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Sustainable development

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Carl Bramwell

on 12 March 2013

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Transcript of Sustainable development

Phillip Morris International Annual report 2011 Current state of general business, social and environmental systems If not business as usual,
what else? Matt Astbury, Anthony Batey, Carl Bramwell & James Brown Cafédirect The concept of sustainability Sustainability is a fairly broad concept, it means different things to different people. Generally speaking it is about creating an environment in which we can satisfy the current needs of the planet and its people without having to compromise the quality of life of future generations.

“The world has enough for everyone's need, but not enough for everyone's greed.”

Mahatma Gandhi References Fast-Moving Consumer Goods Sustainable development "Our aim is to generate superior returns for shareholders, provide high quality and innovative products to adult smokers, and reduce the harm caused by tobacco products. We work toward this last goal by supporting comprehensive regulation based on harm reduction and developing products with the potential to reduce the risk of disease. " Mission Statement: (Philip Morris International) 915.3 billion cigarettes sold
$31.1 billion net revenue
Global workforce of more than 78,000
NYSE share price of $89.99 (correct as of 15/02/2013) Global Force Products are sold in approximately 180 countries
Estimated 16.0% share of the total international cigarette market outside of the U.S
Or 28.1% excluding the People’s Republic of China and the U.S. (New York Stock Exchange, 2013)
(Philip Morris International, 2011)
(Philip Morris International, 2011) Mission Statement “at Cafédirect our mission is to change lives and build communities through inspirational, sustainable business. We focus our social
and economic impact in the developing world.” HQ: London
Founded in 1991 by the charity Oxfam
2011 Turnover of £13,777,291
260,000 employees worldwide
UK’s largest 100% Fairtrade hot drinks company Annual report 2011 "That's human nature. Nobody does anything until it's too late."

~ Michael Crichton

"If all mankind were to disappear, the world would regenerate back to the rich state of equilibrium that existed ten thousand years ago.”

~Edward O. Wilson

"We do not inherit the earth from our ancestors; we borrow it from our children."

Native American proverb Weak versus Strong Sustainability Non substitutable paradigm
“critical natural capital” – which should not be harmed or destroyed by economic growth
irreplaceable natural resources and services; crucial to the well-being and integrity of the planet’s biosphere a human-centered worldview is adopted; view that nature is merely a collection of natural resources that is there to be used by the human race
places no real restriction on amounts or kinds of economic growth
environmental problems can be handled by conventional forms of technological innovation
Business as usual (very much the dominant approach used by businesses) (Neumayer , 2004)
(Barry, Baxter, & Dunphy, 2004) Weak Strong The theory of a Chrysalis economy Management style “Our aim is to generate superior returns for shareholders” (Phillip Morris International)

This ideology can be likened to Milton Friedman's management theory.

"The responsibility (of the management, to the owner) is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom”

Friedman’s ideology is mirrored by the actions of Phillip Morris International (Friedman, M. 1970) Management Style
Main aim is to “change lives and build communities through inspirational, sustainable business”.

Acknowledges the responsibility it has to society.

This ideology can be likened to management theories of Peter Drucker and John Elkington.

Drucker believes that a company has a responsibility to contribute positively to the society that it operates in.

"In order to be sustainable you need to make a profit, therefore long term economic, social and environmental partnerships could be key in order to achieve a successful business performance." (Elkington, J. 1998)
(Drucker, P. 1994) The Chrysalis Economy explores corporate strategies as we begin the long haul from today¹s Caterpillar Economy to tomorrow¹s Butterfly and Honeybee Economies.

The idea of the chrysalis economy is that a company can fall into one of four paradigms, depending on the way it acts in society and the effect that its actions have. (Baron, 2010) (Elkington, 2002, p. 6) , (Baron, 2010) Environmental Concerns Society Global warming is conceivably the most complicated issue fronting world leaders.

Emissions contribute massively towards global warming.

Organisation's are one of the most significant emitters of greenhouse gases.

Pressure on organisation's to evaluate their contributions and create a solution on how to reduce their involvement towards global warming.

Organisation's can reduce their contributions by preparing annual greenhouse gas inventories and setting long term targets e.g. improving energy efficiency. (The New York Times, 2013)
(Gillis & Broder, 2012)
(Parliament, 2004)
(Hennepin County Environmental Services, 2013) Globalisation of business.

Quality of Life better than ever before.

Expectations of responsible business practice from society.

Linked to Corporate social responsibility Corporate Social Responsibility What is it? The concept whereby companies integrate social and environmental concerns into their business operations and in their interaction with their stakeholders, on a voluntary basis. Positives
Employees want to feel proud of the organization they work for.

