Sustainability news links - Nespresso sustainability, BBC complaint, Greenpeace losses

University of Michigan MBA students win competition to inject sustainability into coffee production - video; "The 2014 Nespresso Sustainability MBA challenge, which aims to find new ways to inject sustainability and shared value into the coffee industry, saw 70 MBA schools worldwide take part. Students from Yale School of Management were one of two runners-up, recognised for their strategy to combine the goals for carbon reduction of both Nespresso and coffee producing country Costa Rica." http://www.theguardian.com/sustainable-business/video/university-michigan-mba-nespresso-sustainability-challenge-2014-coffee-video

Common sense prevails as BBC upholds Today programme climate complaint. BBC's Editorial Complaints Unit concludes interview with Lord Lawson and Professor Sir Brian Hoskins on climate change and floods broke guidelines on due accuracy; http://www.theguardian.com/environment/blog/2014/jun/26/commonsense-prevails-as-bbc-upholds-today-programme-climate-complaint; " Lawson made inaccurate and misleading statements about the science of climate change as he had done so in previous appearances on its programmes.
Furthermore, he was no doubt invited to participate in the interview on Today because he rejects the scientific evidence and chairs a campaign group for climate change ‘sceptics’, the Global Warming Policy Foundation...."

Greenpeace losses: leaked documents reveal extent of financial disarray; Emails and meeting notes show group’s finance department has a long history of problems in its handling of the £58m budget,
The Guardian, Monday 23 June 2014 10.09 BST; "The handling of Greenpeace International’s £58m budget has been in disarray for years, with its financial team beset by personnel problems and a lack of rigorous processes, leading to errors, substandard work and a souring of relationships between its Amsterdam headquarters and offices around the world, documents leaked to the Guardian show.
Coming after it emerged that a staffer had lost £3m on the foreign exchange market by betting mistakenly on a weak euro, the documents show that the group’s financial department has faced a series of problems, and that its board is troubled by the lack of controls and lapses that allowed one person to lose so much money.... Greenpeace, which prides itself on being largely funded by relatively small individual donations, apologised to supporters for the loss, claiming that the “serious error of judgment” was the result of a single staff member “acting beyond the limits of their authority and without following proper procedures”. But the documents show that internally the group is worried about the organisational failings that allowed it to happen....The leaked material seems to show disquiet over a continuing major restructuring, aimed at moving staff from Greenpeace International’s base in Amsterdam to national offices across the world to fulfil Naidoo’s goal of better tackling environmental problems in the global south. “This [2014] will be a testing year for all of us,” the strategy document warns....Gerald Steinberg, president of NGO Monitor, which seeks to make NGOs more transparent and accountable, said he saw parallels with the financial problems Amnesty International had experienced in recent years. “The extent of it [the financial problems] was not something I expected [at Greenpeace]. But it’s part of the fact that NGOs keep things very much within the organisation; there’s no culture of accountability. They call on governments to be accountable but they lack this in so many ways, so in that sense it’s not a surprise.”... http://www.theguardian.com/environment/2014/jun/23/greenpeace-losses-financial-disarray

To target Greenpeace's flying director is to miss the point, It's easy to set green against green, but the charity's problems run wider and deeper than one person's travel plans, The Guardian, Wednesday 25 June 2014; http://www.theguardian.com/commentisfree/2014/jun/25/greenpeace-flying-director-green-charity

Nielsen survey finds sustainability boost sales, sustainable consumption ranks #12

Khor Reports: An interesting ranking of CSR topics of "extreme concerns" in this Nielsen retail survey, where clean water and sanitation come up tops, and environment and biodiversity come #3 and #11 and "increasing the focus of sourcing products we consume sustainably" comes in #12 and benefiting local communities #20. The top ranking CSR topics are mostly traditional development concerns including child mortality, maternal health, disease, and disaster relief. Various commodities are shifting toward sustainable supply-chains, so it's interesting to see the ranking of their core targets relative to other concerns.

