How to negotiate for Ethics in a Crisis: The Greenpeace-Nestlé case

In March 2010 food-giant Nestlé had to learn the hard way, how to (not) react to a hostile NGO attack: Greenpeace had released a video that made the link between palm oil used in Nestlé’s Billion-Dollar-Brand KitKat and the destruction of rain forests in Indonesia that kills Orangutans.

http://www.greenpeace.org/international/en/campaigns/climate-change/kitkat/

The video was shocking and went viral in no time. Nestlé’s first reaction was to prohibit Greenpeace to show the video on the internet. A bad move in the world of social media, because this even multiplied the interest in the video. This was probably even wanted by Greenpeace because consequently the campaign gained an unbelievable momentum: Internet users kept sharing the video and as a sign of solidarity even used the logo of the Greenpeace campaign (the KitKat brand logo modified into Killer) as their Facebook profile picture.

Of course, Nestlé did not actively kill orangutans, like the video suggested. The problem was created deep down in their supply chain. Palm oil is cultivated in South-East Asia and it is an ingredient of about 50% of all products that we buy on a daily basis: Shampoo, cookies, lipstick, ice-cream. It is virtually everywhere. It is cheap, it grows fast, it does not have a strong taste, it keeps chocolate solid at room temperature. One hectare of palm oil will give you six tons of oil. In comparison: one hectare of soy only generates a yield of one ton of oil. No wonder the world’s hunger for palm oil is ever increasing. Consequently, cultivators of palm oil actually do cut down rain forests in order to set up huge mono-cultural palm oil plantations, thereby destroying the habitat of orangutans. However, they also lift people out of poverty and build schools and hospitals. Palm oil and deforestation is a classical « wicked problem », i.e. it is complex, controversial, value driven, concerns many stakeholders and spans many domains (economic, social, political, legal, ethical). This is why such problems are very hard to solve.

In my class « Business Ethics and Negotiation » I confront my students with this case and then they need to figure out in a group work what had gone wrong in this case and develop a strategy for what Nestlé should do next. I ask them to imagine that they are the top-notch Ethics and CSR consultant and that they need to convince the Nestlé board.

This spring we had the great pleasure and privilege to actually receive the debriefing for the group work form the real-life world class CSR consultant who had helped Nestlé to cope with the KitKat crisis: Scott Poynton from The Forest Trust, a non-profit organization, that helps companies to improve their supply chains.

Guest-speaker Scott Poynton

Guest-speaker Scott Poynton

Scott is a hybrid between an activist and a consultant: He had realized that fighting deforestation and other sustainability disasters was more effective with companies than against them. Consequently, he became a “critical friend” to corporations in environmental trouble. Scott has helped some of the world’s leading companies to transform their supply chains for the better.

That made him the perfect mediator for Nestlé: He understood the problems multinationals have in keeping their supply chains out of trouble and he also is a trusted person at Greenpeace.

Scott shared with us that companies when being attacked by an NGO like Greenpeace often have trouble understanding the issues. This certainly was the case when Nestlé was attacked. The Nestlé top-management tried to explain to the Greenpeace spokesperson of the campaign on the phone that the company was doing a lot for the environment. Greenpeace campaigners know this kind of reaction and they usually react by saying: « They do not get it. They need more pain. » And they did get more pain, when Greenpeace campaigners dropped from the ceiling and unfolded banners during the Annual General Meeting.

This is why Scott’s first lesson for companies under NGO attack is to really understand what the issue is and what your responsibility is.

The Forest Trust helped Nestlé produce and implement « Responsible Sourcing Guidelines » with the objective to avoid sourcing palm oil that was linked to deforestation.

It turned out that many of my students’ good suggestions for change were too long-term to really help Nestlé out of the acute crises they faced: Reforestation, finding a substitute for palm oil are all good ideas, but they take too much time. Nestlé needed to get its valuable brand KitKat out of the negative headlines quickly and reach an agreement with Greenpeace that they would give them a break in the campaign.

In order to do this Scott’s second lesson is: Find common ground. This is easier said than done. The worlds and mind-sets of NGos and companies are often quite contrary. A company fighting to save the profits of very successful brands like KitKat notoriously have trouble seeing the ethical issue hidden somewhere in the product’s supply chain. At the same time, for NGO activists it is very hard to understand how you could not see it. This creates tensions. Then just throw in some pride and ego and the fact that in a corporation nobody wants to be blamed for these kinds of messes and you have an explosive mixture for a first negotiation meeting.

This is why, for Scott, one of the most important things (yes, this is lesson Nr. 3) in negotiating in heated situations is to start with the values of the persons involved. If you want to mediate between conflicting parties, you always need to genuinely believe that your negotiating partner is a reasonable, rational, and decent person. If you enter a sensitive negotiation already convinced that your counterpart is mean and evil, they will sense this instantly and the necessary basis of trust cannot even be started to be built.

