Bloomberg News

Kellogg Among Food-Sellers Earning Failing Grade From Oxfam

February 26, 2013

Kellogg Among Food-Sellers Earning Failing Grade From Oxfam

The treatment of women and policies that seek to protect the rights of small farmers when companies try to buy up large tracts of land received the lowest scores. Photographer: Sanjit Das/Bloomberg

Major food businesses including Kellogg Co. (K:US) received failing grades in an Oxfam International report on how they support sustainability and human rights, including the treatment of women.

Associated British Foods Plc (ABF), the London-based maker of Ovaltine drinks and Twinings teas, scored lowest in the report, the human-rights advocacy group said. Kellogg and General Mills Inc. (GIS:US) were the next-lowest in the study released today. Nestle SA (NESN), Unilever NV (UNA) and Coca-Cola Co. (KO:US) had the best results, though none did better than 38 out of a possible 70 points.

“What we’re out to do is shine a spotlight and create attention on these issues,” Chris Jochnick, director of the private sector department of based Oxfam America, the U.S. arm of the U.K.-based global group, said in an interview. The study rated corporate policies related to the land rights of small farmers; exploitation of women, farmers and workers; climate change; business transparency; and water use.

Greater corporate concern for human rights, endorsed by the United Nations in 2011, has been urged by advocacy groups as businesses expanded operations in sub-Saharan Africa and other developing regions. Companies including ConAgra Foods Inc. (CAG:US) and Royal Dutch Shell Plc (RDSA) have joined initiatives such as the Roundtable on Sustainable Palm Oil and created certifications such as Fair Trade to monitor business practices and encourage improvements.

‘Simply Ridiculous’

Associated British Foods criticized the report, saying in a statement that any accusation it is hiding mistreatment of people in its supply chain is “simply ridiculous.”

“We treat local producers, communities and the environment with the utmost respect,” the company said in an e-mailed statement. “Where issues are found, they are appropriately resolved.”

Kris Charles, a Kellogg spokeswoman, said the Battle Creek, Michigan-based company was in contact with Oxfam as the group prepared its report and values the discussions.

“Kellogg is committed to a sustainable, ethical and transparent supply chain, and we are working with the farmers who grow our grains to drive collaborative sustainability improvements,” Charles said in an e-mail.

Big 10

The 10 businesses studied in the report are among the top producers in the global food-and-beverage industry, which Istanbul-based consultancy IMAP Inc. values at almost $7 trillion. Nestle, the world’s largest food company, last year had revenues of $92.2 billion, close to the gross domestic product of Slovakia and almost enough to put it in top third of all nations that year, according to company and International Monetary Fund data.

“By working cooperatively with more than 600,000 farmers that provide our raw materials, we are in a unique position to make a real impact,” Nestle said in a statement. “The sustainable use of water is also one of our highest priorities.”

With each of the seven areas rated on a scale of 1 to 10, companies did best on water use and transparency, issues where businesses have made great strides in recent years, Jochnick said. “There is a business case to be made in these areas, and they understand that,” he said.

Corporate Silence

The treatment of women and policies that seek to protect the rights of small farmers when companies try to buy up large tracts of land received the lowest scores. Many corporations either say nothing on the issues, or take initiatives that don’t address problems in a comprehensive way, according to the report.

None of the 10 companies knew or were trying to find out how many women farmers are involved in their supply chains or what kind of farming activities they are engaged in, Oxfam said in the report.

“Without such knowledge, the Big 10 cannot determine whether women are at risk of exclusion or exploitation, and whether women have equal access to the safer, better paid and more stable jobs often reserved for men at the farm level,” Oxfam said.

Efforts on projects to empower women, which Coca-Cola and Purchase, New York-based PepsiCo Inc. (PEP:US) have in place, “are only the beginning of the journey, not the end,” Oxfam said in the report.

Women’s Day

With scorecard in hand, Oxfam’s next step is to highlight individual issues to pressure companies on policies, Jochnick said. Treatment of women will be spotlighted first, with events coordinated with International Women’s Day on March 8.

Unilever said “meaningful progress” can only be achieved if producers, processors, traders, retailers and governments work together. “We also believe that more attention needs to be paid to the importance of improved nutrition,” it said in a statement. Unilever has headquarters in Rotterdam.

Companies that make consumer products, rather than major food shippers and traders such as Archer-Daniels-Midland Co. (ADM:US) and Louis Dreyfus Commodities BV, were selected for the report because of their recognizable brands, Jochnick said.

Other companies studied include Mars Inc., Danone SA, and Mondelez International. The scores of the 10 businesses: Nestle 38, Unilever 34, Coca-Cola 29, PepsiCo 22, Mars 21, Danone and Mondelez 20, General Mills and Kellogg 16, and Associated British Foods 13.

Vevey, Switzerland-based Nestle, which scored 7 on transparency and water, and Unilever, which received the same rating on treatment of farmers, were the only companies to score that high in any category.

Coca-Cola

Coca-Cola, with headquarters in Atlanta, and McLean, Virginia-based Mars said they looked forward to getting together with Oxfam on some of the issues raised by the study. “We believe in creating economic opportunities for women and smallholder farmers as well as stewarding water and other natural resources,” Coca-Cola said in an e-mailed statement.

Mondelez, spun off last year from Kraft Food Co., said it was surprised by Oxfam’s ratings. “Their scorecard is a missed opportunity to engage companies in positive change,” Richard Buino, a spokesman for the Deerfield, Illinois-based company, said in an e-mail. “By working together and focusing on our common ground -- rather than what we disagree on -- we’ll make much better progress toward common goals.”

General Mills, based in Minneapolis, declined to comment before the report’s release. PepsiCo didn’t respond to telephone and e-mail requests for comment. Danone (BN), based in Paris, said it had no comment for the moment.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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Companies Mentioned

  • K
    (Kellogg Co)
    • $64.3 USD
    • -0.58
    • -0.9%
  • GIS
    (General Mills Inc)
    • $52.71 USD
    • -0.51
    • -0.97%
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