What's also interesting is Nielsen's recommendation to use KPIs and quantify program outcomes. There is seems to be a rising dissatisfaction from both growers and buyers that sustainability programs are of uncertain macro benefit. Many industry specialists think that commodity sustainability programs are part of the non-tariff barrier trend and used for commercial advantage[1] by various industry players. One buy-side industry sustainability expert I spoke to very recently said this: "imagine if we took all that money spent on (palm oil sustainability) certification, supply-chain mapping and so forth and just spent it on the ground (on traditional CSR programs)...."

[1] Note Nielsen's research finding of "average annual sales increase of 2 percent for products with sustainability claims on the packaging and a rise of 5 percent for products that promoted sustainability actions through marketing programs. A review of 14 other brands without sustainability claims or marketing shows a sales rise of only 1 percent.."


Consumers Believe They're Eager to Pay More for Do-Gooder Products  By Venessa Wong      June 20, 2014; http://www.businessweek.com/articles/2014-06-20/consumers-believe-theyre-eager-to-pay-more-for-do-gooder-products

Even the most earnest social-responsibility efforts are often tied deeply to corporate marketing goals, a long-standing link that appears to be growing stronger. Research by Nielsen (NLSN) has found that consumers are attracted to such initiatives and are even willing to pay additional money to satisfy do-gooder instincts. For companies, it seems that doing good is an increasingly viable sales strategy.
In Nielsen’s online survey of 30,000 consumers in 60 countries, 55 percent of respondents said they would pay more for products and services from companies committed to positive social and environmental impact. The age group most likely to say they’d pay a premium: millennials.... “Precision marketing and knowing your consumers intimately will yield the greatest results,” wrote Amy Fenton, Nielsen’s global leader of public development and sustainability.... Labels are a marketer’s best friend, as food companies discovered when consumers said they would pay a premium for claims such as “locally sourced” and “certified organic.” ...consumers’ top concern: The world’s premium-paying consumers cared most about access to clean water, Nielsen found, followed by access to sanitation and environmental sustainability.....

The Nielsen research found, in a retail analysis, that sales of products marketed as socially responsible grew more quickly than those of comparable products: “The results from a March 2014 year-over-year analysis show an average annual sales increase of 2 percent for products with sustainability claims on the packaging and a rise of 5 percent for products that promoted sustainability actions through marketing programs. A review of 14 other brands without sustainability claims or marketing shows a sales rise of only 1 percent.”

To capitalize on sustainability initiatives, Nielsen offers companies this road map:
1. Vision: Be clear, practical, and global.
2. Endorsement: Get adoption and action from senior leadership.
3. Strategy: Focus on outward messaging and consistent cause messaging.
4. Accountability: Use key performance indicators, internally and externally.
5. Measurement: Quantify program outcomes and return on investment consistently across markets.

Interview #1: Presidential politics and Indonesian palm oil

We've been chatting with Malaysia and Singapore palm oil industry specialists and noticed significant interest in the upcoming Indonesia Presidential vote. Early in the week, we had the opportunity to talk to a Khor Reports reader who was interested to talk about it, and so we present to you this interview. 

Political changes can bring major shifts in resource development policies as well as a different approach to NGOs such as seen in Australia. On the buy side, in major consuming countries, we should note the rise of right wing nationalistic parties who gained more power especially in the European Parliament.

Interviewee #1: Indonesian voter, palm oil industry senor manager, who was part of the student demonstrations in the 1998 ousting of Suharto. A Jokowi supporter.

#1 on the Presidential ballot is Prabowo-Hatta  and #2 is Jokowi-Kalla. The Presidential election is on 6 July 2014 (in just over 3 weeks time). 

graphics source: http://www.kpu.go.id/index.php/post/read/2014/3337/Daftar-Pasangan-Calon-Peserta-Pemilu-Presiden-dan-Wakil-Presiden-Tahun-2014

What do you think of the recent poll numbers?
40% of Indonesia voters are undecided. Jokowi has a 10% lead. In the USA that would be a win, but Indonesians can decide at the last minute. Indonesians won’t take your money and vote for you like what we hear about Malaysia. There was a famous case where Rp 150,000 (US$14-15) bribe was given at a local election – that candidate just got three votes and he hired a debt collector to try to get back his money!

