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 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)

Reporting by association

Another trend we can see building momentum in susty reporting these days is the number of industry associations that report on sustainability. Industry sector reports are a fascinating breed. They are a sort of publication du jour for these associations, offering them a fun marketing ride on the back of sustainability. At one level, the industry association's purpose is to promote the sector - that's what members pay them to do - so inevitably sector reports are good great news and marketing oriented.  At another level, their reports address the collective sustainability challenges that sectors face and therefore may loosely be described as some kind of sustainability report. By and large, they tend more toward the marketing end than the reporting end, but they are often nice publications which can give you a good overview of the material issues in a particular sector and the general approach being taken to address such issues. They also help you to become familiar with the sustainability jargon of the sector. Great for jargon geeks.

The Consumer Electronics Association (CEA) published a 2010 Sustainability Report, its second, in which it highlights how the "consumer electronics industry is acting boldly and continuing to raise the bar in addressing environmental and societal challenges." (No surprises so far, right?).  The CEA promotes growth in the $170 million U.S. consumer electronics industry through its 2,000 members and the report includes data and case studies from published fiscal year 2009 sustainability reports for the 10 largest companies in CEA membership from a global revenue perspective (Dell, HP, LG Corp.,Microsoft, Nokia, Panasonic, Philips, Samsung, Sony and Toshiba). Well worth a look to get a quick view of the nitty-gritty issues for this sector. And as for jargon, the CEA has an eCycling initiative, sales growth of EPEAT products, green lubricants for shredders, the green grid, power islands and more.  

Another mine of interesting information (if you're a beef geek) is the National Cattlemen's Beef Association  (NCBA) who recently published the Cattlemen's Stewardship Review, which as far as I can tell is their first.  It is dedicated to "the nearly 1 million U.S. cattle farmers and ranchers who work hard every day to raise good food, keep their animals healthy, protect the land and environment and build strong communities". An interesting fact is that 97% of all cattle ranches are family owned -  we tend to think of beef as a highly commercialized industry but when you get down to where it all comes from, its about good people trying to make a  sustainable living with "cattle-raising traditions passed from generation to generation". More than 10% of cattle farmers and ranchers are women :). The U.S. Beef industry produces 20% of the world's beef with only 7% the cattle. For the health-minded, you can also learn that a sirloin steak has 34% less total  fat today than it did in 1963. The report is a nice overview of the beef industry and the key sustainability issues relating to beef life-cycle, animal care, educating consumers about beef and healthy diets, antibiotics use and disease, and environmental aspects such as use of land and water, managing manure though methane emissions from cattle are barely referenced. And for the jargoneers, BQA , the Code for Cattle Care, beef fabrication innovation opportunities, retail meat case knowledge, beef shoulder clod, the DASH diet and more should enrich your vocabulary. 

My final example today is where green turns to yellow, or vice versa, with the Yellow Pages Association's first Sustainability Report. The YPA is the "largest trade organization of a print and digital media industry valued at more than $31 billion worldwide" and it's report is a 16 pager, which goes straight to the jugular of the YPA's main business to consider the Life Cycle Assessment of a Telephone Directory (what's one of those, remind me?) though disappointingly, the report does not reveal any data from a directory LCA assessment that the was conducted by the National Council for Air and Stream Improvement (NCASI). The key conclusions are that the main components of a Telephone Directory Life-Cycle are paper production, printing,  and end of life management (interestingly, distribution is not mentioned). But this is report is flimsy and not terribly informative and closer to the bon ton marketing brochure which any self-respecting trade association cannot now be without. Jargon lovers will enjoy consumer search habits, recovery rate of directories, coldset ink, ZIP code, waste paper landfill leachate and more.  

Despite Sector Sustainability Reports being interesting, they provide only a very shallow and high level view of what's happening in an industry sector. Indeed, this is one type of report that the GRI framework accommodates less well. Often the direct impacts of the Association itself are limited. The power of an Association is in the leverage of its membership and its ability to influence new directions. I think this is an something that could benefit from a GRI sector supplement to help address the different ways Industry Associations could report more effectively on sustainability.

In the meantime, I wonder if the Global Ice-Cream Manufacturers' Association will be publishing a Sustainability Report this year? Free ice cream for everyone who reads it ?

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)