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February 05, 2001
Oekom Measures Food Industry's Appetite for Corporate Social Responsibility
German research firm publishes a study on the social and environmental performance of international
food corporations.
SocialFunds.com --
Consumer confidence in the food industry has been shaken by the controversy over genetically
modified organisms (GMOs), as well as by scares such as e-coli poisoning and mad cow disease
(bovine spongiform encephalopathy). Oekom Research AG, a corporate social research firm based in
Munich, Germany, recently analyzed the social and environmental performance of some of the major
multinational producers. While the wide range of scores on various criteria were not surprising,
the lower-than-average overall score suggests the industry can do better.
 Oekom applied its Corporate
Responsibility-Rating (CRR) to the 18 companies that agreed to participate in the assessment.
Compared with other industries, the participation rate of the food industry in this study (64
percent) was about average.
The scoring range was from A+, which represented companies
that "are especially progressive in the social/cultural as well as the environmental realm" to D-,
which was defined as "hardly any noteworthy social/cultural or environmental activities could be
identified."
The highest overall score in the survey was a C+, a grade that three
companies received. Ranked one, two and three respectively, the companies were U.K.-based Allied
Domecq, Procter & Gamble, and Gillette. Thirteen companies received scores ranging between C and
D+, and two companies, ConAgra and H.J. Heinz, received the lowest grades of D.
Oekom's
CRR "is based on a comprehensive set of criteria especially developed for the ethical and
ecological assessment of companies." The overall score is derived from combining a company's
social cultural and environmental ratings.
The social cultural rating is based equally on
a company's treatment of its employees and a company's responsibility toward external stakeholders
and society as a whole. The criteria for calculating the environmental rating include
environmental management, environmental data, and the environmental aspects of a company's products
and services.
On average, companies scored better in the social cultural area of the
study. Regular employee surveys, innovative social services, and employee diversity were among the
areas in which some companies excelled.
Conversely, researchers found a major negative
point to be a lack of monitoring or enforcement of standards for foreign suppliers. McDonald's and
Sara Lee were two of the companies cited as having regular and efficient monitoring of supplier
labor policies around the world. The researchers noted that "in general, reporting tools are
inadequate and only a few companies (e.g. Procter & Gamble) were able to provide us with a social
report covering working hours, employee benefits, workplace diversity, etc."
There seemed
to be a similar difficulty with environmental reporting. Allied Domecq, Unilever and Cadbury
Schweppes are some of the firms that regularly compile thorough environmental reports, but
researchers quickly found that different methods are used to present data. These disparities
highlight the need for common reporting standards.
The study also indicated companies are
generally continuing to rely on industrialized production methods. No companies are sourcing raw
materials from organic farms or sustainable fisheries, and most producers are not considering
farming that minimizes the use of chemicals. Some firms, however, have some forward-thinking
initiatives. To counter dwindling fish stocks, for example, Unilever has partnered with the World
Wildlife Federation to establish the Marine Stewardship Council (MSC) labeling system. Unilever
says it will be using only MSC-certified fish products by 2005.
On other environmental
issues such as animal welfare and genetic engineering, few companies stood out as environmental
leaders. Of all the companies surveyed, McDonald's was the only one found to be promoting more
humane methods of animal husbandry among its suppliers. Multinational food companies generally
have embraced genetic engineering, with 16 of the 18 companies surveyed offering products with
genetically modified organisms. The two that do not are Allied Domecq and Germany-based Sudzucker.
It seems that in the media, discussions of food industry social responsibility usually
focus on only the products. The average overall score of C- for the industry seems to indicate
there is much room for improvement in all areas of corporate social responsibility. Given the
impacts multinational food corporations have on public health, the environment and foreign
suppliers, social investors should take notice of the good and bad performers.
http://www.oekom.de/index_english.html
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SRI World Group, Inc. All Rights Reserved.
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