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Fair Tea Responsibility Deal:Can you create a responsible
cup of tea?IBM Finance Conference
Andrew Dakers
December 2011
Overview
Responsible business & sustainability A cup of tea – sustainability impacts and
possible responses Negotiating the Fair Tea Responsibility
Deal Feedback from the Office of Fair Trading
Sustainable development
“development that meets the needs of the present without compromising the ability of future
generations to meet their own needs.”
Regulators
Media scrutiny
Role ofgovernment
Globalisation
Adherence to standards
Attract &retain best
staff
Product info and
transparency
Return oninvestment
Society’sexpectations
Consumerawareness
Environmentalconcerns
Corporategovernance
The pressures facing the tea business
Responsible business todayWorkplace GovernanceEnvironmentCommunityMarketplaceEQUAL OPPORTUNITIES
REWARD AND RECOGNITION
HEALTH & SAFETY
WORK/LIFE BALANCE
RECRUITMENT AND RETENTION
TRAINING & DEVELOPMENT
HARASSMENT/ BULLYING
COMPLAINTS PROCESS
CONSULTATION & INVOLVEMENT
GREAT PLACE TO WORK
DIRECTOR’SRESPONSIBILITIES
CLEAR COMPANY DIRECTION
LEGISLATION
REGULATION
RISK MANAGEMENT
REPORTING
SOCIALLY RESPONSIBLE INVESTMENT
VALUES/PRICES
CODE OF BUSINESS CONDUCT
OPENNESS
STAKEHOLDER INVOLVEMENT
ENVIRONMENT LEGISLATION COMPLIANCE
WASTE MANAGEMENT
ENERGY USE
WATER USE
RECYCLING
ENVIRONMENTAL FOOTPRINT
TRANSPORT ISSUES
EMISSIONS
NEW BUILDING
COMMUNITY PARTNERSHIPS/SHARING
VOLUNTEERING
GOOD NEIGHBOUR PROGRAMMES
COMMUNITY CONSULTATION
GIFTS IN KIND
HEALTHY MARKET ENVIRONMENT E.G. EMPLOYMENT, CRIME
CONSUMER RIGHTS
FAIR PRICING
PRODUCT SAFETY
ACCESS FOR PEOPLE WITH DISABILITIES
SUPPLIER PRACTICES INCLUDING PAYMENTS/ TERMS/SUPPLIER INVOLVEMENT
EASY TO UNDERSTAND LABELS AND INFORMATION
SUSTAINABLE RAW MATERIALS
RESPECT OF PRIVACY
Overview
Responsible business & sustainability A cup of tea – sustainability impacts and
possible responses Negotiating the Fair Tea Responsibility
Deal Feedback from the Office of Fair Trading
The Nilgiri Hills in Chembakolli, South India.
IMPACT?
IMPACT?
IMPACT?
IMPACT?
IMPACT?
IMPACT?
Overview
Responsible business & sustainability A cup of tea – sustainability impacts and
possible responses Negotiating the Fair Tea Responsibility
Deal Feedback from the Office of Fair Trading
The ‘triangle of change’ …
Source: Triangle of change, One Planet Mobility, WWF-UK, 2008, pg 33
RESPONSIBILITY DEAL - EXAMPLEMigrant Worker Code of PracticeSeeks business signatories’ agreement to: Take an ethical approach to recruitment – both in relation to
potential employees and any impact on their country of origin
Support migrant worker travel and accommodation Support migrant worker integration into the host community Provide for the needs of those who speak little or no
English Prevent and address racial discrimination and harassment
in the workplace Afford fair treatment in the workplace
The stakeholder cast
The senior business leaders.
The campaigners.
The shareholders.
The customer.
Finance Director – Just Change TeaFinance Director – Best Earl Grey
Which?
The facilitator.The employees.
Friends of the EarthHuman Rights Watch
Community Mark Investors in People
UK Trade UnionIndian Trade Union
Shareholders & Investors Action Group
Overview
Responsible business & sustainability A cup of tea – sustainability impacts and
possible responses Negotiating the Fair Tea Responsibility
Deal Feedback from the Office of Fair Trading
Feedback from the Office of Fair Trading (OFT)
HIGH COST RESPONSIBILITY
DEAL
LOW COST RESPONSIBILITY
DEAL
Low cost, low impact Responsibility Deal
You have created an uncontroversial Responsibility Deal. This will have minimal social and environmental benefit.
Cost neutral or net profits increased through a range of fairly cautious social or environmental improvements.
Waste-reduction strategies, for example, may gain the business brand advantage or cut costs.
Issues of investor, regulator (OFT) or customer approval do not arise as their will be no impact of price.
Stakeholders may share (non-price related) information/ knowledge.
Conclusion >>
High cost, high impact Responsibility Deal
Well done in agreeing such a radical Responsibility Deal! This could have real social and environmental impact in the tea marketplace.
Unfortunately we (the OFT) may not be able to allow this agreement to proceed.
This is due to the constraints of competition law. We are concerned you may be colluding and fixing tea prices at an unacceptably high level for consumers.
We have taken action before….
OFT objections against supermarkets and dairies regarding claims of price-fixing in 2002 and 2003
Office of Fair Trading (OFT) issued a statement (2007) of objections against supermarkets and dairies regarding claims of price-fixing in 2002 and 2003.
Sainsbury’s, Asda, Safeway, Dairy Crest, Wiseman Dairies and The Cheese Company all admitted liability.
However, they also stated that their actions were motivated by trying to help British farmers.
At the time retailers and dairy firms were under pressure from farmers and politicians to give a better deal to their suppliers.
The Cooperatition Incubator believes there is a case for radical Responsibility Deals to be allowed on the basis of social and economic sustainability benefits that would be lost through a lack of cooperation between companies.
ConclusionsHigh cost, high impact Responsibility Deals throw up a variety of legal problems for companies with Competition law. Given this The Cooperatition Incubator is asking the Department for Business to: • Instruct OFT to publicly acknowledge that public policy goals are
relevant in EU and UK competition law;• Ensure OFT reforms introduce a small, specialist unit to balance
competition and wider public policy goals;• Create an online register/website for present and future public
interest driven voluntary agreements that enables:– Full transparency. – Application of best practice in developing agreements.– Capture of insights and feedback from stakeholders supportive
or against an agreement either when it is at the proposal stage and/or during its active life.
Based on an ethical approach to economics radical Responsibility Deals could: help accelerate the advance of responsible business
practice; in the context of the financial crisis and collapse in
trust in business, provide the basis for a much needed new ‘contract’ between business and society.
Synthesising the best of competition and cooperation we have coined the term ‘cooperatition’ to describe the approach.
Fair Tea Responsibility Deal:Can you create a responsible
cup of tea?IBM Finance Conference
Andrew Dakers
December 2011