger and #CSR Debate moderator, made me aware on Twitter of the "real" Hershey report. And that is well worth a blop (= blog post for those not used to my lingo. Yet).

Let's set the scene:

First, Hershey, with great fanfare, published their first ever CSR Report (GRI Level C). This is the real report. This report, as might be expected, presents Hershey's strong commitment to Corporate Social Responsibility in all aspects of its operations, including management of the Hersey supply chain and cocoa sourcing.

Second, a group of activists and campaigners for human rights including Global Exchange,  Green America, The International Labor Rights Forum and Oasis USA  published a mock CSR report attacking Hershey for human rights abuses in the production of cocoa. This is the real "real" report. In this report, the campaigners focus primarily on what they allege to be forced labor, child labor and trafficking  in the Hershey supply chain, greenwashing regarding charitable and community activities in West Africa which mask the underlying human rights problems and urge Hershey to increase transparency and adopt full sourcing of Fair Trade Certified (TM) Cocoa. 

So which is the real real real report ?
First a look at both reports and then some perspectives of my own.

The real report


The report published by Hershey confirms that the Company is no stranger to CSR, in fact the story goes that when Milton S. Hershey started the firm that would become The Hershey Company in 1984, he conducted his business according to the following principles:

**  make and sell a high-quality product at a fair price
**  provide meaningful work and fair wages to employees
**  give back to the communities where the company operated
**  be a good steward of the land and its resources

The Hershey report follows the Quadrant Model (marketplace, workplace, environment and community) and, despite no evidence of materiality thinking and proiritization, the key headlines are covered in greater or lesser detail. These include promoting responsible consumption of snacks and treats as part of a healthy lifestyle (really?), supplier diversity, nutrition labelling and nutrition research (how many phytonutrients in your daily diet, hmm?), promoting health and fitness, marketing with integrity, plus all the regular disclosures and case studies relating to environmental stewardship, repsonsible workplace and community contribution. There is a two page section on "Addressing the Challenges in Sourcing Cocoa" which reconfirms Hershey's commitment to  "embrace our responsibility to ensure that the cocoa  we buy is grown and harvested in a sustainable manner. That means encouraging a cocoa supply chain that provides adequate incomes to small cocoa farmers, advances efforts to promote responsible labor in cocoa-farming communities, promotes gender equity and protects and preserves the environment." All in all, Hershey says, through their efforts in West Africa, "Hershey and its industry peers have made a positive impact on an estimated 500,000 farmers and their families—about 2.5 million people altogether."  There is no doubt that this is a good news report, very skillfully copywritten, designed to paint a very rosy picture of the Hershey Company. Its transparency is limited to the direct impacts that are non-controversial in terms of disclosure and the report is not assured. Nonetheless, it  does demonstrate a certain level of CSR commitment and practice, which cannot be denied.

The real real report



This report represents the "dark side" of Hershey's chocolate production and focuses on four key issues, alleging that:

First: In sourcing much of its cocoa from West Africa, Hershey does not have a system in place to ensure human rights abuses are eliminated.
Second: Hershey does not disclose its cocoa suppliers in West Africa, therefore making it difficult to monitor human rights issues.
Third: Hershey engages in greenwashing by reporting on charitable programs whilst masking underlying supply chain abuses
Fourth: Hershey does not adopt the Fair Trade Certification for Cocoa, "the strongest certification system available" for all but one of its chocolate products.

The report refers to a shareholder resolution submitted in 2006 to Hershey, that was rejected, to push Hershey into reviewing and reporting on supply chain sourcing and addresses why Hershey is purchasing from "the three companies,Archer Daniels Midland, Cargill, and Nestlé, which are involved in the ongoing lawsuit in US courts on child labor claims". Similarly, the alternative report looks at leading practices in cocoa sourcing and commitments by other manufacturers and shows how Hershey is lagging behind. Additionally, the report makes recommendations to Hershey for resolution of this issue through to the year 2022.

The real real real issues

So what should we make of all this?  Here are some thoughts:

Whether you are transparent or you are not transparent, you are transparent.
No company can hide from transparency. It's either forced or it's voluntary. In the same way that Gap Inc and Nike and others realised that the only way to gain benefit from transparency is to embrace it and work with it, so Hersheys, sooner or later, will have no option but to go this route. Whilst a first CSR report is a step in the right direction, transparency on the most material and critical issues cannot be avoided.

Don't cherry-pick at stakeholder engagement 
Hershey lists the stakeholders they engage with in their CSR report, which includes interest groups, NGO's and the World Cocoa Foundation (established in 2000, Hershey is a founding partner), but they don't drill down into the details of their engagement. The coalition of human rights activist groups who wrote the alternative report don't appear to rate this foundation, which focuses on good work without the same activist edge. In deciding whom to engage with, a company should not cherry-pick around who to talk to. If you do not engage with your strongest critics, you are at risk of them engaging you in a way you may not have anticipated. On the other hand, engaging with such critics may well provide a platform for your business to create new commercial opportunities and longer term sustainability.

