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This Month:

page 10

by Michael Rice

On Sustainability and Social Responsibility in the Coffee Industry

The terms sustainability and corporate social responsibility (CSR) are getting a lot of attention today. The debates over climate change have focused the global society on our environmental and our energy

futures. The green building movement has gained incredible traction with the LEED (Leadership in Energy and Environmental Design) program. The promotion of a multitude of social causes from cancer awareness to treatment of workers in developing countries can be seen every day. And while it is clear that much is going on, there is much more to be done.

Andrea Illy of illy Caffè highlighted some of the sustainability issues impacting the coffee industry at the recent National Coffee Association Convention in Charleston, SC. Mr. Illy started the attendees with the UN’s Bruntland Commission’s 1987 definition of sustainability, “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

The concept of sustainability is part of the broader concept of corporate social responsibility. While there are many definitions of CSR, they all in some way involve organizations take responsibility for their impact on society and on the environment. They usually embody going beyond legal requirements to improve the quality of life for the company’s stakeholders, which include not only company employees but the broader community, locally and globally. At one point, CSR was thought of as philanthropy, charitable contributions to organizations that management thought were worthy recipients in the community. However, today, the concept transcends specific causes and communities (although charitable giving of time, treasure, and talent is still an element of CSR) and contemplates how companies fundamentally operate and carry out their core functions, not only for the improvement of society but also for the improvement of the company itself.

The mantra of the sustainability effort has been the triple bottom line. This three-legged stool has been described in several different ways. There are the 3”Ps” of sustainability: People, Planet, and Profit. And there are the 3”Es” as well: Environmental, Economic, (Social) Equity. Mr. Illy talked about 3”Cs”, an interdependent cosmos: Economic Cosmos, Social Cosmos, and Environmental Cosmos. In addressing these different cosmos, he spoke about shared value, growth, and respect.

Shared value speaks to the need to find common ground that balances, and possibly constrains, the drive for profit with the fundamental respect for the dignity of the individual and the dignity of the environment for the benefit of the long term. Shared value and sustainability do not ignore the need for profit; they just try to place in perspective vis-à-vis the people that work to produce this profit and the environment from which these profits come.

The term respect is fundamental to sustainability and CSR, and to ethical behavior in its essence. Whether it is through a secular, natural law philosophy or from a religious belief in the inherent value of the human person, respect for the dignity of the individual is the fundamental underpinning of a healthy society. And it is precisely when this dignity is violated that the seeds of social and environmental turmoil are sown. The philosopher, Immanuel Kant, privileged us with the thought that we should all, “Act in such a way that you treat humanity, whether in your own person or in the person of any other, never merely as a means to an end, but always at the same time as an end.” People need to be treated with respect because they deserve it.

It is that fundamental need to respect the dignity of individuals that forms the foundation of the many initiatives and proposals aimed at improving global ethical behavior, especially in developing countries. The U.N.’s Declarations of Human Rights speaks to respecting and honoring the dignity of all. In the coffee industry, the discussions over fair pricing and distribution of the wealth generated by this $100+ billion dollar industry beckon the question of how we respect and honor the dignity of the individual, especially those that are most vulnerable. Fair trade coffee and the education of consumers in coffee’s Third Wave are all part of this dialogue. The success that the industry can generate in these areas will determine how effectively it can help promote the social growth that Mr. Illy described as part of social sustainability.

Another element of social growth is personal development. How well do our social systems allow people to reach their full potential as human beings? An interesting way to examine this can be found in Abraham Maslow’s hierarchy of needs, which Mr. Illy gave us as food for thought. According to Maslow, individuals need to successfully fill a hierarchy of needs on their way to

achieving what he called “self-actualization.” Others have variously defined this as personal fulfillment, self-awareness, openness

to truth, and true contentment. But, to be able to fully achieve self-actualization, one must progress through a

series of lower needs starting with physiological needs (food, water, sex, sleep, etc.). Once physiological needs are met, security and safety needs (shelter, protection from danger, job security) must be addressed. The next need is for love and belonging (affection, friendship, community). The last need that must be

satisfied before pursuing fulfillment is esteem (both self-worth and the esteem of others).

When individuals are not able to fully satisfy a lower level need, it becomes difficult, if not impossible to progress toward

self-actualization, personal fulfillment, and true contentment. Because of personal hurts we have experienced in our lives, we all have some type of “holes in our souls” that lead us, and our companies, (since companies are essentially collections of individuals brought together under an organizational structure) into temptations that compromise our abilities to act in socially responsible and sustainable fashions.

Not surprisingly, much of this poor ethical behavior can be traced back to unhealthy attempts to satisfy unmet needs that usually manifests itself in actions that disrespect the dignity of others. One can easily identify four great temptations that lead to most unethical behavior in business: sex, money, power, and honor. Interestingly, each of these temptations can be connected to one of Maslow’s lower four needs. Inappropriate desires for physical pleasure, be it sex, gluttony, or any physically addictive behavior, that disrespect others or disrespect ourselves, are physiological issues. Excessive desire for money or material goods at the expense of the dignity of others relate to security. Unethical use of power can be associated with belonging. Esteem issues can result in people going to extreme lengths to be honored at the expense of others. Exploring these connections more deeply can provide insights into the roots of disrespect and unethical behavior. And then committing to those values, both individual and corporate, that truly respect the dignity of individuals and rethinking organizational structures and management practices to replace exploitation with empowerment will be the underpinnings of a responsible, sustainable enterprise.

