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