Can corporate social responsibility affect your company’s bottom line?

Nestl? share price drops

Your company’s share price can be negatively affected if you fail to behave responsibly in your business practices.

I have written here a couple of times about environmental risks companies could potentially face. This first time I wrote about this it was in reference to FaceBook’s decision to source the power for their new data center from a utility which uses coal-fired power primarily.

I followed that up with a post about how the EPA, the SEC and institutional investors are becoming more interested in environmental risk, asking companies to report on risks which may impact on a business’ sales, properties or even their reputation.

The importance of this has been driven home forcibly over the last couple of days as GreenPeace launched an international campaign targeting Nestl?. Why? Because it turns out Nestl? is purchasing palm oil from companies whose plantations cause deforestation of Indonesian rainforests with all the attendant knock-on effects this has (massive CO2 emissions, indigenous communities destroyed, and devastation of the Orang-utan’s habitat to name but a few).

As part of the campaign, Greenpeace launched a report called Caught Red Handed [PDF] outlining the connections between Nestl?, their suppliers and habitat destruction in Indonesia. As part of the launch campaign, Greenpeace had people on the ground at Nestl? offices in Orang-utan costumes publicising the report and they posted a spoof video on YouTube.

Unfortunately Nestl?, decided that instead of fixing their supply chain, that they should go down the censorship route. They quickly contacted Google and had the video removed from YouTube. Nestl? didn’t reckon with the Streisand effect though and in very short order the video was posted on vimeo and promptly re-posted on many other sites.

Nestl?’s lawyers quickly abandoned the take-down option realising they’d merely be playing a game of whack-a-mole if they continued. The storm of publicity which ensued even spread as far as CNN and within 24 hours Nestl? was forced to backtrack . The video is now back up on YouTube.

Nestl? censoring comment on FaceBook

As these things do, the debate took place on FaceBook and Twitter too with many people calling for a boycott of Nestl? products! In a classic social media shot to the foot Nestl? warned people:

we welcome your comments, but please don’t post using an altered version of any of our logos as your profile pic – they will be deleted.

Now, in any social media forum (or any forum for that matter), threatening people with censorship is definitely not a way to win friends or influence people. And predictably this threat inflamed an already upset audience. The censorship threat went viral and Nestl?’s reputation went into freefall.

The end result, as you can see at the top of this post, Nestl?’s stock price fell too.

This was eminently preventable.

And it is a clear demonstration of the need to be fully aware of all the potential risks in your supply chain.

If Nestl? was utterly transparent and ethical in its business practices, then it couldn’t have been ambushed by Greenpeace.

If Nestl? had ensured that its supply chain was completely free of controversy it would have avoided the pr storm, the reputational damage and the financial losses from loss of sales and the fall in its share price.


Greenpeace score big wins against illegal deforestation in Brazil

Deforestation in the Amazon to make way for cattle

Photo credit leoffreitas

GreenPeace released a damning report last month called Slaughtering the Amazon in which it detailed how the Brazilian cattle sector is the largest driver of deforestation in the world.

In this shocking exposé Greenpeace detailed how:

  • Cattle are responsible for about 80% of all deforestation’ in the Amazon region. In recent years, on average one hectare of Amazon rainforest has been lost to cattle ranchers every 18 seconds.
  • Analysis by Greenpeace of 2006–2007 satellite data and forest clearance permits reveals that more than 90% of current Amazon deforestation was illegal.
  • The Brazilian government has invested in many of the large beef producing companies.
  • Greenpeace identified hundreds of ranches within the Amazon rainforest supplying cattle to slaughterhouses in the Amazon region belonging to Bertin, JBS and Marfrig

The report goes on to name many well known brands who are buying the products of this illegal deforestation (often unwittingly) – names such as Unilever, Colgate Palmolive, Johnson & Johnson, Nike, Reebok, Addidas, Boss, Geox, Gucci, Hilfiger, Louis Vuitton and Prada, amongst a long list of other extremely recognisable names.

