If you read the business press these days, you may come across a funny word: “stakeholders.”
It’s become a buzzword thanks to a statement issued by the Business Roundtable, an association of the leading U.S. CEOs, in August. The organization issued a wide-ranging document stating that it is a corporation’s purpose to benefit “all its stakeholders—customers, employees, suppliers, communities, and shareholders.”
The statement, signed by CEOs from companies ranging from General Motors and Ford to Apple and Goldman Sachs, attempts to dethrone a god that has been worshipped by business in recent decades: shareholder value. By this view, the purpose of a company is only to benefit shareholders. All other concerns are secondary. They should be set aside if they threaten shareholder value.
In the new picture, shareholders are only part of the picture. The needs of employees, the community, society, and the planet have to be taken in account as well.
The Roundtable statement has met criticism, partly because of the suspicion that it is nothing more than window dressing. Michael Collins, a blogger for Industry Week, asks, “What can corporate leaders do now to convince people that this is not just a public relations effort?”
Especially for the produce industry, the answer lies in another trendy word: sustainability. Not so long ago, sustainability had to do purely with environmental issues—avoiding using up or polluting natural resources.
Today it has a much wider application, often invoking the three Ps: people, planet, profits.
A company needs to consider the consequences of its actions on the people it deals with, notably employees and the surrounding community. In terms of the planet, it needs to be mindful of thrifty and nonpolluting uses of natural resources such as energy and water.
None of this activity, of course, is going to be truly sustainable if a company isn’t going to be around to carry it out. That takes us to the third P: profits. In the end, a business must still remain profitable.
Sustainability efforts are coming to the forefront in the world of produce. Stewart and Lynda Resnick, owners of the Los Angeles based Wonderful Company BB #:115157, recently pledged $750 million to the California Institute of Technology for sustainability research.
Miles Reiter, CEO of Driscoll’s Inc. BB #:116044, says, “Driscoll’s recognizes that driving to solutions for sustainable water management requires coordinated efforts from all stakeholders.”
Calavo Growers, Inc. BB #:113203, a leader in the world’s avocado industry, has launched its own sustainability campaign. A recent company report states: “Our sustainability strategy encompasses all aspects of our business. While our sustainability initiatives are focused primarily on our own . . . operations, we also extend our environmental and social expectations into our supply chain.”
James Martin, director of sustainability for the James K. Wilson Produce Co. BB #:106371, based in Nogales, AZ, observes, “We see sustainability, generally, as having to do with meeting the needs of the present without compromising the needs of the future.”
Gretchen Kreidler Austin, director of marketing and business development for SunFed BB #:150037, also based in Nogales, says, “At SunFed, we focus on two [main goals]: maintaining or surpassing our level of perfection in our produce, year after year; and doing all that we can to be stewards of our earth, reducing the use of and dependence on natural resources.”
Sustainability efforts among produce growers and shippers show a wide range of approaches. One is enhancing life in Mexican villages that are home to the companies’ migrant workers. Others involve water recycling, innovations in packaging, using renewable energy sources, and preventing food waste.
What about profits? Olga Borquez, sustainability manager for Wholesum Family Farms, Inc. BB #:135847, says that “projects we have finished on renewable energy have been very profitable.” She notes that “we save about 10 percent” of energy costs switching to renewable. “Solar panels provide an energy savings of 20 percent. The return on investment is six years.” Improved conditions and benefits for employees also reduce turnover (whose costs are underrated by many companies).
Efforts toward sustainability often pay off in the long term rather than in the short term, but many in the produce industry, especially family owned firms, recognize this and are willing to invest for the sake of a wider perspective.
Buzzwords come and go with fashion, but sustainability is a value that’s likely to stay around.