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    Published on: December 10, 2008

    Guidelines designed to help global retailers and manufacturers adhere to social justice principles at every step in the supply chain are being released today by a consortium of companies meeting in Hong Kong.

    The conference is of a group of the world’s biggest companies that has joined together to create the Global Social Compliance Programme (GSCP), described as a partnership of some of the world’s biggest companies working together for social justice and ethical treatment of workers throughout the supply chain. “GSCP is a business driven programme for companies that want to harmonise existing efforts,” the announcement says. “The aim is to deliver a shared, consistent and global approach for the continuous improvement of working conditions across all categories and sectors”

    The announcement continues, “The Programme represents the most significant business alliance for social justice yet seen, not just because it is practical and inclusive but also because it has strong CEO support,” and notes that the companies joining the GSCP include Walmart, Carrefour, Tesco, Ikea, Hewlett-Packard, Metro and Migros.

    CIES, the global food industry organization, is the major facilitator of GSCP, which is not limited to either the food industry or CIES members.

    At the Hong Kong meetings today, the GSCP board has released a “reference code,” described as “the first of a series of reference tools that will help companies and existing initiatives work together to deliver a common message and reduce duplication and confusion. The Reference Code describes best practice and relies on international conventions and guidelines from which it sets generic requirements … Long-term and genuine change, beyond the mission statement, is best served when stakeholders and business get together in constructive dialogue. This challenge is not industry or country specific. It applies equally to all who buy and sell goods. International organisations, governments, trade unions, NGOs, and consumers are all in support of a new business model.

    Terry Babbs, Tesco’s International Trading Law and Technical Director, is serving as chairman of GSCP, and engaged in the following exclusive e-interview with MNB.

    MNB: My first question is simple. Why this and why now?

    Terry Babbs: We’ve seen the development of codes and implementation systems deliver some real change. However, the number of codes has proliferated and approaches have diverged. This has led to duplication of effort and confusion amongst buyers and suppliers. The people in supply chains deserve better work. Also, buyers and policy makers need a clear framework to work efficiently. To help them, the current complexity needs to be simplified.

    We want to develop a single, clear and consistent message for suppliers globally for the shared benefit of the companies, the existing monitoring initiatives, the civil society stakeholders and especially the workers.

    MNB: Are there specific events or reports that created momentum to develop the GSCP Reference Code that is being released today, and what is the code designed to do?

    Terry Babbs: As recently as twenty years ago, working conditions in global supply chains were considered by business to be the accountability of governments. Our shoppers thought otherwise. They expect us to do what we can.

    We share these supply chains and our experience has been that addressing the root causes of these issues as individual companies does not deliver change. So, to answer your question, there was not really a specific event, more a growing realisation. We believe that working together, companies can improve their understanding and build trust. That will provide the foundation for real improvements.

    The Reference Code provides a clear and common set of requirements for fair labor conditions in the global supply chain. It will enable retailers and brand manufacturers to work toward mutual recognition of audit results and will apply to their entire supply chains, including suppliers and sub-contractors.

    MNB: In reading the materials, it seems like GSCP is very much about sustainability...but the human kind rather than the environmental kind. Are there ways in which GSCP dovetails with other sustainability efforts being undertaken by companies like Tesco?

    Terry Babbs: It seems to me that sustainability in business is the outcome of responsibility in purchasing. That means that business is done with all issues being managed in partnership between the retailer or brand manufacturer and the supplier. That includes the social and environmental issues as well as quality, safety, legal and financial. I would very much agree that involvement in GSCP is a part of efforts on sustainability by the participating companies.

    MNB: Why the decision to extend this effort beyond the food industry companies and CIES-related companies that ordinarily might band together on an effort like this?

    Terry Babbs: CIES is a global professional organisation that brings together major companies in the retail and consumer goods business. Its mission is to promote best practice and common industry positions on strategic non-competitive issues. It offers a neutral platform for retail companies to work on common issues with their suppliers.