What's an important issue in Indonesia elections?
A major political lesson from 1998 is not to let food staples prices get out hand. Indonesia pays attention to "sembako"[1] which comprises 9 items, including rice, flour, eggs, milk, oil, sugar etc.  

What is Prabowo's plaftform?
He says that Indonesia is weak. Its riches has been taken by others. Indonesia has been bullied by Malaysia, Singapore, USA and others. It needs a strong leader who can say no and stand up to them. Like in the old days. He tells voters that Indonesia’s riches will go back to Indonesians. He will start nationalising industries. On corruption: he proposes to increase civil servants pay. On plantations: 5 million more hectares should be developed – you don’t need to conserve forest as this retards economic development. Prabowo is funded by business conglomerates, including his brother’s. He also gets money from Bakrie, and MNC media (he’s featured on 5 out of 6 major TV channels; only 1, Metro[2] features Jokowi).

The younger generation demonstrated on streets to topple Suharto. I shall never vote Prabowo as he ordered protestors shot. The “Jangan Lupa” Facebook campaign aims out to remind people about what Prabowo did in the past. Pro Jokowi army insiders recently leaked information that Prabowo was fired and left under a cloud. He is suing the army for leaking that letter. I am still worried that people will forget what he has done. This letter is not featured heavily in the major news.

What does Jokowi stand for?
Jokowi is about transparency, anti-corruption and a new way of thinking. On corruption: he says that pay should be based on merit and that the government should put all information online for the people to see. On plantations: he's for stability for the environment and development. Jokowi is using Obama-style campaign funding[3] – social media funding. From such donations he has raised Rupiah 17.2 billion (US$1.45 million @11,835). He’s not on significant business funding. Now that he has some money, his posters are up all over. Prabowo is suing him as he says that Indonesian law does not allow such public financing.

Jokowi uses the “good cop – bad cop” approach. When he was Governor of Jakarta, his public image was to visit the people while his vice/deputy was the tough guy. Now, Basuki  is Acting Governor of Jakarta – he is an ethnic Chinese;
http://en.wikipedia.org/wiki/Basuki_Tjahaja_Purnama. Muslim parties had protested against having a Chinese governor but the public said it had no problem with this. Basuki is a no nonsense guy. 

Christian support is going for Jokowi. FPI is a vigilante group attacking churches, going around demonstrating for Shariah law, shouting at Muslim women not wearing a headscarf and vandalising stores selling Christian objects. FPI is publicly supporting Prabowo and seeking Shariah in several provinces. Jokowi is saying that Indonesia is a diverse country and will not be drawn into such religious Shia argument. Shariah is only in Acheh.  

How did the 9 June debate go?
In the presidential debate[4], Jusuf Kalla was placed as the attacker; Jokowi spoke first to set the vision and positive messages. The winner of debate was Kalla as he nailed Prabowo until he couldn’t answer on his human rights record. Some thought the presidential debate was against traditional (less confrontational) cultural modes. Some asked why Jokowi spoke from notes. Prabowo spoke 90% of the time and his vice/deputy had 10% speaking time. Jokowi took about 60% and 40% went to Kalla in debating time.

What are the implications for Indonesia palm oil?
On 5 million hectares for oil palm development - this is part of Prabowo's campaign and it was also from the Bakrie program. But this may not all go to smallholders and it may not be good for the (Indonesia-Norway) Moratorium.

On Indonesia CPO export duty removal rumour – the CPO export duty was supposed to go to the farmers and industry; but there’s not much proof of this. How much has been spent in this way? Many say that it did not even go to the Ministry of Agriculture. As an Indonesian voter, I would support the CPO export duty removal as we don’t know where the money goes. As a palm oil industry person, I would also support its removal as it would bring a level playing field to the industry.

On NGOs in Indonesia - Indonesia ministries are keen to do something about the NGO incursion in Indonesia palm oil. President SBY is widely seen as a supporter of Greenpeace. Its “License to Kill” report against Wilmar quotes SBY a lot. SBY has also visited the Greenpeace boat[5].  Under the next presidency – can TFT and Greenpeace move about so freely in Indonesia? A key SBY advisor is a Greenpeace member. Did this advisor bring the 20% carbon reduction policy? Such a self-imposed policy by a developing country is surprising.