Increased sales. Customers respond to socially responsible business.

A CSR program doesn’t have to cost money. If conducted properly a company can reduce costs through CSR.

A company's investments in society ultimately make it possible for the business to continue Analysis & conclusion Phillip Morris Cafédirect The main focus is about maximising profit -Little/No mention of sustainability and CSR in the annual reports.

Risk of disease and addictive nature of product.

The production of tobacco is degenerative and damages the environment, through land clearing, production and also through the use of pesticides.

Philip Morris was found out to be using a leaf that still contained organochlorines from pesticides that were banned.

Many migrant tobacco workers in Kazakhstan have been cheated and exploited, and some trapped into forced labour .

The corporate strategy of Phillip Morris is one of a degenerative nature.

We believe Philip Morris are between the Caterpillar and the locust.

Firmly in the Weak sustainability paradigm

They place no real restriction on the amount of economic growth the wish to achieve.

They believe that the environmental problems they cause can be handled by technological innovation (Mission statement). First coffee brand to be awarded a Fairtrade mark
Ranked No. 1 ethical tea and coffee brand in The Good Shopping Guide from the Ethical Company Organisation.
They work with 39 producer organisations from 13 countries and positively impact the lives of more than 1.8 million people.
They buy directly from growers to give them the full price for their crop.
Growers play a key role in every aspect of Cafédirect, from governance to product design. They have shares in the company and sit on the board.
Cafédirect also gives growers a share of the profits, over 50% to date. This is over and above Fairtrade requirements. Facts about Cafédirect (Cafe Direct, 2010) Cafédirect has always been considered a pioneer in ethical business

Focus on; Reducing average weight of packaging, disposable cup waste, using renewable electricity and the reduction of carbon emissions

"View of sustainability which goes well beyond environmental issues to face its economic and social impacts head on.(The Guardian, 2011)"

Commitment to invest at least one third of its profits into the local work communities

Café Direct's commitment to fair trade typically means producers get twice or three times standard world commodity prices.

Help's provide a living for producers and their families in places like Latin America, Africa and Sri Lanka.

Regenerative in nature (Butterfly)

Strong Sustainability paradigm (The Guardian, 2011)
(Bibby, 2004) (Hill & Roberts, 2012)
(Human Rights Watch 2010) Recommendation If not business as usual, what else?

Due to the line of business that Philip Morris are in, they can never be become a perfectly sustainable business.

They need to recognise their responsibilities as a business, and that their actions are often a force for bad.

To succeed in the future they need to change/develop their business operations.

Even small changes can make Philip Morris look a more responsible company.

E.g. Afforestation & use more reliable suppliers Philip Morris recommendations The rise of Social Enterprise "Social enterprises are businesses which exist to address social or environmental need. "

"They are a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners" (Social Enterprise London, 2012) The Economy Unemployment Economic Growth The macro economic performance of a country can be judged on it's performance in several key area's. Typically including indicators like inflation, the balance of payments, consumption and international trade amongst others. Arguably the two most important economic indicators, especially in relation to business, are the levels of Economic growth and Unemployment. Conclusion No longer an optional extra

Sustainability is key to the future of business

Customer's will respond

You don't have to be a social enterprise to positively contribute Somewhere in between? Statoil; Profit driven, but sustainable?

Energy production.

Global player.

€86billion Revenue in 2011 and sold a total of 1,378million barrels of oil equivalent.

“Our mission is to accommodate the world’s energy needs in a responsible manner; we apply technology and create innovative business solutions. Our approach is founded in a values-based performance culture, a belief in cooperation and a striving for continuous operational improvement.”

"Sustainability performance for Statoil means helping to meet the world's growing energy needs in economically, environmentally and socially responsible ways." (The Guardian) (Riley, 2012) (Statoil) Cafédirect In terms of sustainability, there isn’t a great deal more that they can do.

However, the aim for every butterfly company must surely be to become a honey bee company.

They are a business, not a charity.

If they want to positively affect more people - they must grow.

They might have to sacrifice some of their short term sustainability procedures in order to grow and enhance their ability to positively contribute to society. Baron, D. (2010). Business and Its Environment. London: Pearson Education.
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(2013, January 8). Retrieved March 1, 2013, from The New York Times: http://topics.nytimes.com/top/news/science/topics/globalwarming/index.html (D’Amato, Henderson, & Florence, 2009) (Cafe Direct. 2010) (Cafe Direct. 2010)
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