Ethical Performance
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The art of working in collaborative partnerships

July 2013

Collaboration, either between different divisions of large corporates, or between companies and organisations in related fields, is not just a simple case of pooling expertise. There are lots of other CR business benefits too discovers Patricia Mansfield-Devine

When it comes to corporate social responsibility, companies often find that there is strength in numbers. Collaboration, either between different divisions of large corporates that effectively run as separate companies, or between companies and organisations in related fields, results in a pooling of expertise, reduced overheads and sometimes the ability to access grants from national and international bodies that might not otherwise be forthcoming.

Natural products trade association PhytoTrade and the Union for Ethical Biotrade (UEBT) have recently partnered with the International Finance Corporation (IFC) to promote ethical sourcing and biodiversity in Africa. The partnership aims to protect the natural environment and reduce poverty in the countries involved, principally Tanzania, Mozambique and Malawi, which produce raw materials such as baobab and mafura, whose seeds yield a fatty butter that is used for conditioning the hair and skin.

The IFC is a member of the World Bank Group, and focuses exclusively on the private sector. Africa is rich in biodiversity, says the organisation, and there are many opportunities in the region for the production of ethically sourced products in both the food and cosmetics markets.

“When we asked 5,000 consumers what would make them purchase a product containing natural ingredients from Africa, protecting biodiversity and improving the livelihoods of African producers were the two most popular responses,” says Rik Kutsch Lojenga, executive director of the UEBT.

“This partnership will allow us to promote ethical sourcing of biodiversity in Mozambique, Malawi and Tanzania.”
Via the project, Phytotrade Africa aims to facilitate low-income farmers’ access to international biotrade markets and develop sustainable supply chains. It will map the availability and production capacity for the natural ingredients, and find community associations or co-operatives and SMEs that can be helped to process and market the products.
The project also aims to link those associations and SMEs with international markets.

In terms of how the partners work together, “The UEBT is a standards-setting organisation, so they provide a way of linking business in the developed world to businesses in Africa,” says Jonathan Landrey of Phytotrade.
“It gives people assurance - though not guarantees - that their suppliers are following the right standards to sustainability, fair trade, environmental protection etc.”

The Fair Trade (FT) model works well for commodities that can be traded in large volumes, he points out, because players can afford the FT certification and charge a premium. “But if you don’t have high volume or are producing more niche ingredients, then Fair Trade certification is too expensive to obtain.”

The UEBT provides a system that is intuitive for SMEs to follow. “Like a ladder, there’s a staged approach for SMEs to become fully certified,” he says. “Then, companies like Weleda are happy to work with them - the UEBT helps to bring in the big players, which are also its members.”

Meanwhile, the IFC’s role in the partnership, says Landrey, is to manage a fund originally set up by the Swiss, Danish and Dutch Governments to support the development of biotrade.

“[The IFC] is interested in developing new markets that will be able to access the forming banking sector,” he says. “The money they’ve provided Phytotrade with has helped to provide access to investment with the aim of developing SMEs to a level where they can obtain finance from venture capital etc.”

He adds: “We need to develop biotrade so that these companies can access technology to trade more efficiently, as we have come to a tipping point with artisan production and can’t just keep adding more people with more hand presses - scalability is limited. What is needed now is technology and that requires financing and solid supply chains and co-ordination.”

The IFC specifically deals with small-scale private sector investors and it also advises Phytotrade on impact - gender-based impact in particular - and how the money is being utilised. “They have skills to improve how we collect information,” says Landrey.

Meanwhile, in Europe, French governmental funding for the Genesys project has been given the go-head* by the European Commission (EC), stimulating another collaborative project.

Genesys, which is still at the research stage, aims to develop a new ‘zero-waste, positive-energy’ third generation of bio-refineries in France, using oilseed and lignocellulosic biomass from agricultural and forestry residues and urban waste to produce clean energy. Sources will include maize stalks, sunflower seed and rapeseed.

The energy will be in the form of electricity and heat, and the refineries also aim to produce food products and chemicals. The project also has an ambitious target of publishing around 100 scientific publications per year and filing around 40 patents on oilseeds and lipids over the next 10 years. Patent licences arising from successful projects will be sold to interested firms on commercial terms.

SAS Pivert, the holding company set up to run Pivert IEED (Picardie Innovatons Végétales, Enseignements et Recherches Technologiques Institut d’Excellence en Énergies Décarbonées), and which will run the Genesys project, will be 50% owned by the public sector and 50% by the private sector.