Note: Graphics from Greenpeace in May-June 2013.

Khor Reports note: This precedes significant new palm oil buying policy by Unilever in November 2013 and Singapore-based Wilmar in December 2013 with The Forest Trust, associated with Greenpeace in palm oil first via its work with Singapore-listed Golden-Agri Resources / PT SMART (Sinar Mas). Despite the NGO-government engagement and NGO-corporate deals, anti-palm oil campaigns continue: Protect Paradise: An Animation about Palm Oil by Greenpeace, 19 Feb 2014: http://youtu.be/0o6WHN4NDTk and a video produced by the KBRI (Indonesian Embassy) of Brussels to fight against the anti-palm oil campaign. Protect Paradise For All: An Animation on Anti-Palm Oil Dirty Secret, 14 May 2014: http://www.youtube.com/watch?v=FQ5_ITx1JoU.

 
So there's concern in Indonesia about foreign influence amidst nationalistic feeling?
Foreigners are seen to be “campaigning” for Jokowi. Prabowo points out that Jokowi is accepting undue foreign influence. But there has been no evidence of foreign funding for Jokowi. Voters may notice he spends time with foreigners. For example, when Jokowi cycled to work, the Sweden and Norway ambassadors cycled along with him. Their embassies were not even near the Governor’s office.

A minimum 20% vote is needed to nominate a presidential candidate. PDIP got 18.9% and it had to build a coalition to nominate Jokowi. Prabowo got 11% and he had to build an even bigger coalition with the National Amendment Party who provides his VP. PDIP is a nationalistic party – it is founded on Sukarno’s idealism for diversity, nationalism, and a strong independent country. Prabowo has been talking a lot about this too. Jokowi will have a rising nationalistic streak. He cannot issue laws without coalition support.

Jokowi might try to limit what NGOs are doing in Indonesia, but he’s an open and transparent person, so he may put more limits on NGOs, but in a reasonable manner. Jokowi will run country like he did Jakarta – every meeting he and his vice /deputy has had is on youtube. Prabowo will be different.


Related news:
http://khorreports-palmoil.blogspot.com/2014/06/indonesia-presendial-race.html
http://khorreports-palmoil.blogspot.com/2014/04/australia-resource-industries-seek-ban.html
http://khorreports-palmoil.blogspot.com/2014/03/at-sidelines-of-poc-2014-1-on-new.html

Notes: 
[1] sembilan bahan pokok are nine basic materials abbreviated as groceries covering basic needs. Set out by the Minister of Industry and Trade as: 1. rice, sago and corn,  2. sugar, 3.vegetables and fruits, 4.beef and chicken, 5. cooking oil and margarine, 6. milk, 7. eggs, 8. mineral oil or LPG gas, 9. salt.
[2] Metro is owned by Surya Paloh, head of the National Democratic Party – who did not get enough votes in the first round results. He threw his support with PDI-P behind Jokowi.
[3] Some campaign funding information here - http://www.thejakartapost.com/news/2014/06/05/jokowi-kalla-ticket-collects-rp-42-billion-campaign.html
[4] Five debates are scheduled between June 8 and July 5. 9 June debate can be viewed here: http://www.youtube.com/watch?v=XYAvBPVRdcc and impact on voter sentiment is reported here: http://www.thejakartaglobe.com/news/presidential-tv-debates-impact-still-undecided/.
[5]  http://www.greenpeace.org/international/en/news/Blogs/makingwaves/in-the-same-boat/blog/45492/: "Just a few hours ago, we met the President again, but this time on our iconic ship, the Rainbow Warrior, which is winding up a one-month tour through Indonesia raising awareness about the need to protect Indonesia's forests and oceans. The President visited the ship with the First Lady Ani Yudhoyono, his daughter-in-law, granddaughter and nearly half his cabinet including Ministers of Environment, Forestry, Fisheries, Foreign Affairs, the Cabinet Secretary, head of Indonesian Navy, Armed Forces and Police. It is a remarkable recognition of our work in Indonesia and of course a validation of our work to protect the country's rich environment..." http://news.mongabay.com/2013/0607-sby-greenpeace-ship.html:  "Indonesian President Susilo Bambang Yudhoyono met with Greenpeace International Executive Director Kumi Naidoo aboard the activist group's ship, the Rainbow Warrior, today in Jakarta to discuss Indonesia's environmental issues. The meeting took place 31 months after the Rainbow Warrior was barred from Indonesian waters under pressure from interests in the forestry sector.  Remarks from the Indonesian president while aboard the vessel underline the country's policy shift in forest management since 2010…..

