Features International Sugar Journal

Are sugar companies exploiting the cache of social responsibility?1

Companies embracing sustainability realize that this requires embracing a range of actions. Research2 from the University of California, Berkeley’s Haas School of Business, highlights one. It offers a compelling insight into how big businesses capitalize on consumers willingness to pay more for socially responsible products – a phenomenon known as “conspicuous conservation”. Of course, for most of the top and successful sugar companies with strong corporate social responsibility agendas, the actual research findings may confirm their corporate stance. But the point is, to what extent, if at all, these companies flag up their initiatives in the business they run and make it known to the wider world and consumers more explicitly?

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$20M to produce eco-friendly, natural cleaning products.

Socially responsible innovations

Company/(Category)  Launch Description of Innovation
 

Toyota/(Automobiles)

 

1997

 

Prius: Hybrid Propulsion

Intellijet boat engines 2013 Clean-tech propulsion for pleasure boating. 50% less fuel.
Clorox/(Household Products) 2008 Green works: Spent $20 million to develop non-synthetic cleaning products
Levis/(Jeans) 2011 Water<LessTM jeans: Over 3 years of R&D to reduce the amount of water used in manufacturing.
Puma/(Shoes) 2011 Puma InCycle, Re-suede Shoes: Footwear made of 100% recyclable materials tied to their \Bring me Back” program
Lush/(Cosmetics) 2012 3 years of R&D to develop a non palm oil soap base

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

It is worth examining three examples in the sugar industry from companies in three continents. First, British Sugar has been outstanding in monetizing from various waste streams emanating from beet sugar processing. One of the co-products of their environmentally sound recycle and reuse approach is the production of medicinal marijuana (to treat 40,000 children) in British Sugar’s 18-hectare Cornerways Nursery in Wissington, Norfolk. Previously, the same glasshouse used to produce 140 million tomatoes annually.

In Tanzania, nearly 100,000 people living in the Kilombero district benefit from Kilombero Sugar Company Limited (KSCL) through the company providing a 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. In addition, it has invested some US$303,490 to expand services at the government health facility at Nyandeo in Kidatu Division, resulting in providing specialized medical x-ray equipment as well as services such for trauma, surgery along with maternal and newborn child health (MNCH). Furthermore, it runs two health clinics and an 80-bed hospital, annually investing a total of US$ 474,051. Yet, I am unaware of KSCL exploiting its output as a 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 of sugar, has outreach programs are directed toward education, health, empowerment of women and environmental projects. Examples include creating 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 essential 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 its deep pockets, it has simply not exploited by branding its supremely commendable socially responsible programmes.

To bowdlerize Marx, socially responsible operations sugar companies partake in are fine; the point, however, is to capitalize on consumer willingness to pay a premium for the responsibly produced products.

 

Endnotes

1 This is the edited/slightly updated version of the comment published in the July 2016 issue of Int Sugar Journal.

2 Ganesh Iyer and David Soberman (2016) Social Responsibility and Product Innovation,” Marketing Science, 35 (5):727-742.