The Shifting State of Sustainability: Can the private sector really deliver a public good?

Coffee Output

The development community, with some notable exceptions, is waking up to the absurdity of measuring only their inputs and outputs like the number of farmers trained or the number of hectares certified as “farmed sustainably”.  In many cases, missing is the measurement that matters most: what positive (or negative) difference did their efforts make for the lives of their intended beneficiaries?  What was their impact?.  Of course, the most thoughtful are indeed measuring well and applying the emerging range of mixed methods to understand impact and impact pathways. However, in a shift that portends a seismic change in how sustainability works, it is the private sector that is increasingly pushing the envelope for many commodities. After all, today firms have to increasingly account for the efficacy of all their investments, even those once considered soft investments in Corporate Social Responsibility (CSR) or sustainability.

We at the Committee on Sustainability Assessment (COSA) applaud this change in direction, but note that progress toward measuring private sector sustainability has not been without controversy.  Indeed, for us and many others, this change in private sector accounting has been a long time in the making.  By the mid-1990s the concept of Corporate Social Responsibility was expanding beyond its legal and ethical origins to cover the multi-dimensional aspects of sustainability (social, environmental, and economic). It remained optional and rarely reported in any official communication[1] until firms began to understand that the expectations of consumers and shareholders were often aligned with sustainable or CSR practices and that growing evidence suggested that it led to better performance without reducing financial returns. A handful of leading companies such as Mars (cocoa, coffee, rice, pet food, etc.), Ben & Jerry’s (dairy), and Patagonia (cotton) had already proven this for years in part by integrating sustainable or CSR practices into their concept of the intrinsic value of their products.

Year in and year out, we can see that the transactional relationships that companies have with farmers and producer organizations are typically more frequent and are sometimes more tangibly valued than the occasional or infrequent presence or interventions of government or the public sector in farming communities. Learning about CSR and how it works was hindered by the range of heterogeneous ideas of what it is. CSR concepts varied across geographies, across sectors, and even across similar companies. In some cases, it began to be negatively associated with marketing, leading to the emergence of the term “greenwashing”. By the turn of the century, there was a marked turning point in the perception among consumers and shareholders that companies were beginning to be held to a higher standard in terms of how they did or did not contribute to the public good.

The impetus to systematize reporting practices came both from organizations like the Global Reporting Initiative and from market forces ranging from the creation of the Dow Jones Sustainability Indices and FTSE4Good Index to the Global Impact Investing Network. This productive step has made CSR more publicly visible and induced a great increase in compliance reporting. But some have been asking: “compliance to what?” claiming that the metrics are often vague and self-reported with little if any scrutiny or external oversight. The volume of reporting has not necessarily been translated into value in part because it remains inconsistent and not comparable or verifiable.

Leading firms such as Nestlé Danone and Unilever realized early on that it was useful to have public credibility for their sustainability efforts and they tested essentially two main paths forward. Giants like Kraft, Keurig Green Mountain, and Mondelēz initially engaged one path relying on public standards and certification, counting on NGOs to help deliver sustainability results at origin. Others such as Mars, Coca-Cola, Starbucks and Lindt chose a second path developing proprietary systems to track sustainability investments and compliance. Today, an increasing number of firms including Walmart, McDonalds, and Lavazza realize the limits of both and follow an approach that combines these paths.

While compliance with a standard or a checklist of values has certain merits, it fundamentally does not ensure the necessary factors for development, especially among poor communities. Missing is the accurate diagnosis of conditions from which to generate an appropriate, thoughtful intervention or investment. Many compliance approaches – especially when framed as toothless yes or no questions –  fail to generate meaningful data, much less any knowledge, of what is happening at origin and why. Equally challenging is the ability to effectively track performance when an intervention or investment is chosen. So, we can only determine success several years or more after the fact, a woeful and inadequate option.

Firms are often focused on the return on investment (ROI), both short and longer term. While some think it callous to consider the return for sustainability efforts, a growing number of us within the development and research community believe that it is actually helpful and that it is about time. After all, how many of us like to waste our money? Well, let me rephrase that. How many of us would prefer that our resources or investments actually be effective in serving the people, communities, and environments that are most at risk? Most of us would. And the return cannot, and should not, always be merely financial or even monetized. The returns in better soils, biodiversity, and community resilience have intrinsic merit. Of course, not everything needs to have a ROI. But perhaps we should consider the challenge to generate a ROI as a valid call to be more effective with our resources and to be rigorous about the fact that while making an effort is nice, it is results and impacts that matter most.

So, it is heartening that increasing numbers of companies are acting from the assumption that the public good is often also what is good for them. If we are to help them, then government and civil society organizations can facilitate their ability to conduct research that measures what matters and to do so in ways that are not only rigorous but also comparable. It is sheer foolishness for those of us working in the development sector, private and public, to not agree on standard ways to do the simple things that we do thousands of times every year. As a research community, can we not agree on some optimal ways to measure the costs of production or the diversification level of a farm or gender inclusion?

 

Productivity

For COSA, this comparability is an important way to learn across projects, crops, or geographies. It is necessary to evaluate best practices. It is vital for intelligent testing and scaling of nearly any effort that appears to work. Smart efforts at aligning and standardizing are already underway all around us. COSA alone has aligned indicators together with the FAO, ISEAL (21 members), Sustainable Food Lab (60+ members), and the IDB SAFE Platform (55 members) and is working with other leaders such as the Sustainability Consortium (100+ members). [2]

Some Partners in GFAR are similarly engaged. One planned collective action to engage with is an “Innovative Approach to New SDG Metrics for Agri-food Innovation”. Whether it is for the SDGs or for corporate accountability, it is not difficult to see the learning value of clear and common metrics. Sure we may lose some nuance, as we do with any standardization, but together we all gain infinitely more.

 

[1] For example, shareholder reports and financial or regulatory filings.

[2] Details include:  FAO Sustainability Assessment of Food and Agriculture systems for smallholders; The International Social and Environmental Accreditation and Labelling (ISEAL) Alliance Impacts Code;  The Multilateral Investment Fund of the InterAmerican Development Bank’s Sustainable Agriculture, Food and Environment Platform (SAFE).

 

PARTNER SPOTLIGHT logoThis blog post was written by Daniele Giovannucci, President of the Committee on Sustainability Assessment (COSA), a consortium of institutions fostering effective ways to measure and understand sustainability in the agri-food sector. During our Partner Spotlight from 23-27 October 2017, we’ll be examining pragmatic ways COSA metrics are driving innovations and sustainability practices, through the applications of tools ranging from impact assessments to performance monitoring. As part of the Partner Spotlight, a webinar on “Effective Tools for Understanding, Managing and Accelerating Impact” will be held on Thursday October 26th at 15:00 Rome time (13:00 GMT).

Metrics is a very relevant area of inquiry for the Partners in GFAR, who are embarking on a Collective Action to develop an “Innovative Approach to New SDG Metrics for Agri-food Innovation.”

GFAR Secretariat is turning the spotlight on the work and Collective Actions of Partners in GFARwho share in our mission to strengthen and transform agri-food research and innovation systems globally. Not a GFAR partner yet? Join now!

Photo credits: COSA


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