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.”
The pressures facing the tea business
Media
scrutiny
Society’s
expectations
Attract &
retain best
staff
Return on
investment
Regulators
Product
info and
transparency
Role of
government
Adherence to
standards
Corporate
governance
Consumer
awareness
Globalisation
Environmental
concerns
Responsible business today
Workplace
EQUAL
OPPORTUNITIES
REWARD AND
RECOGNITION
Marketplace Community
CONSUMER RIGHTS
FAIR PRICING
COMMUNITY
PARTNERSHIPS/
SHARING
ENVIRONMENT
LEGISLATION
COMPLIANCE
PRODUCT SAFETY
VOLUNTEERING
WASTE
MANAGEMENT
HEALTH & SAFETY
ACCESS FOR
PEOPLE WITH
WORK/LIFE BALANCE DISABILITIES
RECRUITMENT AND
RETENTION
TRAINING &
DEVELOPMENT
HARASSMENT/
BULLYING
Environment Governance
SUPPLIER
PRACTICES
INCLUDING
PAYMENTS/
TERMS/SUPPLIER
INVOLVEMENT
COMPLAINTS
PROCESS
EASY TO
UNDERSTAND
LABELS AND
INFORMATION
CONSULTATION &
INVOLVEMENT
SUSTAINABLE RAW
MATERIALS
GREAT PLACE TO
WORK
RESPECT OF
PRIVACY
GOOD NEIGHBOUR
PROGRAMMES
DIRECTOR’S
RESPONSIBILITIES
CLEAR COMPANY
DIRECTION
LEGISLATION
ENERGY USE
REGULATION
COMMUNITY
CONSULTATION
WATER USE
RISK MANAGEMENT
RECYCLING
GIFTS IN KIND
HEALTHY MARKET
ENVIRONMENT E.G.
EMPLOYMENT,
CRIME
ENVIRONMENTAL
FOOTPRINT
TRANSPORT ISSUES
EMISSIONS
NEW BUILDING
REPORTING
SOCIALLY
RESPONSIBLE
INVESTMENT
VALUES/PRICES
CODE OF BUSINESS
CONDUCT
OPENNESS
STAKEHOLDER
INVOLVEMENT
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.
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 - EXAMPLE
Migrant Worker Code of Practice
Seeks 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 employees.
The facilitator.
UK Trade Union
Indian Trade Union
The
Shareholders
& Investors
shareholders.
Action Group
The
Friends of the Earth
campaigner
Human Rights Watch
Community
Mark
s.
Investors in People
The
Which?
customer.
The senior
Finance Director – Just Change Tea
business leaders.
Finance Director – Best Earl Grey
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)
LOW COST
RESPONSIBILITY
DEAL
HIGH COST
RESPONSIBILITY
DEAL
Conclusion >>
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.
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.
Conclusions
High 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