Scott’s stories show very nicely that if you want to negotiate for issues around ethics and sustainability, you cannot use the standard “I win – you lose” approach to negotiation. In this approach, we only divide the cake and try to get the biggest piece of it. This does not work, when you are dealing with “wicked problems”. In these cases, concentrating on positions only leads to impasse, misunderstandings, blaming, and zero-sum games that nobody can win.

If you want to successfully negotiate conflicts around wicked problems, you need to concentrate on interests and try to create a larger cake for all parties involved. Nestlé was not interested in deforesting Indonesia and killing orangutans. They are interested in having a well functioning supply chain for good quality palm oil. In order to find out the interests of the other party, you have to stay open and not judge the other side. You have to ask the right questions to understand them, listen carefully and then you can find common ground.

Thank you, Scott, for bringing to life what my students have learned in theory and negotiation role plays in class in a way that they will remember every time they will eat a KitKat.

Prof.-Bettina-PalazzoDr. Bettina Palazzo
Professor at BSL

Zara: It is time to detox!

The problem
Let’s talk about clothing. It is something essential, isn’t it? You could hate fashion and you would still need to buy and wear clothes. Who has not ever bought a piece of clothing from brands such as Nike, Adidas, Zara, H&M, Gap or Primark? Do you know that those clothes you have bought could contain toxic substances?

Indeed, yes, they might contain toxic substances. Substances that are thrown into the rivers close to the factories. The low prices that we usually pay for these clothes have an extra human cost paid by local citizens of the countries on where factories are settled. These chemicals are used to color clothes and have a huge impact on the environment and health through the whole supply chain. This happens because the chemicals are disposed into the rivers near the factories, but also when we buy and wash them, as the water used by the washing machine will drain polluted water to the environment.

The solution
Greenpeace was concerned with what it was happening with these chemicals and they launched a campaign called ‘Detox’ in 2011.

The first step was to do scientific research in order to be able to prove that they were right. They took small pieces of clothing from different brands from all over the world and analysed them in laboratories where they found out what different chemicals were inside these textiles.

Once they had the evidences, they started to put social pressure on the brands to join ‘Detox’.

If companies accepted to join the initiative to detox, several conditions had be fulfilled in order to become a detox leader:

  • They should have removed all the hazardous substances by 2020
  • Three fundamental principles should be followed:
    • Prevention and precaution: Taking precautionary action towards the elimination of dangerous chemicals.
    • Right to know: Total transparency between the brands and the consumers. Consumers have the right to know about the chemicals let off into their waterways.
    • Elimination: Eliminating those toxic substances and admitting that there are no environmentally safe levels for hazardous substances.

What happened with Zara?
Well, Zara was one of the first companies that Greenpeace started to attack. Why?

Zara belongs to the Inditex group, the biggest textile group in the world, and the usual strategy that Greenpeace adopts is to attack to the biggest prey, the one that can cause the biggest social impact. As soon as this prey is captured, the rest of the preys will tend to follow the biggest one. This is why Zara was the chosen as the first target of the campaign. Once Zara was convinced to join the Detox campaign, the rest of the brands were easier to convince.

How did they convince Zara to detox?
The only needed nine days of public pressure. Flash mobs, dressed in a very special way, made performances in front of the main boutiques of Zara all around the world. Social networks, bloggers and fashion lovers helped to increase public awareness about toxics in cloths.

Greenpeace also put a video clip on the topic in the social networks. This video imitates the style of a manga movie – a smart way to communicate to the young target group of Fast Fashion.

 

More brands involved in this campaign
After Zara accepted to detox, more brands started to join this campaign and others just did not want to follow this environmentally friendly change. This is why Greenpeace designed a special website in order to inform the consumer if the brands where they buy their clothes are detoxing or not.

Greenpeace distinguishes between three kinds of brands: detox leaders, green washers and detox losers. The first ones are the brands who are detoxing, the second ones are the brands that said they would detox but they are actually not doing anything and finally the third group is for the brands that have denied the propositions given by Greenpeace.

But, we can all be part of this, we can all chose to detox and buy clothes from the companies that take care of our environment and our health. It is also in our hands.

LET’S HELP THE WORLD, LETS DETOX!

Author: Miguel González López M.I.B. Student

Credit Suisse – Reputation is vital

Dr John Tobin, Managing Director and Global Head of Sustainability for Credit Suisse, presented a conference on “Finance and Sustainability in a Resource-Constrained World” to our Masters in International Finance students in the class of Prof. Alkis Tsiklis last week. Continue reading