Placing Corporate Social Responsibility at the Heart of the Company

22-05-2018

Placing Corporate Social Responsibility at the Heart of the Company

Fenix Outdoor International

The concepts of sustainability and corporate social responsibility should be front and center of brand owners’ corporate philosophy, as Sarah Morgan hears from two companies.

Aiko Bode, Group Chief Sustainability Officer at Fenix Outdoor International AG (Germany), says that the days are long gone when companies could treat sustainability, or corporate social responsibility (CSR), as a peripheral agenda item.

Today, sustainability must be a core tenet of a company, otherwise pursuing it tends to become a pure marketing exercise, he adds.

“Every company will need to reflect on what impact their business model has on the environment or societies and other stakeholders,” Mr. Bode says. “This is particularly true in Europe, where non-financial aspects are increasingly forming part of the legally-demanded annual reporting exercise.”

"Every company will need to reflect on what impact their business model has on the environment or societies and other stakeholders."
Fenix Outdoor International AG, a company specializing in outdoor equipment, owns the brand Fjällräven, which means “Arctic Fox” in Swedish. Featuring the logo of a red fox, the brand’s rucksacks are commonly spotted across Europe.

Fjällräven is not the only brand used at the company—others include outdoor footwear line HANWAG and outdoor clothing brand TIERRA. Recently, Fenix Outdoor acquired Royal Robbins, a California based outdoor apparel company.

“An outdoor company that does not take care of nature, the environment, and societies it deeply depends on is not truly trustworthy,” Mr. Bode explains.

This is why sustainability stands at the core of the company.

In 2012, Fenix Outdoor International AG adopted the Fenix Way, the company’s “constitution”.

At the core of the document stands the compass, the four cardinal directions of which are N = Nature; E = Economy; S = Society; and W = Wellbeing of man and nature.

“A 360-degree view allows for decision-making that takes repercussions and side-effects into the equation and may give another impetus/emphasis to a decision taken,” Mr. Bode says.

The company has also included a code of conduct for employees and suppliers (to share values) on the Fenix Way, so that it combines ethical and sustainability aspirations and compliance.

Mr. Bode adds: “We at Fenix believe that we depend on a planet that is worth living on and that has natural habitats and diverse cultures that call for adventures and exploration.”

Making Sense for the Future

For Santiago Peralta, the Founder of Pacari Chocolate (Ecuador), an organic chocolate manufacturer based in Ecuador, “sustainability is the only thing that makes sense” to ensure the long-term future for brands.

Mr. Peralta launched the company 16 years ago with the aim of “changing the history of chocolate in Ecuador.”

Until the beginning of the 20th century, Ecuador was the world’s largest exporter of cacao. Now, while the country produces only a small proportion of the world’s cacao, Ecuador and Trinidad and Tobago are the major fine or flavor cacao producers, according to the International Cocoa Organization. Three-quarters of Ecuador’s exports are classified as fine or flavor cacao.

There are two broad categories of beans: “fine or flavor” beans, which produce high-quality dark chocolate, and “bulk” beans, which are used in mass-produced chocolate.

“When we began our project, the aim was not to start making chocolate. We were trying to improve the price of cacao for cacao farmers and have a sustainable enterprise,” Mr. Peralta explains.

Instead of exporting the raw goods to traditional chocolate makers in Europe, Pacari Chocolate has moved the production in-house, making a “tree-to-bar” chocolate.

According to Mr. Peralta, this ensures that over 50 percent of the wealth from the chocolate stays in the country of origin.

He adds that by paying farmers more for the beans, Pacari Chocolate is helping to stop the felling of very old cacao trees, which are fantastic in flavor but don’t have a very big yield.

“You can’t be environmentally sustainable if you put chemicals into the land,” cautions Mr. Peralta.

This is why Mr. Peralta speaks to the farmers to make sure they understand the products being produced and the quality of beans needed. This means that the 5,000 small-scale farmers Pacari Chocolate works with want to be part of the company’s drive for change.

Matching Pacari Chocolate’s environmental sustainability aspirations is its logo. Pacari means “nature” in Quechua, a native South American language spoken primarily in the Andes, and the company’s logo incorporates a graphic of a man and a tree that is 5,500 years old, reflecting the long history of cacao in the country. This, according to Mr. Peralta, represents a “symbiotic relationship between nature and man.”

Halfway across the world, a similar philosophy guides Fenix Outdoor International AG’s efforts to protect wildlife.

The Arctic fox (known as Fjällräven in Sweden), which the Fjällräven brand features, has been an endangered species in Sweden since the 1930s. In 1928 there were more than 10,000 Arctic foxes in Sweden but by 1930 there were only 150 left, and the population has never truly recovered, despite many preservation efforts.

“We invest in research and support to protect the fox and its habitats and we can see some signs of hope as the population is slowly increasing again,” says Mr. Bode.

However, climate change has led to the intrusion of the red fox into Arctic fox territory and the red fox considers the Fjällräven as prey.

Industrial and recreational activities and infrastructure projects mean that the Arctic fox’s original habitats have changed a lot, making it even more challenging for the foxes to survive.

“But we are on it and will extend our activities beyond the foxes into ecosystem protection and preservation efforts in the years to come,” Mr. Bode adds.

Fenix Outdoor International AG’s efforts in support of wider Swedish Government policies have helped to drive an increase in the population of Arctic foxes (according to Mr. Bode, there are now 250).

Better Conditions

Fenix Outdoor International AG is also attempting to change the textile industry’s long legacy of poor working conditions and pollution.

“If you look at certain street names in Europe that come from the medieval times, such as 'blue creek road' and 'red river street', they may sound nice but they relate to water pollution that happened more than 1,000 years ago,” says Mr. Bode.

For the outdoor brand, it has been important to improve this legacy. To do so, Fenix Outdoor International AG has incorporated into the Fenix Way a rather broad but targeted set of goals.

The reduction of chemicals is one of those goals, and the company is consequently phasing out harmful substances—“a process that takes time but we can already see the first results,” says Mr. Bode.

It is looking to remove perfluorocarbons (PFCs), which make materials water repellent, from all of its products, although this is challenging as the alternatives are few and far between and there are not many reliable PCF-free waterproof zips on the market.

Animal welfare is also high on the agenda—animal welfare organization Four Paws has named Fenix Outdoor International AG as the top performer in its “Cruelty Free Down Challenge,” which makes sure geese and ducks are not live-plucked or force-fed.

The company’s promise says that “when you buy a down product from Fjällräven you can be 100 percent sure that the down we use is the result of a process that takes the greatest possible care of the bird’s well-being.”

Only if you have a full understanding of the “ingredients” in your product and know where they come from will you be able to fully manage them and their legacy, Mr. Bode explains.

“It is simply a part of responsible purchasing and product development,” he adds.

Fenix Outdoor International AG has also established a control system on labor conditions in the supply chain; the company’s social compliance setup, which contributes to working and living conditions, has been accredited by non-profit organization the Fair Labor Association.

Mr. Bode states: “Topics which deal with social exploitation or the destruction of nature stand at the core of our agenda and we continue to develop this further.”

In Ecuador, Mr. Peralta is very aware that new generations will not stay in the farming areas if there are no opportunities to build a future.
“There will be no people in the fields in 20 years’ time if we don’t create jobs in a sustainable way,” he cautions.

Pacari Chocolate deals directly with the farmers, rather than middlemen, solidifying their loyalty and paying a much higher price than the market rate for the beans.

“People start to take care of how they harvest the beans. Because they know and trust us, we get the crème de la crème of the cacao beans,” Mr. Peralta says.

He believes that the success of Pacari Chocolate is inspiring the local business community to “go in the right direction” and become sustainable and organic.

A Competitive Edge

“The more honest the efforts we take to improve our sustainability profile, the more our customers support us and help us to remain competitive in our markets. In turn, we can then become even more sustainable in various ways,” Mr. Bode adds.

The importance of consumer trust cannot be overstated, but what happens when that trust and confidence is lost?

The brand may suffer serious economic consequences, but also risks to its reputation.

According to Mr. Bode, this is particularly an issue with brands that touch upon essentials such as health, nutrition, and safety in their business models, as well as for those that sell to outdoor enthusiasts, as they are “expected to not do any harm to nature.”

Ultimately, a major reputational loss can lead to a brand’s disappearance from the market.

“We think that honesty, open dialogue and transparency are the elements that help to ensure consumer trust and satisfaction (apart from the obvious: to deliver quality products),” adds Mr. Bode.

But consumers are now demanding more. They want to see what a company does in terms of positive contributions to the community and nature.

The advent of the Internet and social media makes it that much easier to make this clear to consumers. Fenix Outdoor International AG has published a set of YouTube videos explaining what it’s doing and why (along with an annual CSR report for those who want to follow its progress).

Taking it one step further, the outdoor brand also invites various groups (activists, customers, policy makers, and suppliers) to discuss the progress being made on the sustainability journey and develop new ideas for goals and paths to follow.

Mr. Bode adds: “We want to give the Fenix Way and our sustainability agenda another level: we will update it in light of what we have achieved and where we faced challenges and we want to incorporate and address ambitious goals.”

INTA, INTA18, Arctic Fox, Fenix Outdoor International AG, Pacari Chocolate, corporate social responsibility, corporate philosophy, sustainability

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