Note: In Indonesia, the President is directly voted by the electorate and it takes over 50% of the public vote to win. There is no mediation by an electoral college which exists in places like the US. In Malaysia the Prime Minister is selected by the coalition which won power (in Malaysia’s mal-apportioned, first past the post electoral system, there is disconnect between the public popular vote which went to the opposition but with majority of seats staying with the ruling coalition) The Indonesia legislature does not have power to select the president, but they can impeach him. The upper house is purely for constitutional matters.

 

Source: http://www.thejakartaglobe.com/

Sustainable palm oil - RSPO vs Greenpeace, Greenpeace targets, French nutrition policy, Club of Rome

On the recent RSPO meeting in Europe, interesting excerpts include the following, and we put contextual comments in blue:

the (palm oil) sector needs "violent endangerment" to keep the debate going

Marks & Spencer's sustainable development manager Fiona Wheatley: "food businesses and consumers didn't understand the impact emerging economics could fact if pressures to source 100% sustainable palm oil built too quickly... (RSPO) has created a lifeline between partners who have had not contact before... some companies and brands (are looking) for alternative partnerships[1]...  we need to make sure we have a stronger standard... we sometimes need those different opinions and a bit of violent endangerment to keep things moving... and aspirations high..." - this seems to refer to the RSPO vs TFT-Greenpeace competition over market share in sustainability programs. This has even resulted in RSPO issuing an open letter to ask TFT to collaborate with them. It is interesting that a duopoly in non-Europe biofuel certification is not thought well of and the monopolistic approach is preferred (different from what is seen in soy sustainability). Here RSPO's call for TFT collaboration: http://www.rspo.org/file/tft/TFT_RSPO_open_letter_FINAL.pdf  and Mongabay talks about it here: http://news.mongabay.com/2014/0527-rspo-tft.html.

Cynthia Ong of Land Empowerment Animals and People: "pressures from western (NGOs) such as Greenpeace, were frustrating producers in Malaysia and Indonesia... communities say they want to plant oil palm because it will put food on their tables and the best option we can present them is RSPO certification - ditto

Pat Vendetti, Greenpeace senior forest campaigner: "our focus is on ending deforestation and not tearing down the palm oil industry and the RSPO... another myth is there's a neo-colonial plot.. it's too convenient an excuse for the Malaysian government to trot out...we need to change the mind-set of the Malaysian government..." - sustainability is widely viewed from industry as a non-tariff barrier and it has raised such concerns that the WTO is trying to define "private standards" and that the UN is also looking it; as they note that these typically end up disadvantaging small and marginal producers.

Puvan Selvanathan, UN global compact head of sustainable agriculture (former Sime Darby): "all of the energy we put into debate.. could be better spent looking for a solution.. the message of doing a good thing is being lost in the heat and the emotion. It's a tough sell to have one group of people to tell you how to live your life..."  - in palm oil sustainability, the approach has been driven more by corporate to NGO negotiations (this differs from soy, where there is more government and industry association mediation, on the buy as well as the sell side). Although it is labelled as multi-stakeholder, there are some gaps: a) government is not involved, resulting in problematic differences in the private standard versus regulations and laws; and b) practitioners tell us that actual workings of working groups is that a handful of companies may represent the industry but with few updates to all fellow members, resulting in surprise new major policy administrative changes. Specialists reckon that NGOs set more dedicated resources to these negotiations than does the palm oil industry. Also, some point to the tendency that controversial topics (that growers disfavor) are escalated until they end up offered for General Assembly voting (where voting numbers and blocs are against growers); giving a sense of powerlessness to the minority growers who bear the cost of compliance. Notwithstanding these concerns, lead palm oil industry companies, especially those based in Malaysia and Singapore are leading the push for sustainable certification via RSPO or the new TFT non-certification program.