Communications should be balanced
Both the real report, which is good news, and the real real report, which is bad news, are guilty of imbalance in communications. Both tell one story only. The one which advances their agenda. And let's make no mistake. The profit agenda of a corporation and the non-profit agenda of NGO's are also driven by people with personal interests and much to gain, one way or another. This approach to one-dimentional reporting undermines the crediblity of both players in this sad scenario.

Convert words into action
There is no doubt in my mind that, even if Hershey people have an adequate defense to the allegations in the real real report, they must respond and disclose an action pan to address the issues raised. Whether or not everything is true, or not, there is surely something that Hershey can accept as a way forward. I don't believe that Hershey can maintain a credible  CSR positioning without doing this. The first response should be a public invitation to the real real report authors to meet with Hershey leadership and table all issues at a facilitated conversation in open and positive spirit. Wow. That' s a conversation I would be happy to facilitate!

This story reminds me of two other anecdotes:

The story of the Hershey Trust decision to sell the Hershey Foods Company to the highest bidder, which was recounted by Andy Savitz in his book, The Triple Bottom Line. The story is amazing and shows how Hershey blundered through a process that caused stakeholder uprisings and ultimately had to back down, "squandering valuable social capital". Hmm. A lesson not learned, it seems.

The story of Starbucks and the Ethopian coffee farmers, which was the subject of an Oxfam led  campaign, which went pretty viral with people from all over the world posting videos in support of Ethiopian farmers, eventaually forcing Starbucks to give in. Starbucks did, and went on to build stronger reciprocally positive relationships with Ethiopian coffee farmers. A lesson learned, apparently.

Seems like Hershey has a knack for doing things the hard way. At least, as I have a few (ok, a lot of) pounds to shed, I wont have to ponder the issue of whether to eat Hershey's chocolate or not, for the time being. I will be watching for Hershey's to respond, however. Hopefully they will do so before my diet turns once again, into the tomorrow diet. Haha.

(Oh, and in case you are wondering, I did write directly to Hershey with my queries about this issue. I hope they have something to say).


elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict, author of CSR for HR: A necessary partnership for advancing responsible business practices.  Contact me via www.twitter.com/elainecohen  on Twitter or via my business website www.b-yond.biz/en  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

5 comments:

Colin Dey said...

Thanks for the interesting post - readers may be interested to know that academic research in this area (surrounding what we refer to as 'shadow' accounts) has studied similar examples of contests between corporations and NGOs. The Centre for Social & Environmental Accounting Research has a good introduction to the subject at http://www.st-andrews.ac.uk/~csearweb/aptopractice/silentacc.html.

elaine said...

thanks so much , Colin, for this. I wasnt aware of this interesting work. I checked out the site and it looks fascinating. I will be looking at the shadow reports in detail as soon as I can. I can think of quite a few companies I would like to shadow-report as well!

Warm regards, elaine

Lavinia Weissman said...

I learned about the Milton Hershey school tonight watching one of my favorite shows (produced by ABC- which owns Disney).

The show is Extreme Makover and tonight they were featuring a project for educating kids in a residential based program. Hershey was a an ad sponsor and advertised how they raise money out of every Hershey product to donate to the Milton Hershey School

See this link: http://en.wikipedia.org/wiki/Milton_Hershey_School

This school has 1818 kids in residence and will grow to supporting 2100 kids by 2013.

These residential programs that I learned about tonight on Extreme Makover are fulfilling a single mom's dream (like my own dream) to know her kids is safe and educated.

There was a very strong recognition in the presentation that these residential programs are so key for kids to have an environment of safety in which they can learn.

I have live in two unsafe neighborhoods raising a child a lone. One was a poor neighborhood in Boston MA - Mission HIll.

but the other was one of the most wealthy communities in America and home of Apple Computer, Cupertino MA

There were gang fights in the schools in Cupertino and issues of harassment and kids who went hungry.

Hershey is paying attention to a need in America that so many deny seeing or deny entirely.

Until you are a person in a country where you cannot assure your kids safety, you just cannot know the value of what Hershey is providing in America when so many of us think this is a problem in India and Africa and direct our support there.

Bravo, Hershey.

Anonymous said...

Some great points here, especially regarding definition of stakeholders/including critics at the table, clarity about materiality and increasing depth on abusive child labor reporting. A bit more digging into the details/agendas behind both reports could help. For example, one thing that struck me about the Hershey report was the lack of real data in most areas, apart from some environmental and charitable. This seems like a big area for improvement for them.

As someone who has been engaged in broader supply chain labor issues for some time, I'm also aware that the report authors were behind both the shareholder resolution and lawsuits, which may be biased as well. Hershey established a supplier code in response to a resolution from a group of responsible investors and faith-based groups so they've engaged. In their ongoing activities, the report authors don't seem to act in a way that builds trust - they're selective in what they share, overlooking industry reports about progress on the issue, misrepresent facts, come to their own conclusions without full foundations and seem opportunistic - rushing out a report countering Hershey in one day being a case in point. As you rightly conclude, both can improve and it's essential for the greater good that they do so.

elaine said...

Hi anonymous, thanks for reading and thanks for your iput. We have been consitioned to believe that everything we hear from NGO's is the absolute truth, but, as you pointed out, there night also be an element of opportunism at play as well,
regards, elaine

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