Then comes news this week that:

Responding to allegations that major Brazilian cattle producers are responsible for illegal forest clearing in the Amazon, Brazil’s development bank BNDES will soon require processors to trace the origin of beef back to the ranch where it was produced in order to qualify for loans

Furthermore, as a result of the report:

Brazil’s three largest supermarket chains, Wal-Mart, Carrefour and Pão de Açúcar, last week announced they would suspend contracts with suppliers found to be involved in Amazon deforestation, while Bertin, the world’s largest beef processor, saw its $90 million loan from the International Finance Corporation withdrawn. Marfrig, the world’s fourth largest beef trader and one of the firms named in the report, said last week it will no longer buy cattle raised in newly deforested areas within the Brazilian Amazon. Meanwhile a Brazilian federal prosecutor has filed a billion dollar law suit against the cattle industry for environmental damage. Firms that market tainted meat may be subject to fines of 500 reais ($260) per kilo.

This is a spectacular win for Greenpeace, the Amazonian Rainforest, and all of us who depend on it for life on our planet.

It is not over yet. The traceability program depends on ear tags which are removable and so can be gamed. True traceability would use chips and would be independently verified. Still, this is a big step in the right direction and massive kudos are due to Greenpeace for this win.


April 27th GreenMonk Energy & Sustainability show

I embedded today’s show live on on a new page on the site. Moving people to this page will allow me to change the back-end without inconveniencing people, however, it doesn’t appear to be possible for people to login to the chat on this page with their Ustream accounts so instead viewers were labelled “ustreamer-64326” and similar. Those who went to the show’s original Ustream page had no such issues. Need to see if i can fix that!

Had a rich link laden show today!

Here is the chat-stream from the show:
16:31 TomRaftery: Ok, can everyone see & hear me ok?
16:32 TomRaftery: Hello?
16:32 ustreamer-9456: Hello !
16:32 ustreamer-9456: I see you
16:32 TomRaftery: Anyone seeing or hearing me?
16:33 ustreamer-9456: see and hear this is Tish I see 6 others online/
16:33 ustreamer-2665: i got both. yes goiod
16:33 ustreamer-2665: yes
16:34 ustreamer-9456: How do we get a log in with our names?
16:35 TomRaftery:
16:36 TomRaftery:
16:37 TomRaftery:
16:38 ustreamer-9456: just loged in to Ustream to get my name I hope
16:38 Suki_Fuller: Howdy all – on a conf call but no way gonna miss the show
16:39 TolkienLibrary: Hi there all greenmonktv followers!
16:39 TomRaftery:
16:41 TomRaftery:$1290184.htm
16:43 TomRaftery:
16:44 TomRaftery:
16:45 ustreamer-7847: Primefuson here, finally. Best to all.
16:46 TomRaftery:
16:46 TomRaftery:
16:49 TomRaftery:
16:50 yellowpark: wow, ustream’s new design chages really suck
16:50 TomRaftery:
16:51 TomRaftery:
16:52 TomRaftery:
16:53 ustreamer-2582: Hi Tom, Diarmuid from Cork here. What do you think of the ESB announcment about smart grids .
16:53 TomRaftery:
16:55 ustreamer-2582: cheers
16:55 TomRaftery:
16:56 TomRaftery:;title
16:59 TomRaftery:
17:00 TomRaftery:
17:03 TomRaftery:
17:03 TolkienLibrary: thnxs G Bush… glad I can say this one time in my life
17:03 TomRaftery:
17:06 yellowpark: yes, all the shows were recorded
17:06 yellowpark: cheers tom
17:06 yellowpark: one sec
17:06 Suki_Fuller: I was looking for a sponsor to fly me home to attend!
17:06 yellowpark: just grabbing them
17:07 TomRaftery:
17:07 yellowpark: won’t let me post it
17:10 yellowpark:
17:10 yellowpark: i cheated
17:10 ustreamer-5464: How much Have I missed
17:10 yellowpark: so you can link to the homecamp videos here
17:10 ustreamer-5464: Oops I’ll watch the recorded vs
17:11 TishShute: thanks Tom great show!
17:11 TolkienLibrary: thanks Tom… very interesting once again… nice way to close my working day!
17:11 Suki_Fuller: As always I learned bunches even though I couldn’t participate with interaction today. Awesome Tom!
17:11 TomRaftery: Thanks everyone for your time, attention & interest
17:11 yellowpark: bye
17:12 joegarde: cheers tom got here late too