Robert Hoster, Cargill Refined Oils Europe trading director: "the whole chain needed to be involved in sustainable palm oil from the start.. we need to make sure we make sustainability more affordable.. we need to ensure its cost effective to grow..."  - this might refer to the approach taken by private standards to engage with corporations in order to effect faster change and the problem of the low level engagements with government. This is starting to worry politicians as sustainability is reaching the stage that large private standards and their commercial partners are pointing toward supply-chain shifts that may marginalize and/or bring complicated and costly certification to smallholders and farmers with small estates; note Australia beef worries here, http://khorreports-palmoil.blogspot.com/2014/05/politicians-worry-about-wwf-roundtables.html. Clearly they are an important voting base. We also heard earlier in the year that proposals by a smallholder certifying "technical NGO" to introduce loans to Indonesian palm smallholders (so that they can pay for the certification process and more?) has raised concerns among policy makers there. Cost of certification is a prime concern for small producers where it weighs heavier. For example, the RSPO costing for group smallholder includes some fees of US$10,000 periodically. It would be useful for the cost-benefit for smallholders to be reviewed independently.

 News link: http://www.foodnavigator.com/Market-Trends/Palm-oil-debate-in-quotes


Greenpeace indicates its latest strategy and targets here, http://www.theguardian.com/sustainable-business/deforestation-palm-oil-more-greenwash-greenpeace - Annisa Rahmawati is a forest campaigner at Greenpeace Southeast Asia: "Business as usual cannot continue - Greenpeace is deeply concerned that well-known players in the RSPO are pretending membership alone confers a glow of sustainability. It is waiting to see what public action the RSPO will take on the cases raised with it and how it will strengthen its standards.... In the meantime, Greenpeace demands prominent RSPO members including IOI, KLK, Musim Mas, RGE group and Sime Darby to stop the bulldozers and urgently implement a no deforestation policy. It will continue to push more palm oil consumers such as Kao (the Japanese personal care company behind brands such as John Frieda and Bioré) and others to clean up their supply chains.... To reach this tipping point has not been easy. Some elements want to portray the shift to responsible palm as an attack on the palm oil industry itself, as a call to boycott palm oil or a form or "green protectionism". To them, Greenpeace says this: don't ignore the crisis – don't ignore the fact that Sumatra is burning and Papua's pristine forests are disappearing. Recognise there is a problem, and choose to be part of the solution. Palm oil can be grown responsibly, and must make a genuine contribution to Indonesia's development."


At the same time, new proposals on French nutrition policy worries palm oil interests: "two French politicians, Senator Yves Daudigny and Senator Catherine Deroche, which is set to pose a major threat to Malaysia’s top commodity export in Europe, according to palm oil industry market observers.... Both Daudigny and Deroche had presented a report to the French Senate calling for an introduction of “behavioural” taxes on food and beverages deemed dangerous to the public health in France.... Nutella is a chocolate and hazelnut spread made by Italian company Ferrero that is extremely popular in France, which accounts for 26% (about 100 million jars) of the product’s world consumption.... However, thanks to the quick action and successful engagements by the Malaysian government and palm oil industry players, the Nutella tax proposal was gunned down in December 2012.... So this year, Daudigny is trying a new attempt to champion his cause by roping in Deroche to propose that all taxes of vegetable oils in France be “harmonised”.... http://www.thestar.com.my/Business/Business-News/2014/06/07/Another-antipalm-oil-drive-French-politicians-calling-for-new-taxes-on-food-and-beverages-deemed-dan/


On the big picture, it's interesting to see this:  Scientists vindicate 'Limits to Growth' – urge investment in 'circular economy'; http://www.theguardian.com/environment/earth-insight/2014/jun/04/scientists-limits-to-growth-vindicated-investment-transition-circular-economy