Oekom applied its Corporate Responsibility-Rating (CRR) to the 18 companies that agreed to participate in the assessment. Compared with other industries, the participation rate of the food industry in this study (64 percent) was about average.
The scoring range was from A+, which represented companies that “are especially progressive in the social/cultural as well as the environmental realm” to D-, which was defined as “hardly any noteworthy social/cultural or environmental activities could be identified.”
The highest overall score in the survey was a C+, a grade that three companies received. Ranked one, two and three respectively, the companies were U.K.-based Allied Domecq, Procter & Gamble, and Gillette. Thirteen companies received scores ranging between C and D+, and two companies, ConAgra and H.J. Heinz, received the lowest grades of D.
Oekom’s CRR “is based on a comprehensive set of criteria especially developed for the ethical and ecological assessment of companies.” The overall score is derived from combining a company’s social cultural and environmental ratings.
The social cultural rating is based equally on a company’s treatment of its employees and a company’s responsibility toward external stakeholders and society as a whole. The criteria for calculating the environmental rating include environmental management, environmental data, and the environmental aspects of a company’s products and services.
On average, companies scored better in the social cultural area of the study. Regular employee surveys, innovative social services, and employee diversity were among the areas in which some companies excelled.
Conversely, researchers found a major negative point to be a lack of monitoring or enforcement of standards for foreign suppliers. McDonald’s and Sara Lee were two of the companies cited as having regular and efficient monitoring of supplier labor policies around the world. The researchers noted that “in general, reporting tools are inadequate and only a few companies (e.g. Procter & Gamble) were able to provide us with a social report covering working hours, employee benefits, workplace diversity, etc.”
There seemed to be a similar difficulty with environmental reporting. Allied Domecq, Unilever and Cadbury Schweppes are some of the firms that regularly compile thorough environmental reports, but researchers quickly found that different methods are used to present data. These disparities highlight the need for common reporting standards.
The study also indicated companies are generally continuing to rely on industrialized production methods. No companies are sourcing raw materials from organic farms or sustainable fisheries, and most producers are not considering farming that minimizes the use of chemicals. Some firms, however, have some forward-thinking initiatives. To counter dwindling fish stocks, for example, Unilever has partnered with the World Wildlife Federation to establish the Marine Stewardship Council (MSC) labeling system. Unilever says it will be using only MSC-certified fish products by 2005.
On other environmental issues such as animal welfare and genetic engineering, few companies stood out as environmental leaders. Of all the companies surveyed, McDonald’s was the only one found to be promoting more humane methods of animal husbandry among its suppliers. Multinational food companies generally have embraced genetic engineering, with 16 of the 18 companies surveyed offering products with genetically modified organisms. The two that do not are Allied Domecq and Germany-based Sudzucker.
It seems that in the media, discussions of food industry social responsibility usually focus on only the products. The average overall score of C- for the industry seems to indicate there is much room for improvement in all areas of corporate social responsibility. Given the impacts multinational food corporations have on public health, the environment and foreign suppliers, social investors should take notice of the good and bad performers.