    This problem needs to be considered as one of fundamental importance for business. It’s not just about clothes, or toys, or food. It’s not just about America or Europe or China. It’s not just about companies, or civil society or governments. It’s not just about factories or sweatshops or farms.

    It’s about people and it’s about all products, all countries, all stakeholders and every level in the supply chain. The participating companies share supply chains and share consumers everywhere. We had to build the scope of GSCP to recognise the nature of the global marketplace.

    MNB: GSCP, described as a challenge to uphold human rights in the workplace, seems like it could be a tough sell at the moment because of all the focus on the global recession. Do you have any concerns that its importance could be lost among the economic headlines?

    Terry Babbs: Consumers have less money. They’re not buying so much and they’re also trading down as they look to balance their own budgets. It’s a tough time for business too. However, the problems of divergence and duplication represent a clear opportunity for business to improve efficiency. I think that makes this a good time to tackle the problem.

    MNB: Beyond making recommendations related to social justice and human sustainability, what other efforts will GSCP be undertaking? Would you expect it to push for regulations or legislation that might have teeth, with consequences for companies that ignore these issues?

    Terry Babbs: We believe we need to find a common understanding of the entire audit process through the development of the reference tools before we can effectively start dealing with training, capacity building and developing management systems.
    As for other companies, they have to be accountable to their own shareholders and stakeholders for what they do. There are no plans to push for any regulations.

    MNB: Five years from now, what kinds of results would you ideally like to see have emerged from GSCP?

    Terry Babbs: I would like to see a clear framework to help all buyers and policy makers address social justice issues in supply chains. Also, the workers deserve better than they get. To help them, the current complexity needs to have been simplified through convergence. That means simpler buying, improved efficiency and better work.

    MNB: Will membership in GSCP and compliance with its recommendations translate into a business advantage for those who take part? How so?

    Terry Babbs: Participating companies will get a number of benefits. Their brand promise is likely to seek a fair deal for those who make, sell and buy their products. Their ability to deliver that promise will be improved. In addition, they will participate in a forum where they can openly discuss issues and challenges. Also, their experts will learn from others. Any business advantage should be measured in efficiency. There is a clear understanding that there will be no marketing activity around participation.

    KC's View:
    I think Babbs is right when he says that consumers hold retailers and manufacturers responsible and accountable for human rights violations in the supply chain. Which is why companies have to be aggressive – in the model proposed by GSCP – about making sure that things are done not just efficiently, but appropriately and correctly.

    Published on: December 10, 2008

    Bloomberg reports that Walmart has agreed to pay $54.3 million to settle a lawsuit in Minnesota that charged the retailer with forcing employees to work off the clock.

    According to the story, “The settlement covers workers employed between Sept. 11, 1998, and Nov. 14, 2008, at Wal-Mart and Sam’s Club locations, the retailer said today in a statement. The agreement prevents the case from being presented to a jury, which would have been asked to order Wal-Mart to pay as much as $2 billion … The lawsuit is one of more than 70 cases, including class actions, or group, suits, in which Wal-Mart has been accused of wage-law violations. The retailer lost a $78 million jury verdict in Pennsylvania in 2006 over rest breaks and unpaid work and a $172 million verdict in California in 2005 over meal breaks.”

    KC's View:

    Published on: December 10, 2008

    The Dallas Morning News reports that discount retailer Aldi has confirmed its plans to open at least 25 stores in the Dallas-Fort Worth marketplace.

    The units will be opened in spring 2010 and, according to the News, the list “includes new construction, space in existing shopping centers that it will convert and former free-standing Albertson's and Super 1 Foods stores.”

    The News goes on: “Over the past five years, Aldi stepped up its expansion plans and said it would move into Florida and Texas, both major strongholds of Wal-Mart Stores Inc. Originally, it had planned to open stores in Texas in 2009; it opened its first stores in Florida in September.

    “It started opening stores in Oklahoma in the early 2000s and now has 13 stores there. Last summer, it began building a $40 million, 500,000-square-foot distribution center in Denton to support stores in Texas and Oklahoma. It will be Aldi's first distribution center in the Southwest.”

