Large corporations finally embracing green trend

Many large corporations are
committing to being greener.

Under pressure from NGOs, a slew of global companies that are number one in their industries made unprecedented commitments to better environmental and social behavior.

There is at least the chance that their promises are not greenwash.

In November, one of the biggest global brands announced it was joining the good guys. Coca-Cola, the world’s largest purchaser of sugar, declared it would stop buying from suppliers that did not adhere to its new guidelines on protecting land rights, which commit the company to "zero tolerance for land grabbing" and respect for land rights of communities and traditional groups.

The commitment was given to Oxfam, the UK-based aid and development NGO, which has been campaigning against land grabbing by sugar companies and others. Coca-Cola promised to publish independent social, environmental, and human rights assessments of its activities, and those of its suppliers.

Earlier in the year, in a move that could have major implications for the forests of Southeast Asia, there was a similar announcement from the world’s largest producer of paper products, Jakarta-based Asia Pulp and Paper (APP).

The company has long been a target for campaigners as it stripped the rainforests of Indonesia to feed its giant pulp mills. But last February it promised an immediate end to the clearing of natural forest by the company and its subsidiaries and suppliers. The company said it would switch to sourcing from timber plantations and that "where new plantations are proposed, APP will respect the rights of indigenous peoples and local communities, including recognition of customary land rights."

APP’s promise, which will be policed by the environmental group TFT, was enough to convince Greenpeace, which had accused the company of "pulping the planet," to call off its worldwide protests.

But perhaps the most far-reaching commitment came in December, when the world’s largest palm-oil trader, Singapore-based Wilmar, committed itself to ensuring that no more deforestation or peatland destruction was carried out by any company that fed its supply chain. Again, TFT will help monitor the company to make sure it delivers.

The pledge from Wilmar did not come out of the blue. It followed strenuous NGO campaigns to clean up the supply chain of an ingredient that is in one in three processed foods. And it came right after an announcement the previous month from foods giant Unilever, which is Wilmar’s biggest customer and is the world’s largest purchaser of palm oil. Unilever promised that by the end of 2014, it will have tracked its entire supply chain to ensure it meets its promise to end its role in deforestation. Arguably, Wilmar had little choice.

Nonetheless, things are getting interesting. The world’s largest companies and investors are starting to use their position as market leaders to drive up standards, rather than pushing them down. From retailers on up the chain, they are demanding that their suppliers clean up their acts. Could it become a "race to the top"?

Not everyone is convinced. Talk can be cheap, and other industry leaders have made such promises before.

So somebody has to make sure the reformed rainforest trashers and land grabbers live up to their promises. For now, that someone looks like TFT founder Scott Poynton, a brash Australian former forester who set up TFT in 1999. The Europe-based nonprofit, with offices in Switzerland and Britain, has been contracted by Wilmar, APP, foods giant Nestle, and a string of top companies to ensure that they do what they promise.

Poynton adamantly insists he won’t be anybody’s stooge. "We are painful, annoying, and strict. If things go wrong, we walk away. We have done that when companies are not serious and open with us — if we keep learning about things through the media, for instance."

What is involved, he says, is more than PR — it’s about changing the nature of the corporations.

Some CEOs clearly get it. Optimists hope that the industry leaders can be effective "first movers" and that other smaller players will follow. Pessimists fear that the others will simply see their big rivals as weakened by ethical compliance, and move in to take advantage.

If this really is a turning point — the moment a "race to the bottom" in corporate ethical standards becomes a "race to the top" — then we should soon know.

Source: Yale e360. This article has been edited for length.

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