France’s Ecology Minister, Ségolène Royal, has apologised for her recent comments castigating Nutella over its use of palm oil and calling for people to stop eating the popular chocolate hazelnut spread altogether. The comments aired on French television channel Canal+ and immediately gained widespread traction across international news outlets and social media. The palm oil industry has long been a target of criticism from conservation groups for its lack of standardised and sustainable production, which has led to widespread deforestation across Malaysia and Indonesia – these two countries accounting for around 90% of global palm oil production. A number of organisations have been established to offer recommendations on how these issues can be proactively tackled, RSPO (Roundtable on Sustainable Palm Oil), CSPO (Certified Sustainable Palm Oil), and ISPO (Indonesian Sustainable Palm Oil), to name a few.
Nutella, part of the Ferrero Group, enjoyed a massive 83% value share of chocolate spreads in France in 2014, and despite criticisms from the Minister, has historically been a pacesetter in the race to 100% RSPO sustainable and segregated palm oil – a target it achieved ahead of schedule in several countries in 2013, ironically; France being one such country. Italian chocolatier Ferrero has also committed to establishing a Palm Oil Charter in partnership with non-profit organisation TFT (previously The Forest Trust) in an effort to catalyse the transformation of the palm oil sector toward a fully sustainable model, a goal that stretches beyond its remit and represents genuine engagement with the ongoing debate.
Ethics for sale
Palm oil use remains a contentious topic, and is tethered closely to a wider collective of responsible forestry initiatives focused on lobbying businesses toward more sustainable practices while incorporating ethical standards into the entire supply chain. The Rainforest Alliance (one of the founders of the Forest Stewardship Council) is one of the most recognisable and widely trusted avenues for providing sustainably sourced accreditation and has attracted commitments from global giants including Kraft, Lavazza, Mars Drinks and Costa Coffee. These commitments have sparked a chain reaction, causing Rainforest Alliance to enjoy impressive growth, with 600 new companies joining the ranks in 2013 alone, taking their tally to over 4,000 companies.
The effect that a recognisable ethical logo can have on sales simply cannot be ignored. In 2007, McDonald’s also joined the Alliance and witnessed a significant boost in coffee sales and revenue – reports claiming a 15% and 23% increase respectively, after it began prominently displaying the logo in stores and advertising in the UK.
Green and Black’s Organic Chocolate earned the UK’s first Fairtrade mark for a chocolate product back in 1994, and while accounting for a relatively small 1% share of chocolate confectionary in the UK in 2014, has remained steadfast, offering perhaps a glimpse into the loyalty of ethical consumers. The success of Green and Black’s has spurred Mondelez (Green and Black’s global brand owner) to evolve its flagship brands into the ethical sphere. The Cadbury range for example, which accounted for 25% of chocolate confectionary in the UK in 2014, now sports the Fairtrade mark on many of its top sellers, this representing just one instance of the wider transition of ethical from niche to mainstream. Partnering with Fairtrade not only improves brand image, but also bolsters market position and encourages growth, and for this reason, Mondelez and other global players are evolving toward sustainable production for the added value that ethical labels bring to their brands.
The road to sustainability offers some significant challenges and many companies are adopting a fresh approach in addressing these. Unilever, Coca-Cola and Mondelez are just a few of the companies that are setting their sights on 2020 rather than focusing on the more traditional, annual CSR strategies that we are accustomed to seeing. The benefits of setting mid to long range targets is that quarterly and annual financial reports do not suffer any major negative impact by making the ethical switch a slow burning transition rather than a revenue draining snap conversion.
The Importance of Integrity
Sustainability and ethical initiatives and schemes are a global conversation not unique to environmental issues. There is a constantly increasing range of organisations offering accreditation and certification that appeal to various consumer groups, from label transparency and opposition to artificial ingredients, to animal welfare in the beauty and personal care industry, to halal and kosher certified goods – the list goes on. The numerous seals, logos, marks and certificates these companies offer function as a signifier of a company’s ethical grounding and integrity in its respective industry, and in many cases these are worth their weight in premiums.
The evidence continues to build and suggests that it makes commercial sense to go ethical and appeal to the constantly increasing number of consumers in their search of the elusive label. In the case of France, targeting Nutella was imprudent, and an apology was swiftly issued by Royal on twitter – while Italian Minister for the Environment, Gian Luca Galetti, jestfully quipped that he would be having “bread and Nutella” for dinner.