The public arm includes a handful of major universities and 14 other public research bodies acting together in a consortium, while the private arm consists of six industrial partners from the chemicals, food manufacturing and engineering sectors, who were chosen by the EC from the firms who answered the tender.

They include major French agri-food group Sofiprotéol; international chemicals group Solvay Rhodia; sugar technologist and bioethanol producer Maguin; French fine chemicals group PCAS; engineering and construction group SNC Lavalin; and IAR (Industries & Agro-Ressources), itself a ‘competitive cluster’ of around 215 companies.
To carry out their R&D work in biorefining, the partners will have access to a specially designed building and experimental facilities: the Centre BIOGIS, which should come on line in 2015, will make up the heart of an industrial zone that includes training facilities, processing plants and biodiesel production.

The partners were chosen by the EC because they have all developed specific skills and competencies that are useful and necessary to carry out the R&D activities.

The primary goal of research organisations is to conduct independent research to produce public scientific knowledge and they may have fewer options than specialised enterprises to respond to the technological and economic needs of the industry.

However, private investors would be unlikely to spontaneously put money into technological activities that give rise, for the most part, to free knowledge transfers.

The project, therefore, allows the universities to provide the initial research expertise, with 150 researchers - an overhead that would be impossible for the companies to provide - then later the companies will further refine and then commercialise the products that result. Patents will be granted in a joint-ownership fashion that reflects the different bodies’ personal contributions to the project.

IAR, the cluster involved in SAS Pivert, focuses on creating regional biorefineries based in the heart of production areas. Sixty per cent of its members are private and 40% are SMEs.

“The idea is to get a handle on R&D,” says Johan de Coninck, business development manager
at IAR.

“We will never produce an end product - we will build an intellectual property (IP) portfolio that will be proposed to our partners, which are grouped into a sort of a club. They pay us to get first refusal on that IP. If they are interested, they pay an option and then royalties if they are able to market it. If not, then we’ll put it out on the free market. Club membership is quite broad and includes firms such as Clariant, Archema, Chimex and BCIS.

“Any type of oilseed biomass will be produced,” he continues, “but since we are in France, it will probably be rapeseed, though we’re open to working with anything. We already have two big biorefineries on site, one right next to Pivert and owned by Sofiprotéol - a crushing plant for rapeseed oil that produces biodiesel and resins.”

What the collaborative enterprise of SAS Pivert permits, says de Coninck, is “to allow our members to innovate better and accelerate time to market for their innovations.”

 

Case in Point

One company that prides itself on its sustainability credentials is Coca-Cola, a firm that measures its commitments against key performance indicators and publishes them annually in a sustainability report.

PlantBottle is just one of its initiatives. Introduced in 2009 as the first fully recyclable PET plastic bottle made partially from plants, it recently passed the 15bn bottle mark. Around 8% of Coca-Cola’s PET plastic bottles last year contained PlantBottle technology.

The packaging offers the same functionality and recyclability as traditional PET plastic, claims Coca-Cola, but with a lighter carbon footprint and reduced dependence on fossil fuels. It uses natural sugars found in plants to make ingredients identical to fossil-based ingredients traditionally used in polyester fibres and bottle resins.

Coca-Cola has also collaborated with environmental organisations and academic researchers to ensure that the raw materials used come from sustainable sources and do not compete with food crops.

In addition to eliminating the equivalent of around 140,000 metric tons of CO2 emissions, the new technology also has business advantages, with Coca-Cola using PlantBottle as a key differentiator for its water brand Dasani.

At a time when it was suffering from falling sales, Dasani created a striking new visual identity for PlantBottle – including an image of a big leaf and green closures that played up the packaging’s connection to plants and nature - and saw its sales increase by 12%.

Rather than keeping the technology to itself, Coca-Cola has also taken the decision to license it to other manufacturers such as Heinz, which is now using it in its ketchup bottles. Since production began in 2011, more than 200m 20-oz ketchup packages, featuring ‘talking labels’ asking, “Guess what my bottle is made of?”, have been produced for sale in the US and Canada.

In anticipation of further licensing deals in the future, Coca-Cola has also teamed up with manufacturer JBF Industries to build a world-scale production facility for the bottles in Brazil. 




Europe | Collaboration

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