People and the planet – CSR initiatives sweeten Ferrero’s success
Tammi L. Coles spoke with recognized CSR researcher and author CB Bhattacharya about how this is revealed in the “People and the Planet” philosophy of the successful Ferrero Group.
Corporate Social Responsibility (CSR) and corporate sustainability have come to represent a broad range of ethics-driven standards for business practices that go above and beyond legal requirements for how corporations draw from and contribute to natural resources and social communities.
At ESMT Berlin, how companies communicate their ideals, engage stakeholders, and otherwise achieve their goals in CSR is the subject of study by Professor CB Bhattacharya, an internationally recognized researcher and author on corporate sustainability. Since 2014, Prof. Bhattacharya has held the Pietro Ferrero Chair in Sustainability, founded by the family-owned Ferrero Group – the confectionary company behind global brands like Nutella, Rocher, and Kinder. The Chair was named for the late Dr. Pietro Ferrero, who from 1997 until his untimely death in 2011 was company CEO together with his brother Giovanni.
In keeping with its commitment to a “People and the Planet” philosophy, Ferrero’s latest annual CSR report and recent activities reaffirm its intention and practice of corporate sustainability for its consumers, workers (current and former), stakeholders, and their communities.
Corporate Sustainability is About Choices
The Ferrero Group has set goals for certifiably sustainable sourcing of main ingredients like cocoa, sugar, and palm oil by 2020. Some of these goals were already achieved in 2014, such as 100% palm oil certified as sustainable and 100% virgin cardboard coming from sustainable supply chains.
These sustainability targets and milestones are visible in Ferrero corporate reporting and marketing, contributing to public awareness of corporate sustainability. “Current research shows that good stakeholder engagement can lead to better business outcomes – whether it is risk reduction, better reputation, more loyal customers, or higher employee engagement,” said Bhattacharya.
Furthermore, these targets are backed by commitments that include investment in water and energy technologies that increase production efficiencies, contribute to responsible natural resource management, and minimize environmental impact across Ferrero’s entire value chain.
“Corporate Sustainability is Not Contradictory to Corporate Growth,”
said Bhattacharya. In fact, research by Prof. Bhattacharya and Prof. Sankar Sen at Baruch College’s Zicklin School of Business showed that highly innovative companies with high-quality products actually see more in their investment in CSR activities than less innovative companies. “Some of the executives I interviewed for my latest research project told me that it simply makes good business sense,” said Bhattacharya. “What is more, rather than being contradictory, the choice to not act on sustainability is increasingly costly, as businesses face serious challenges related to climate change. So ‘doing sustainability’ is becoming the ‘to be or not to be’ question for companies.”
During the last CSR reporting period, for example, the Ferrero Group acquired the Oltan Group, a leader in hazelnut supply, processing, and sales in Turkey and part of the Ferrero Farming Values (FFV) sustainable farming program. CSR investments in raw ingredients like these, alongside expansion in sales and manufacturing, helped Ferrero see 13.4% growth over the previous year.
Corporate Sustainability is a people practice
Ferrero’s commitment to high-quality products is also reflected in its high standards for CSR implementation at all levels, including in human resource management. New employees receive Ferrero’s Code of Ethics, first published in 2010, together with their working contracts. “Employee engagement is vital to the success of any long-term corporate sustainability activities,” said Bhattacharya. “This is why it is so crucial to enable employees to contribute to these activities, for example, the way Ferrero does it – via training.”
Corporate Sustainability is Global and Local
While remaining family-owned, the Ferrero Group is present in 53 nations with 22 production plants worldwide. As part of its environmental commitment, Ferrero is especially transparent regarding its palm oil supply. This includes 100% traceable data on its palm oil sources, the approximately 36,500 smallholders in its supply chain, and the company’s efforts to protect forest cover and biodiversity. In Côte d’Ivoire and Ghana specifically, Ferrero joined eleven of the world’s leading cocoa and chocolate companies in a pledge to end the deforestation and forest degradation that has marred their contribution to the global cocoa supply chain.
In addition to having corporate sustainability ideals drive global supply chain and production targets, Ferrero extends these values into projects that center consumers and their families at the heart of their activities. At the international level, the company actively participates in initiatives led by NGOs such as UN Global Impact and CSR Europe that promote corporate sustainability alongside human rights; economic, environmental, and social sustainability; anti-fraud and anti-corruption strategies; and consumer protection. At the local level, the Michele Ferrero Entrepreneurial Project contributes to childcare and social enterprises in the health and education sectors of Cameroon, India, and South Africa. Ferrero’s Kinder+Sport initiative, which celebrated its 10-year anniversary in 2015, held more than 3,100 sporting events with 4.1 million children living in 25 countries.
“Increasingly, different stakeholders are laying out their expectations about how companies should contribute,” noted Bhattacharya. “They need to, although sometimes their expectations are in conflict with each other. A company may feel lost – where do I start, which issue do I tackle? As Ferrero has shown, for example, tackling human rights challenges can be vital to a smooth supply chain operation. Each company must decide which of these issues are material to its operations, existence, and purpose.”