New research¹ from University of California, Berkeley’s Haas School of Business offers a compelling insight into how big businesses are capitalizing on consumers willingness to pay more for socially responsible products – phenomenon, known as “conspicuous conservation”. For most of the top and successful sugar companies with strong corporate social responsibility agenda, the actual research findings may simply confirm their corporate stance. But the point is, to what extent, if at all these companies flag up their socially responsible credentials forcefully to make it known to consumers more explicitly and capitalize on them?

The researchers cite several examples of socially responsible innovations (see table). Toyota’s launch of the hybrid Prius attracted particular interest from “green conscious” consumers who were willing “to pay for the green social value …in the range of US$430-US$4200”. Another example, Levi’s launched its Water Less™ jeans line in 2011. This came after Levi’s spent three years developing a process to create denim that required up to 96% less water in the manufacturing process. Clorox’s Green Works spent over US$20mln to produce eco-friendly, natural cleaning products.

Socially responsible innovations

In the sugar industry it is less the case of producing a sugar in socially innovative way, but rather a company adhering to and managing its operations in a manner that heed socially responsible norms.

It is worth examining three examples in the sugar industry from companies in three continents. AB Sugar has been outstanding in profitizing from variety of waste streams emanating from beet sugar processing. One of the co-products of their environmentally sound recycle and reuse approach is the production of tomatoes in greenhouses which exploits waste heat and carbon dioxide generated at its beet sugar factory. Some 10% of tomatoes supplied to the supermarkets in UK are claimed to come from British Sugar’s greenhouses. I have been to practically all the major supermarkets in UK over the past year, and have not come across AB Sugar branded tomatoes – these are arguably “socially responsible” boasting “conspicuous conservation”.

In Tanzania, nearly 100,000 people living in Kilombero district benefit from Kilombero Sugar Company Limited (KSCL) through the company providing variety of amenities and benefits including housing, health care, water and electricity. Specifically, the company is supplying potable water supply to around 50,000 residents in the area. It has invested some US$303,490 to expand services at the government health facility at Nyandeo in Kidatu Division resulting in providing specialized medical X-ray equipment as well as services such for trauma, surgery along with maternal and new born child health (MNCH) and runs two health clinics and an 80 bed hospital, annually investing a total of US$ 474,051. Yet I am not aware of KSCL exploiting the sugar it produces as socially responsible brand and securing premium in some niche markets.

In India, Bajaj Hindusthan, which operates 14 sugar mills and produces over 1 million tonnes sugar has an outreach programs directed toward education, health, empowerment of women and environmental projects. Examples include the creation of several public schools, blood donation camps, an eye check-up camp, general medical check-up camps in villages and factory camps. Conserving and efficiently utilizing water is important in drought prone areas, and the company is continuing to develop an integrated water resources management programme. The founder of the company, Jamnalal Bajaj, from the very beginning, wanted to help the community and so he set up a trust for this purpose. Today, the company runs two foundations, the Bajaj Foundation and the Jamnalal Bajaj Trust that together support more than 100,000 families in 501 villages, impacting more than 615,000 individuals within the company’s 12 sugar production areas. Despite the fact it has deep pockets, the company has simply not exploited, through branding, its supremely commendable socially responsible programmes.

To bowdelrise Marx², socially responsible operations sugar companies partake in are fine, but the point, however, is to capitalize consumer willingness to pay a premium for the responsibly produced products.

References

1 Ganesh Iyer and David Soberman (2016) Social responsibility and product innovation,” Marketing Science, in press.

2 This is reference to Karl Marx’s oft quoted observation “philosophers have only interpreted the world in various ways, the point is to change it”.