“Development that meets the

needs of the present without compromising

the ability of future gen-erations to meet their

own needs.”

continued on page 3230

April 2012

Ted Smithers – In MemoriamOn March 28, 2012, the world marked the passing of Ted Smithers, one of the great men of our industry and possibly one of the least known. Kerri and I are priviledged to have known Ted person-ally for many years and came to know the abiding strength and gentleness of true greatness.

As the husband of Linda Smithers, Ted willingly stayed in the background as Linda built her career in coffee – first with Susan’s Tea and Coffee, a small chain in Akron, Ohio and then further as Linda became President of the SCAA, and eventually a leading marketer of green coffee from Daterra Coffee, Brazil.

But Ted was also an intellectual and business force of nature whose passion for coffee unavoidably led him to delve deeper into coffee and café management with the same enthusiasm with which he approached all things in his life. Ted served on the technical stand-ards committee of the SCAA for a number of years, and through that participation learned a deep understanding of our industry and its nuances.

Many who met Ted Smithers did not know that he was an accomplished business person in his own right who helped guide Smithers-Oasis into a world-class industrial Company into a world-class leader in the floral foam industry. Founded by his father in 1954, Smithers Company remains a leader in products for the floral industry world-wide. The same values that Ted carried in his personal life are reflected in the continuing opera-tion of the Smithers Company – a deep focus on corporate and social responsibility and a high degree of integrity and direct involvement.

Ted recently finished a book about his military experiences during World War II titled “Lucky to Be Here,” where we are introduced to a Ted Smithers few knew. A hero of the war, Ted landed in Europe on D-Day and during his deployment, he was awarded the Silver Star and the Bronze Star for valor and heroism beyond the call of duty, as well as a four Purple Hearts for wounds received in action. He was part of the liberation of Dachau Concentration Camp and ultimately the defeat of Nazi Germany.

In truth, I believe that we are the lucky ones for him being here for us. Thanks for the humor and the wisdom. 100% of the proceeds from the sale of the book will go to the Wounded Warrior Project.

Join us in celebrating Ted’s life and support Linda in this time of loss. Kerri and I were lucky to get to know Ted well. His passing is a great loss to all of us but it can be said that he lived a true and good life and contributed to making the world better and brighter by his being here.

Ted with his father and brothers

Respect for the environment comes right after the respect for the individual. As Mr. Illy demonstrated to convention attendees, “good agronomical practices will maximize profits to the growers and benefits to consumers without harm to the environment.” The keys to this transformation are a long-term perspective and education (both of consumers to recognize and be willing to pay a premium for higher quality and of producers to develop and internalize a longer term perspective).

Thus, a long-term integrated commitment is essential to successful implementation and achievement of these principles of sustainability and CSR. Such a commitment means that companies integrate these tenets into their core values and their strategic planning. It means that they align their objectives and their core competencies to produce both the motivation and the resources to accomplish these goals. And, most importantly, it means that both employees and company management, and especially management, are committed in both word and action. There is nothing that will derail a sustainability initiative or a CSR effort faster than management giving only “lip service” to it.

Such efforts require time, patience, and new perspectives, particularly a longer-term perspective. Unfortunately, individuals and companies are frequently tempted by quick short-term gains and shirk their responsibility to their fellow employees, their company, or society at large in the pursuit of immediate gratification. Oftentimes, people forget that the purpose of a business is to generate long-term wealth.

However, when companies do live and act in a socially responsible manner, they often find that their actions not only benefit society but also benefit themselves in a number of areas. These companies are better able to recruit and retain talented employees. People want to work for companies they can trust, companies that respect them, and companies they believe are socially responsible. It is no surprise that companies in the “Top 100 Best Companies to Work For” often perform better than the average corporation.

Companies also find that being socially responsible also resonates with more and more consumers, giving companies another win-win opportunity, contributing to society while enhancing brand loyalty and customer satisfaction. Combine this with motivated employees and you have a recipe for financial success. This is part of the “shared value” that Mr. Illy addressed.

Other benefits include an improved risk profile that comes both from proactive measures of a responsible culture that can avert scandals of abuse and from a reservoir of good will than can help get a company through an unexpected crisis. Financial markets like responsible companies because their risk profile is lower and studies have shown that those companies that rate high in ethical behavior and social responsibility in the eyes of society usually perform better financially as well. Therefore, whether it is the 3Ps, the 3Es or the 3Cs, embracing the tenets of social responsibility and respect for the individual and for the environment can create economic success, which can, in term, create new resources to even further propagate a sustainable society.

As we move through coffee’s Third Wave and into the Fourth, all participants will find opportunities to advance social and environmental sustainability in ways that can meet the needs of long-term economic sustainability. The question is, “How quickly and how passionately can the industry rise to the challenge?”

Michael Rice is Adjunct Faculty at DeSales University in Center Valley, PA where he teaches courses on Ethical Issues in the Workplace, including topics of Corporate Social Responsibility and Sustainability. Mike is also Senior Product Marketing Manager for Follett Corporation, a leading manufacturer of ice machines, ice and water dispensers, and ice storage and transport equipment focused on promoting health, safety, and well-being in foodservice, healthcare, and office environments. Contact Mike at mrice@follettice.com.

Social Responsibilitycontinued from page 30

Linda Smithers, John Conti, Janet Conti, and Ted Smithers in Brazil32

April 2012