‘Decent work’ – good for business?

Victoria University of Wellington's Principles of Responsible Management Education programme co-hosts a panel discussion with the founders of leading Fairtrade companies Karma Cola and Little Yellow Bird.

By standing for something, you can stand out. That was the message from Karma Cola’s Matt Morrison during ‘How can “Decent Work” be good for business?’, a panel discussion at Victoria University of Wellington’s Victoria Business School.

The discussion was part of the University’s support for the United Nations’ Sustainable Development Goals and Principles of Responsible Management Education, or PRME, a global initiative to foster and embed sustainability and associated concepts such as ethics and corporate social responsibility in the teaching of tomorrow’s leaders.

Co-hosted by the University and the Sustainable Business Network during the recent Fairtrade Fortnight, the discussion brought together two of New Zealand’s most committed and successful Fairtraders: Morrison, co-founder and director of Karma Cola and All Good Bananas, and Samantha Jones, founder and chief executive of uniform company Little Yellow Bird.

“It’s a really rough fact that the people that put food on our tables and the clothes on our back are some of the most marginalised and the poorest in the world,” said Morrison, a Victoria Business School Master of Business Administration alumnus.

“All Good started in 2010 on a very simple basis: that we treat the people that grow our food, even if they are on the other side of the world, as if they lived right next door,” he said.

“Now this doesn’t sound very radical. I don’t know what it says about our world and the consumer food and beverage brands we’re used to but this and essentially providing decent work for growers in marginalised communities has been our point of difference that has driven our business from day one. And it’s really the only thing that sets us apart from every other banana and cola in the world.”

Jones spoke similarly about customers coming to Little Yellow Bird because of its “unique” story and supply chain. “But that’s something we very much want to see become the norm. We don’t want our supply chain to stay something that’s unique to us. We really think that the whole industry needs to move to this sustainable sourcing model.”

All Good has sold 15 million Fairtrade organic bananas in New Zealand; Karma Cola, launched in 2012, has sold 12 million bottles of Fairtrade organic soda, including Gingerella ginger ale and Lemony lemonade, in more than 20 territories (the United Kingdom, Australia and Hong Kong among them).

Being a banana farmer can be hard, said Morrison.

“You can earn as little as $3 a day. You can be standing in chemicals for as many as 14–16 hours of the day. Often the husband and wife work free in the plantations as part of the agreement with the plantation owner and there is no job security. It’s a very, very rough business.”

All Good, on the other hand, sources its bananas from the 150 farmers that make up the El Guabo Cooperative in Ecuador.

The farmers get paid a minimum price all year round for their produce, giving them stability and security in the volatile international banana market. Workers are paid a living wage and there is no child labour. In addition to the fair price, seven to 10 cents from each bunch sold is sent back to the cooperative in Fairtrade premium funding to be used on community projects.

“We were the first to import Fairtrade bananas here,” said Morrison. “Our strategy was we knew we would have to sell them for a dollar more. When you go into your supermarket you will commonly find bananas for $2.99; we knew that, to break even, our business eventually, after doing growth at some scale, would have to sell at $3.99.

“Everyone in the industry said, ‘Look, a dollar extra for the same bananas, you’re just not going to get the traction you think you need to establish a business.’ In fact, the first customers, we understand now, only stocked our bananas because they felt sorry for us.

“Well, since then, we have been able to sell 15 million bunches through New Zealand, and we’ve been able to send a lot of money back to the 150 families in the communities that grow these bananas. In fact, we’ve sent back over $1.5 million in community funding for schools and medical care.”

Sierra Leone, where Karma Cola sources its cola nuts, ranks 179 out of 187 countries on the United Nations’ Human Development Index and 60 percent of the population earns less than US$1.25 a day, said Morrison.

“Sierra Leone also grows the best cola nut in the world, but [before Karma Cola] no one in Sierra Leone has had the chance, other than in internal trading, to earn anything from their work to base themselves around the cola industry.”

With the Karma Cola Foundation supporting grower communities in Sierra Leone with education, HIV awareness, Ebola sensitisation, food security and other programmes, Karma Cola and All Good were named the world’s fairest trader at Fairtrade International’s 2014 international awards and one of the world’s most ethical companies in 2013 and 2014 by the Ethisphere Institute.

Morrison described doing good as “the purpose that drives our company: it’s between everything we do, and everybody that gets involved, whether it’s investors or employees, are part of that purpose”.

This means choosing investors “very carefully, because they’ve got to understand that some of the decisions we make are not going to be in their best interests. That alignment is vital”.

And it means being true to their purpose.

“Authenticity is vital for our business. We are selling to millennials. They are the most cynical generation in history. They will find a hole in your story in two seconds with their thumbs [on a device] and your brand will be shot. So authenticity to us is everything. We all know the big corporates that try to backload their stories and backload their purpose. It simply doesn’t work. Advertising means nothing to that generation. And this is giving us the opportunity to level with companies that are obviously thousands of times bigger than ours.”

The Karma Cola Foundation’s programmes are community-led.

“It’s just not possible for us sitting in Wellington or Auckland to tell the community in Sierra Leone what they should be spending their money on,” said Morrison.

Nor does it try to do everything.

“We want to support things that take time and create irreversible progress rather than short-term fixes,” he said.

Little Yellow Bird’s model differs from Karma Cola’s in that community outreach isn’t such a major focus.

The company does have good connections with the communities it works with, and gives back to them, including supporting schools and providing educational equipment.

But it is mainly focused “on making sure we produce in a way that’s fair”, said Jones, an Edmund Hillary Fellow (recognising her as a change-maker) and New Zealand’s Young Innovator of the Year in 2017.

“We feel that where we sit as a business we can provide much more value if we’re just providing people with good employment and they can choose how to educate their children and where to spend their money and what healthcare they need.”

Jones founded Little Yellow Bird in 2015 and it now supplies uniforms to more than 150 organisations in New Zealand, Australia and the United States.

“When I set out to set up this business the main thing I cared about was that [the uniforms] were manufactured ethically,” said Jones. What she didn’t understand is there were so many other steps in the supply chain before it got to that point, and they were equally if not potentially more important.

“Something I never knew before I started this business was just how water intensive and chemically intensive conventionally grown cotton is. This probably makes the biggest difference in our business – that we choose to source organically branded cotton. It is all from small-scale farmers. They generally have about one to two acres and they do things like plant beans between the cotton rows, they use a concoction of neem leaves and cow urine to spot spray the plans and that warns off the bugs, and they also only grow one crop a year compared with conventionally grown cotton, which is sometimes up to three crops a year, which is really intensive on the soil but also [involves] covering it in chemicals to actually get it to grow like that.”

Cotton then has to be transported, spun, knitted and woven, depending on the type of fabric being produced.

“So this is all the stuff that happens before we get back to where I originally started, which is what’s called the ‘cut, make and trim’ part of a fashion supply chain,” said Jones.

A key factor for Little Yellow Bird is that Fairtrade encompasses the entire supply chain, she said.

“So not just, ‘Was it manufactured in fair conditions?’ And that’s what we come up against when clients are comparing us with other companies. People have become really aware that customers want all this stuff and so they will present themselves by saying, ‘We know where our stuff was made.’ But that might be all they know. Often times they won’t know the deeper layers or where the raw material has come from.”

‘How can “Decent Work” be good for business?’ was moderated by Dr Christian Schott, co-ordinator of Principles of Responsible Management Education at Victoria Business School, and Laurie Foon, Wellington regional co-ordinator of the Sustainable Business Network.

Read the original article on Newsroom.