    KC's View:
    If the expectations held by a lot of people hold true, and the economy is as bad or worse by 2010, then Aldi may be well positioned to do some real damage when it finally opens these Texas stores.

    One thing is for sure. Walmart won’t wait until 2010 to prepare for the onslaught. It was preparing yesterday.

    Published on: December 10, 2008

    The Grocery Manufacturers of America (GMA) announced yesterday that it has hired Pamela G. Bailey to be its new president/CEO.

    Bailey has for the past two years served as president/CEO of the Personal Care Products Council (PCPC), and also served in that same role at he Advanced Medical Technology Association. She also worked in the Reagan White House.

    KC's View:
    It is interesting that at both FMI and GMA, the new CEOs are women who have long experience in the trade association world. It certainly is a good thing that these jobs have not been filled by the same middle aged white guys who tend to get these gigs, but it is just as noteworthy that the trade association mold is not being broken – there had been some expectation that with so many changes taking place in industry and government, this might be an interesting time for more unorthodox choices. As one person said to me yesterday, “If all you have is a hammer, everything looks like a nail.”

    Not passing judgment here on either of the associations or their CEO choices. Just noting that there are some mutterings out there about direction and innovation…and that it is up to both organizations and their leaders to face the fact that the world is changing in profound ways.

    Published on: December 10, 2008

    The Boston Globe reports that a new Greenpeace study into sustainable seafood practices by the nation’s supermarkets shows some marginal improvement when it comes to preventing the fishing of imperiled marine species.

    According to the Globe, Greenpeace issued a report last summer saying that every one of the nation’s 20 biggest supermarket chains got a failing grade, operating “with little consideration for the health of fish stocks and where or how seafood was caught.”

    In an update, Greenpeace now says that four chains get passing grades – Whole Foods, Ahold, Target and Harris Teeter. The Globe writes that “none of the companies in the report had policies or practices that guaranteed they won’t sell seafood from fisheries that are harming sea turtles, dolphins, seals, sea lions and other marine mammals. Still, eight of the companies – including Whole Foods and Ahold - have removed some threatened species such as orange roughy and sharks from their shelves.”

    The new Greenpeace rankings are:

    1. Whole Foods Market
    2. Ahold USA
    3. Target
    4. Harris Teeter
    5. Walmart
    6. Safeway
    7. Wegmans
    8. Kroger
    9. Aldi
    10. Costco
    11. A & P
    12. Giant Eagle
    13. Publix
    14. Winn-Dixie
    15. Delhaize
    16. Supervalu
    17. Trader Joe's
    18. Meijer
    19. H.E. Butt
    20. Price Chopper

    KC's View:

    Published on: December 10, 2008

    The El Paso Times reports that Texas State Sen. Eliot Shapleigh (D-El Paso) has introduced legislation that would ban the use of trans fats in foods sold by the state’s restaurants. If approved, the ban would take effect in 2011.

    "Already, California, New York and McDonald's are moving to healthy diets," Shapleigh said. "Texas should move to healthier lifestyles, too."

    The story notes that California, Pennsylvania, Connecticut and Maryland have imposed restaurant trans fat bans, as has New York City.

    KC's View:

    Published on: December 10, 2008

    • It is perhaps a measure of the current economic situation that members of the California Grocers Association (CGA) have contributed 120 pallets of food to Governor Arnold Schwarzenegger’s WE Can Food Drive.

    • The Minneapolis/St. Paul Business Journal reports that General Mills will change the way it advertises its Yoplait Yo-Plus yogurt, and will limit “unsupported” claims about how the product aids digestive health. The changes are a response to a complaint filed by Dannon, which makes Activia, a similar product.

    USA Today reports this morning that “this winter, Americans will use online coupons, up 22% from the same period last year, says Simmons Market Research Bureau. Online coupon services such as Coupons.com, RetailMeNot.com and CoolSavings.com offer coupon discounts on a range of products from Nintendo Wii to DVDs to food and toys … In November, more than $50 million in savings was printed on Coupons.com, more than double May's total.”

