Monday, August 1, 2011

Sustainability due diligence... over coffee

One of the things I always wonder when I hear about acquisitions of smaller companies by larger companies is to what extent sustainability due dilligence formed part of the acquisition deliberations and whether an assessment of social and environmental risks was included in the analysis and final decision to buy. So when today, I learned of Strauss Group's acquisiton of the Russian Ambassador Coffee brand, my first thoughts went to whether this new purchase will be a sustainability asset or a sustainability liability. Strauss Group is developing its sustainability journey and coffee is an important and highly strategic part of the company's portfolio. Strauss's most recent sustainability report can be found here.
A review of the Ambassador brand website reveals values:  Professional, Open minded, Ethical, Trustworthy, Competitive, Smart and also that all coffee processing from harvesting to transportation of beans is certified by the FNC (Federacion Nacional de Cafeteros de Colombia)- a Columbian state body, founded in 1927 as a business cooperative that promotes the production and export of Colombian coffee, representing more than 553,000 coffee growers, most of whom are small family owned farms of less than about 4 acres.

What is also interesting about the FNC is their Sustainability Report, which covers eight decades! Yes, that's right. Most companies have trouble reporting sustainability performance for one year, but the FNC has managed to cram the years 1927 - 2010 into one report of 175 pages. You can download it here. It's a first report of the Federation and includes a GRI Index and actually, probably anything you ever wanted to know about Columbian coffee. One learns so much from Sustainability Reports, as I have said before on this blog.
So here's an example - a  little Columbian coffee quiz (Answers below. No prizes. Just answers):
  1. What is a coffee cherry?
  2. What is Juan Valdez's mule called and what does she remnind us of?
  3. Who is Juan Valdez?
  4. What effect did corn and bean intercropping have on coffee growers' income in 2010?
  5. What is intercropping?
  6. What actions can be taken to preserve coffee quality and contribute to the sustainability of coffee growing regions ?
  7. What is the most popular flavor of ice cream in Columbia?  
The FNC report is primarily a good news report about the activities of the Federation to preserve, protect and promote the Columbian coffee industry, ensuring fair prices and added value options for specialty coffee and sustainable livelihoods for the coffee growers of Columbia, as well as encouraging the development of environmentally friendly cofee growing. After a brief glance at the report, it does seem that the Federation is making a positive difference. While this type of report does not quite conform to the GRI framework as it refers to a sector rather than one company, and relies on case studies and stories rather than actual data about the impacts of the sector, it does offer some interesting insights into sustainability issues and challenges in the coffee business in Columbia. Perhaps the real power of a Federation such as this whose members are small family operations would be to actually harvest data from the member companies on certain social and environmental parameters to measure sustainability impacts accross the board. I have written about association- type reports also in the past. It's a delicate balance between a sector marketing effort and a materiality driven sustainability performance report. The FNC's report is pretty much like most of the others, tending towards the marketing end.

Anyway, I wonder if the team at Strauss Group who finalized the Ambassador deal read this report or considered sustainability aspects of this newly acquired business prior to signing away $10.4 million. Perhaps in terms of coffee sourcing, there maybe cause for optimism, but this, of course, is only one aspect of the overall deal. 

And for those of you who have waited patiently for the Quiz Answers, here they are:

  1. The fruit of the coffee plant which is picked when ripe. Each cherry contains 2 coffee beans.
  2. The mule is called Conchita and she is a reminder of the challenging mountain topography that produces mild Colombian coffee.[Sic].
  3. The icon of Columbian coffee, created in 1960, representing trust and family values. 
  4. It made them an additional $123 million.
  5. Coffee trees can be planted in an overlapping, inter-mixed fashion, called intercropping, with other plants such as tamarillo fruit trees, plantain, blackberry and cocoa trees, among others. Some of these crops, such as corn and beans, help to increase the productivity of the land.
  6. Planting across slopes to help avoid soil erosion; reliable seeds; ecological seed-beds; pest, disease and weed control; shade-systems for coffee cultivation; environmentally friendly milling processes which use less water and result in less waste water.
  7. Chunky Monkey. Coffee flavor. Of course.  

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

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