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Innovations For Healthy Value Chains

By Helen Richardson,2014-03-22 09:25
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He is author of several field guides on supply chains, territorial development and market linkages. Mark participates actively in the small holder

Innovations for Healthy Value Chains:

    Cases, Tools, & Methods

    Editors:

    Jason Jay

    MIT Sloan School of Management

    Hal Hamilton, Chris Landry, Daniella Malin, Don Seville, Susan Sweitzer

    Sustainable Food Lab

    Peter Senge

    MIT Sloan School of Management

    Society for Organizational Learning

    Andrew Murphy

    WWF

    May 2008

     ?2008 Sustainable Food Lab Innovations for Healthy Value Chains -- 1

    Table of Contents INTRODUCTION ................................................................................................................................................ 4 AUTHOR BIOS .................................................................................................................................................... 5 CASE STUDIES ................................................................................................................................................... 8 THE GLOBAL FOREST & TRADE NETWORK: CREATING A PATH TOWARD FOREST PRODUCT CERTIFICATION ....... 10 Why the GFTN? .......................................................................................................................................... 11 Creating the GFTN...................................................................................................................................... 12 How it works: Results .................................................................................................................................. 13 The Relationship between the Responsible Purchasing Guide and the Keep It Legal Manual ........................ 14 Lessons Learned & Challenges .................................................................................................................... 15

    Operational Lessons ............................................................................................................................................. 15

    Internal Lessons .................................................................................................................................................... 16

    External Lessons ................................................................................................................................................... 16 Moving forward - Where is the GFTN heading? ........................................................................................... 17 Closing questions ........................................................................................................................................ 20 CERTIFYING LIPTON TEA: UNILEVER AND THE RAINFOREST ALLIANCE .............................................................. 26 Setting the Stage at Unilever ........................................................................................................................ 26 What is the Rainforest Alliance? .................................................................................................................. 28 Choosing Rainforest Alliance ...................................................................................................................... 29 Laying the groundwork ................................................................................................................................ 30 Going public ............................................................................................................................................... 31 Challenges ahead ........................................................................................................................................ 32 Smallholder outreach with the KTDA........................................................................................................... 33 Looking forward .......................................................................................................................................... 34 Closing questions ........................................................................................................................................ 34 INDICATORS FOR POVERTY AND HUNGER IN COFFEE SUPPLY CHAINS: GREEN MOUNTAIN COFFEE ROASTERS CONFRONTS LOS MESES FLACOS ...................................................................................................................... 35 Evaluating Corporate Social Responsibility Programs ................................................................................. 35 Phase II ...................................................................................................................................................... 38 UNCONVENTIONAL ALLIES: COKE AND WWF PARTNER FOR SUSTAINABLE WATER ........................................... 44 Two Journeys, One Destination: Confronting Our Most Basic Need ............................................................. 45 Seeing the Larger Business System .............................................................................................................. 49 Getting to Know Your Neighbors ................................................................................................................. 50 Getting to What Really Matters .................................................................................................................... 52 The Risks..................................................................................................................................................... 54 Either We All Hang Together or We‘ll Hang Separately ............................................................................... 55 THE JUAN FRANCISCO PROJECT COSTCO AND CIAT‘S EXPLORATION OF GUATEMALAN GREEN BEANS .............. 57 An Unusual Gathering ................................................................................................................................. 57 Origins ........................................................................................................................................................ 58 Outcomes of the Juan Francisco Project ...................................................................................................... 62 Remaining challenges and questions ............................................................................................................ 64 HEALTHY VALUE CHAINS TOOLKIT: LEARNING FROM PRACTICE ................................................. 69 SECTION 1: PROCESS INNOVATIONS (TOOLS AND METHODS USED TO BRING ABOUT CHANGE): ............................. 73 Tools & Methods for Strategizing ................................................................................................................ 73

    Brand Imprint .......................................................................................................................................................... 73

    Inquiry and Engagement Workshop .......................................................................................................................... 75 Tools & Methods for Partnering .................................................................................................................. 77

    Memorandum of Understanding ............................................................................................................................... 77

    Communications partnership .................................................................................................................................... 79 Tools & Methods for Seeing the System ....................................................................................................... 81

    Third-party NGO analysis of value chain .................................................................................................................. 81

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    Participatory Indicator Development......................................................................................................................... 84 Systems Thinking: Causal Loop Diagramming.......................................................................................................... 87 Learning Journey ..................................................................................................................................................... 91 Tools & Methods for Dialogue, Participatory Engagement, and Decision Making ........................................ 92 Peacemaking Circle ................................................................................................................................................. 92 The Ladder of Inference ........................................................................................................................................... 94 The Four Player Model ............................................................................................................................................ 96 Tools & Methods for Institutionalizing ......................................................................................................... 99 Local Bilateral Engagement ..................................................................................................................................... 99 Local Interpretation Workshop ............................................................................................................................... 101 Joint Target Setting ................................................................................................................................................ 103 Modular Implementation and Verification (MIV) Toolkit: ....................................................................................... 104 Guide to Responsible Purchasing of Forest Products ............................................................................................... 106 Keep it legal - Best Practices for Keeping Illegally Harvested Timber Out of Your Supply Chain ............................. 108 SECTION 2: STRUCTURAL INNOVATIONS - CHANGES IN INFRASTRUCTURE THAT ENABLE HEALTHY VALUE CHAINS

     ...................................................................................................................................................................... 110 Value Chain Structures .............................................................................................................................. 110 Risk sharing fund ................................................................................................................................................... 110 Collaborative Foundation for chain upgrading ......................................................................................................... 112 Organizational Structures.......................................................................................................................... 114 Sustainability Manager embedded in buyer group ................................................................................................... 114

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Introduction

    Peter Senge

    In August of 2007, some forty academic, business, and NGO leaders gathered near Boston to look at the state of ―healthy value chains‖ those that provide social and economic benefit to all

    players in the chain while providing greater protection for ecosystems and natural resources. The meeting, convened by the Sustainable Food Lab, WWF, and the Society for Organizational Learning, provided an opportunity for value chain practitioners in several industries including

    food, textiles, and energy, among others to compare notes on common problems and

    innovative solutions.

    This document is an outcome of that meeting, and is offered in preparation for a follow-up meeting to be held in Rhode Island in June, 2008. In the pages that follow, we bring together several case studies as well as descriptions of tools and methods that have been useful to members of this ad hoc coalition of value chain veterans. We expect it will be useful, by the way, even if you are unable to join us in Rhode Island.

    From numerous examples we have seen that there are three legs to the innovation stool: the governing ideas or framework that guide our work; the innovation strategies and processes that help us make progress; and the critically important process of institutionalizing the change so that it becomes part of the DNA of the organization. We address all three in this document.

    Transforming value chains is a complex undertaking that begins with understanding the social and environmental contexts in which we are trying to create efficient supply chains for high quality products. The kind of understanding that leads to improvement is greatly enhanced by partnerships that enable us to work beyond our traditional boundaries by bringing together the perspectives of both civil society and business throughout the chain.

These partnerships, in turn, are most effective when we use strategies that enable us to see the

    system in ways that can reveal both current reality and opportunities to create economic, environmental, and social improvement. New insight allows us to implement improvements in

    the value chain and learn from that experience, so that we can eventually institutionalize the

    successful innovations as changes in infrastructure.

What follows is a beginning an introduction to what some companies and NGOs have tried in

    order to achieve a variety of goals: to address poverty in producer communities, for example, as Green Mountain Coffee Roasters did, or re-build a brand based on third party certification of its product, as Unilever is attempting with its Lipton Tea.

    We hope to build on this body of knowledge over time so that what we learn can benefit all of us doing business in an increasingly complex environment.

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Author Bios

Hal Hamilton

    Hal Hamilton co-directs the global Sustainable Food Lab, whose members come from more than 70 organizations, including farming, manufacturing, food service and retail leaders, as well as social and environmental NGOs and the public sector. Hal‘s background includes commercial farming, farm organization leadership, creation of rural development and leadership initiatives, and speaker and consultant to many foundations and agricultural development organizations. Hal‘s education was at Stanford University and the State University of New York, Buffalo. He has written numerous columns and journal articles and three chapters in books on agricultural policy and change. He is a proud father and grandfather, and he lives in an eco-village on a working farm in Vermont.

Jason Jay

    Jason Jay is a doctoral student in the Organization Studies Group at the MIT Sloan School of Management. His research focuses on the leadership and organizational change processes involved in generating sustainable business practices. Alongside his studies, Jason has been active in integrating sustainability into the research, education, and campus operations of MIT - he was the co-founder of the MIT Generator coalition, and sits as graduate representative on the Campus Energy Task Force of the MIT Energy Initiative. He is also an Associate Consultant at Dialogos International, where he has contributed to the firm's action research, leadership education, and organizational change consulting for organizations such as BP and the World Bank. Jason received a Masters in Education and an A.B. in Psychology from Harvard University. He and his wife live in the South End of Boston.

Chris Landry

    Christopher Landry, M.Ed is former Director of Development & Communications for the Sustainable Food Lab. He now consults with businesses and NGOs on communications strategy and is producing a documentary film about the global shift toward sustainability. More information is available at www.christopherlandry.com.

Mark Lundy

    Mark Lundy has formal training as a Social Scientist with emphasis on enterprise development and natural resource management by rural communities. His work focuses on developing knowledge, skills and tools to improve linkages between rural communities and markets for agricultural products. Mark recently completed the first phase of a learning project bringing together 25 development agencies in Central America to improve their understanding and practical use of a range of agro-enterprise development tools to improve rural livelihoods. He is author of several field guides on supply chains, territorial development and market linkages. Mark participates actively in the small holder initiatives supported by the Sustainable Food Laboratory both in Latin America and Africa with a particular focus on innovative and inclusive organizationals models that support sustainable businesses and business models along supply chains.

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Daniella Malin

    Daniella Malin is a project leader with the Sustainable Food Lab and in charge of the Food Lab‘s new climate initiative. Daniella has a background in project management, cultural communications, journalism, environmental education, computer science, farming and 6 years of research on a variety of food, agriculture and sustainability related topics. Prior to her work at the Sustainability Institute Daniella wrote software on a three-person team to monitor and control the world‘s largest millimeter-wavelength radio telescope currently under construction in Mexico. Daniella received her B.A. in Literature and Society from Brown University.

Andrew Murphy

    Andrew Murphy is a New Jersey native and a graduate of Georgetown University. He worked as a change management consultant at Accenture before moving to Ghana to serve as a small enterprise development volunteer in the US Peace Corps. After Peace Corps, he was hired to manage a USAID-funded Community-based Ecotourism Project in Ghana. Andy recently completed a concurrent masters program at Harvard Business School (HBS) and the Kennedy School of Government. While at HBS Andrew was a social enterprise fellow for two summers, served as a Board Fellow with Accion International, and was part of the winning team in the pilot track of the 2006 HBS Social Enterprise Business Plan contest. After completing business school, Andrew served as a Service Leader Fellow with the World Wildlife Fund (WWF) and HBS for a year, and since July 2008 has been the Director of Strategy, Research and Development within the Markets unit of WWF's US office . Within the Markets Group he is coordinating planning for WWF's Market Transformation Network Initiative, and developing strategies for identifying and engaging potential corporate partners.

Peter Senge

    Peter Senge is a senior lecturer at the Massachusetts Institute of Technology and founding chair of the SoL (Society for Organizational Learning) Council. He is the author of The Fifth

    Discipline: The Art and Practice of the Learning Organization, co-author of the three related

    fieldbooks, Presence: An Exploration of Profound Change in People, Society, and Organizations

    and most recently, The Necessary Revolution: How Individuals and Organizations are Working Together to Create a Sustainable World. Peter lectures throughout the world about

    decentralizing the role of leadership in organizations to enhance the capacity of all people to work toward healthier human systems.

Don Seville

    Don is the co-director for the Sustainable Food Laboratory, a multi-stakeholder project with the mission of innovating ways to increase the sustainability of the mainstream food system. He is leading the Sustainable Livelihoods Initiative, which is developing partnerships between companies and NGOs to pilot innovations that improve the competitiveness and sustainability of small-scale farming systems. Within the food lab Don is also managing the ―New Business Models for Sustainable Trading Relationships‖ project, a 4 year project with NGO and corporate

    partners to improve market access and livelihoods of small scale producers in Africa in crops including cocoa, dried beans, bananas, and fresh vegetables.

    Don received his M.S. in Technology and Policy from the Massachusetts Institute of Technology in 1994 and has worked extensively with the Society for Organizational Learning. In 1997, he

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helped found the Sustainability Institute and Cobb Hill Co-housing, a farm based ―eco-village‖

    in Hartland, Vermont where he currently lives with his wife and son and is learning to raise sheep.

Susan Sweitzer

    Susan Sweitzer is a writer, researcher and project manager for the Sustainable Food Lab whose members come from more than 70 organizations, including farming, manufacturing, food service and retail leaders, as well as social and environmental NGOs and the public sector. Susan‘s background includes working with organizational development and project management in local, state, and international agricultural policy; creating and implementing joint projects between public health systems and school districts to address medically underserved pediatric populations; representing the Cobb Hill community throughout the building process of the homes; and the Management Director for the Center for Sustainable Systems. Susan has a B.S. in Psychology from Earlham College and a B.S.N. from Eastern Kentucky University and currently lives in a ecologically oriented co-housing community in Vermont.

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Case Studies

The Global Forest & Trade Network:

    Creating a Path Toward Forest Product Certification

    The Global Forest & Trade Network is WWF's initiative to eliminate illegal logging and improve the management of valuable and threatened forests. By facilitating trade links between companies committed to supporting responsible forestry, the Global Forest & Trade Network creates market conditions that help conserve the world‘s forests while providing economic and

    social benefits for the businesses and people that depend on them. The GFTN is also WWF‘s

    best-developed delivery mechanism for assisting companies to achieve credible certification and serves as a model for WWF teams working on certification and standards for wild-caught fish, aquaculture, and agriculture. The case highlights the history, challenges and lessons learned by the Network and also presents some of the tools developed to facilitate the path to certification for companies involved in the forest trade.

Indicators for Poverty and Hunger in Coffee Supply Chains:

    Green Mountain Coffee Roasters Confronts Los Meses Flacos

    When Green Mountain Coffee Roasters decided to measure the impact of their CSR programs, they asked the Sustainable Food Lab and the International Center for Tropical Agriculture (CIAT) for help. Together, they went into producer communities to identify useful indicators (in partnership with the growers themselves) that would enable the company to assess the ability of coffee growers to make a living. What they didn‘t expect was to confront los meses flacos, the

    thin months, the three or four months every year when many coffee growers and their families experience hunger. The case presents the approach the project team used to develop the indicators, and discusses the challenge of addressing poverty and hunger within something as large as the global coffee market.

Certifying Lipton Tea: Unilever and The Rainforest Alliance

    Having invested in sustainable tea cultivation for almost a decade, Unilever decided to expand its efforts and communicate its accomplishments to Lipton and PG Tips customers, as part of a larger effort to integrate corporate responsibility into the company's core brands. To make Unilever's claims about sustainable agriculture credible, however, they needed a third party certifier. The Rainforest Alliance was a natural choice for a company sourcing from both large estates and smallholders, and with a compatible approach to sustainability. Rainforest Alliance certification also held the promise of improving the tea industry as a whole by bringing premium prices and additional income to producers worldwide. The two organizations set ambitious targets: all Lipton and PG Tips tea sold in Europe would be certified by 2010, and all Lipton tea worldwide by 2015. The process began with the certification of three key estates in Kenya and is accelerating from there. The case describes the process of strategizing, engagement, and on-the-ground implementation of sustainable agriculture practices in Unilever's supply chain, and poses questions about challenges that may lie ahead.

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Unconventional Allies: Coke and WWF Partner for Sustainable Water

    Water is the main ingredient directly and indirectly in The Coca Cola Company‘s products. It is also the center of a growing global crisis more than 1 billion of the world‘s people do not have

    access to safe drinking water and the number is likely to expand significantly in the coming decades. Confronting this challenge, Coke began to study water use and water efficiency with its network of bottlers, starting in 2002. As part of the inquiry, it became obvious that Coke needed to gain a more systemic view to expand its understanding of the watersheds and ecosystems

    that surround and feed its operations. Having established a long term relationship with the World Wildlife Fund already, Coke reached out to the WWF for help in understanding the larger ―water footprint‖ of the company‘s operations. Early on, the WWF exposed a challenging fact –

    that while 2.5 liters of water directly enter 1 liter of Coke, as much as 200 liters of water or more go into producing the full list of agriculturally-derived ingredients -especially sugar - in that same liter. From this initial insight, Coke and WWF began engaging at multiple levels, from senior executives to individual bottlers near critical river basins. Through the process, they have had to confront the risks, challenges, and learning inherent in bringing together two organizations with radically different cultures and missions, toward the common goal of using water more sustainably.

The Juan Francisco Project Costco and CIAT’s Exploration of Guatemalan Green Beans

    French-style green beans flow every day from remote farmers in Guatemala to Costco stores throughout North America. They pass through the Cuatro Pinos Cooperative and the Los Angeles Salad Company, who provide technical assistance to farmers and prepare the beans for sale to North American consumers. A Costco executive, through her participation in the Sustainable Food Lab, began to wonder whether farmers in value chains like this one were getting a fair price, and whether their families got the care and services they needed. Conducting this inquiry required transparency among all the players in the chain, in order to understand how profits from green bean sales were being distributed. Engaging with an external, non-profit research center, CIAT, was critical to building trust, thus providing a neutral observer of value chain activities. Through CIAT's extensive value chain analysis, and a skillfully conducted supply chain summit in Guatemala, it became possible for participants from each of the supply chain companies to see and feel the system of which they were a part. They made a decision to invest in sustaining and upgrading the existing commitments to alleviating rural poverty, through the establishment of a Foundation in Guatemala, funded by green bean revenues. The case study describes this process, and some of the challenges involved in institutionalizing the experiences and insights of the Project.

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     The Global Forest & Trade Network:

    Creating a Path Toward Forest Product Certification

    Case author: Andrew Murphy, Director of Enterprise Planning, World Wildlife Fund

To transform the global market place into a force for saving the world‘s valuable and threatened

    forests, while providing economic and social benefits for the businesses and people that depend on them.

     --GFTN mission

    On April 10, 2008, Procter & Gamble and Domtar Corporation joined the North America Forest & Trade Network (NAFTN), of the World Wildlife Fund (WWF). NAFTN is the North American arm of the Global Forest & Trade Network, WWF's initiative to eliminate illegal logging and improve the management of valuable and threatened forests. By facilitating trade links between companies committed to supporting responsible forestry, the Global Forest & Trade Network creates market conditions that help conserve the environmental viability of the world‘s forests while providing economic and social benefits for the businesses and people that depend on them.

    ―Companies that seriously commit to responsible wood sourcing can have significant positive impacts on forest conservation,‖ said Kerry Cesareo, Manager of the NAFTN, WWF. ―WWF is

    delighted to have two of North America's leading manufacturers of paper and consumer care products join the Network. Their commitments to source fiber responsibly and promote credible forest certification of their sources set an example for other companies to follow.‖

    ―WWF has consistently been a great resource for Procter & Gamble and our suppliers as we work to improve the sustainability of our products. I look forward to formalizing this relationship via the North American Forest & Trade Network and to having access to the collective experiences of WWF's global Network,‖ said Celeste Kuta, Associate Director of External

    Relations for P&G Family Care.

    As participants of the Global Forest & Trade Network, companies make commitments in a stepwise approach to phase out all trade in wood from unknown, illegal, and controversial sources, and to phase in wood that originates from sources designated as known, known licensed, and complying with policy, verified legal, in-progress toward certification, credibly certified, and recycled. WWF‘s Global Forest & Trade Network has participants across 37 countries which are supported by 27 regional Forest & Trade Networks as they work in various capacities throughout the entire forest products supply chain.

    The announcement was a major step forward in a 17 year process to build a Network to increase the trade in certified forest products. As of March 2008, the GFTN Portfolio includes:

    ; 360+ companies employing over 1.3 million people and supporting an additional 600

    families.

    ; 12+ million hectares of credibly certified forest with an additional 27+ million hectares

    in progress to certification.

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