    KC's View:

    Published on: December 10, 2008

    • The Kroger Co. today reported that it had Q3 total sales of $17.6 billion, an increase of nine percent over the same period last year, on same-store sales that were up 5.6 percent without fuel and 7.8 percent including fuel.

    Net earnings in the third quarter totaled $237.7 million, compared to $253.8 million during the same period a year ago. Kroger noted that this year’s earnings results “include an after-tax charge of $15.9 million … related to Kroger's $25 million insurance deductible for disruption and damage caused by Hurricane Ike. Excluding this charge from Hurricane Ike, third quarter net earnings were $253.6 million.”

    KC's View:

    Published on: December 10, 2008

    • The Boston Globe reports that Dunkin’ Donuts plans to appoint a new CEO this morning – Nigel Travis, who resigned last week as CEO of Papa John’s International.

    Travis will succeed Jon Luther, who is expected to remain with the company in some capacity.

    KC's View:

    Published on: December 10, 2008

    • Walmart has confirmed that it has decided to temporarily suspend its stock buyback program, saying that the current recessionary economy and credit instability made such a move a wise course for the moment. The stock also has gotten more expensive – up 19 percent since the beginning of the year.
    KC's View:

    Published on: December 10, 2008

    Got the following email from an MNB user yesterday…

    I read the “MorningNewsBeat” every day it comes out. For the most part, I like the way you guys think, until you start getting too liberal on me. I just want to ask, what is your obsession with Whole Foods??? Why do you put this company on a pedestal when clearly it is a format that is proving to drive up the costs of goods, and cannot sustain under hard times.

    Why not mention more successful companies who are truly innovators and clearly care about the consumer and not try and “green wash” us with wrong information. Wegmans, Publix, Harris Teeter, Safeway, Walmart, to name a few….and of course HEB here in Texas….all of whom make it happen day in and day out, with no adverse affect on the consumer other than keeping the costs in line….plus you can take your groceries home in plastic bags since all of them have successful recycling programs, which supports U.S. business and not off shore business.


    I have to admit that I found this pretty funny, since at various times over the past few years I have been accused of being obsessed with almost all of those companies to some degree or another. I’ve gotten emails asking whether it was possible to write an MNB without mentioning Walmart (it is, though not often since Walmart is, after all, the world’s biggest retailer) and, recently, whether I was jinxing Wegmans by saying nice things about the company so often. It has been noted that I’ve become a fan of Steve Burd (something that nobody would have expected a few years ago), and I’ve often written about Publix, Harris Teeter and HEB.

    Now, to be honest, some of the coverage here isn’t a matter of choice. Since “News” is our middle name, we do have to respond to what is going on…and the Whole Foods-Wild Oats deal, and the FTC’s interminable desire to derail it, is news. And I think it is fair to say that since Whole Foods helped to create an entire segment of the industry, and currently is facing hard times, tracking and commenting on its various travails ought to be part of what we do here. (The same way that Starbucks is one of the most fascinating marketing stories of the moment…the gift that keeps on giving if one is in the punditry business.)

    You may not agree, but I have no problem with the idea that Whole Foods decided to stop offering plastic bags and essentially force customers to use non-disposable canvas bags. (And not just because I believe fervently in the use of canvas bags.) Whole Foods decided to stand for something, and it strikes me that this stand probably was pretty much in line with opinions held by many of its shoppers.

    And, let’s be clear. It wasn't like Whole Foods was forcing all shoppers to use canvas bags…just its customers. People who disagree with the policy have the right to shop elsewhere.

    I like that sort of differentiation. And all of the chains you mentioned – Wegmans, Publix, Harris Teeter, Safeway, Walmart and HEB – have a variety of ways of differentiating themselves in the marketplace. For which we at MNB World Headquarters respect them.
    KC's View:

    Published on: December 10, 2008

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    KC's View:

    Published on: December 10, 2008

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    KC's View: