Global Trade – Good or Bad For Nations – For Individuals — a Factor in Encouraging Greater Sustainability for Society?

by Hank Boerner – Chair, G&A Institute

“Trade” can be viewed in the macro-environment or the micro, with personal advantages and disadvantages for men and women in both developed and developing nations.

With a new administration coming to Washington DC in January 2017, the heated rhetoric of the 2016 presidential primaries and during the general campaign quickly moved “trade” as a loose-lip and often-un-informed talking point at rallies in the direction of possibly enacted national public policy.

Tear up NAFTA  – punish China – make cozy deals with countries one-at-a-time instead of multi-lateral agreements.  That’s seemingly the direction of the Trump Administration policy-making in 2018 — if we believe the rhetoric.

So — the question hangs — is global trade good or bad for U.S. workers…for the economy…for workers in both developed and developing nations…as a positive or negative in the quest for greater global sustainability?

As in all policy making, we must search for truth and evidence to help answer the questions — and guide public governance.

We do have help if we want to tune in to the source:  The independent, not-for-profit National Bureau of Economic Research (NBER) weighed in in April with a Working Paper: “How Large Are the U.S. Economy’s Gains From Trade?”

FYI – NBER (founded in 1920) is based in Cambridge, Massachusetts, and has a huge cadre of economists and researchers that work to provide us with “objective, quantitative analysis of the American economy.”

The scholars issue a steady stream of Working Papers for public consumption (and study and discussion by policy makers looking for “truth, fact, objectivity, reliable findings”  — my characterizations).

The name may ring a bell — NBER is the non-governmental organization that declares the official start and end of a U.S. recession, for example.  Their declaration is often separate of what is going on in the capital markets so it stands out.

In the current paper, the researchers examined “estimates of the economic benefits of a globally-open economy.”  And the impact plus or minus on the American economy.

Most likely results: they see a gain for the U.S. domestic economy of from 2% to 8% through open global trade, depending on certain assumptions about consumer and producer behavior.

What if we actually slammed the door shut on trade beyond our borders?  Authors Arnaud Costinot and Andres Rodrigues-Clare explain there is [surprisingly] little direct quantitative evidence on how the economy would react if we did begin to close the doors on global trade. (Note to policymakers: That’s why we don’t make hasty or dumb decisions on trade!)

Looking at such factors as labor and capital embedded in goods purchased from around the world, they estimated the gains from trade by comparing the size of a “counter-factual” U.S. economy that would depend entirely on domestic sources compared with a nation (like the USA) that has ready access to foreign services and goods.

While the dollar value of U.S. imports is large, as a percentage of national spending it is actually really small.

There are varying impacts of open trade on individual industries – and the enterprises and their workers.

For garment and apparel companies the demand for cheap labor is “in-elastic” in economic lingo. Not much wiggle room or flexibility. That is why the companies go to East Asia for labor inputs.

For an American automaker, the import of German-made transmissions for installation in Detroit’s models is somewhat lesser of an impact (there are always alternatives).  US manufacturers used to be more “integrated” and made most of the components for their trucks and cars. Now the industry is defined as a global sourcer.

For U.S. farmers, the impact depends on where else in the world wheat is grown and the ready availability and pricing for that wheat. Trade is critical to the American farm belt.

Think of rare minerals used in manufacturing — if vital minerals are only available in certain areas of the globe, and are needed (say for making cell phones or other electronic products), the dependency is greater for U.S. manufacturers (again, in-elasticity reigns).

Tradeoffs in global trade exist everywhere: Lower consumer prices are enjoyed (as designer-label garments flow to U.S. retailers’ shelves from cheap East Asian labor sourcing) — but too many American workers may lose jobs and/or work for lower wages.  And in turn, local communities suffer.  The 2016 elections showed one of the results of that suffering as voters signalled their discontent with trade policies.

Global Trade ESG Issues

NBER researchers looked at a different topic in the trade bucket for their Working Paper: the effects of Fair Trade Certification.

The movement began led by a church-affiliated NGO in Holland and quickly spread throughout Europe and to the U.S.A. and various groups coalesced in the Fair Trade Labelling Organization (“FLO”) in 1997.

In this research effort, NBER authors Raluca Dragusanu and Nathan Nunn examined the impact of the Fair Trade movement on coffee producers in the Central American nation of Costa Rica, in the heart of the global coffee belt (typically countries near the Equator).

They looked at FLO impacts on incomes of coffee growers, their neighbors and communities.

Fair Trade policies, they assert, is a positive as it raises prices for local growers, to begin with, high enough to cover the cost of production. The higher prices are typically intended as well to raise the quality of life in the coffee-growing region.

Premium prices paid by buyers above the set minimums are used to build schools and establish scholarships, create local health care facilities, and various infrastructure, and to help improve growing practices.

Through fair trade practices, income rises in Fair Trade growing areas, for both certified growers and many of their non-growers neighbors.

Income levels were on average 3.5% higher for growers and as much as 7.5% for “skilled” coffee growers (when the “intensity of fair trade increases in an area).

The researchers found that price premiums for growers increased school enrollments (2%-to-5%) for children ages 13-to-17 — critical ages for young men and women preparing for their adult lives.

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We found this and other NBER research interesting. We have “cold, hard facts” about the economy and trade and the “what-ifs” if present trade policies and practices are messed with, and the results are in the main “unknown”.

And we see that global trade is lifting people and their communities in a Central American country where coffee growing is an important agricultural pursuit.  And a benefit of open and fair trade.

Like climate change and many other public issues, there are plusses and minuses in trade affairs — and no easy answers!

Therefore, we can argue, let reason reign, common sense be applied — and science and facts and evidence-based research be the foundations of good public sector decision-making!

Thanks to NBER researchers for their efforts (in producing more than 1,000 Working Papers a year) to continue to produce research and surface evidence that can add to be leveraged to develop both public and private sector strategies.

You can learn more at:  www.nber.org

Imagine the Power to Address Climate Change As the Pope & Roman Catholic Church Focuses on Sustainability

by Hank Boerner – Chairman, G&A Institute

Imagine the impact — the power of the organizational resources directed at climate change issues — as the global Roman Catholic Church focuses on the issues. In 2915, the new year, the global church could become the major “game changer” on the issue.

There is a new Holy Father in place — Pope Francis, who took office in a little bit less than two years ago. He has shaken things up in the Roman Curia (the important headquarters infrastructure in Rome/Vatican City) and is sending strong signals to the faithful on all continents.

Among those messages:  we are the stewards of the natural world and have moral and spiritual responsibilities in that regard.

The buzz is that a powerful message will be coming from Pope Francis this spring, in the form of an encyclical, the traditional way that important and “highest” teachings are communicated to the faithful worldwide.

Photo: USCCB

The resources of the church are immense and global: 1.2 million faithful around the world, 75 million alone in the United States; 5,000 bishops; 400,000 priests; newspapers; radio and TV stations; web sites; hundreds of orders; universities & colleges…and more.

Thinking of impact in capital markets:  Many Roman Catholic orders are members of a powerful institutional investor activist coalition — Interfaith Center on Corporate Responsibility (ICCR), which engages with public companies to address issues of concern.  Including uppermost in mind, climate change.

If these and other resources are brought to bear on climate change issues, think of this as the game changer for the global discussion on the subject.

We have strong hints now at the direction to be taken by Pope Francis and the church he leads.  Here are some things to consider as we enter 2015.

In late December, Amy Goodman of Democracy Now, shared her views on the church’s anticipated moves. “Pope Francis,” she posited, “is about to make history by issuing the first-ever comprehensive Vatican teachings on climate change, which will urge 1.2 billion worldwide to take action…”

Ms. Goodman interviewed author and Vatican expert Austin Ivereigh (co-founder of Catholic Voices), who has just published the biography, “The Great Reformer: Francis and the Making of a Radical Pope.”  Mr. Ivereigh said that the encyclical will address the science underlying arguments for policy changes and actions to be taken.

As backdrop, in May 2014, two “Pontifical academies” that are part of the Vatican mechanisms — The Academy of Sciences, and the Academy of Social Sciences — conducted a joint workshop and in effect convened a summit in Rome to discuss “Sustainability Humanity, Sustainable Nature”  Our Responsibility;”

The gathering explored economic growth and the impact on natural resources (“natural capital”).  And, the gap between rich and poor and the impact of economic growth on emerging economies, urban pollution, the growth of poverty, and other issues. (Among participants:  Jeffrey Sachs of Columbia University Earth Institute.)

The intent of the workshop was to view “Humanity’s interchanges with Nature through a triplet of fundamental, inter-related Human needs — Food, Health, Energy.\

The Papacy is a powerful bully pulpit for addressing societal issues and bringing the considerable resources of the Roman Catholic resources (spiritual, economic, diplomatic, persuasive) to bear. And Pope Francis is a logical messenger on the issue. Thank about his background and personal resources.

He was trained as a chemical technician in his homeland, Argentina. He chose the priesthood, entering the Society of Jesus (the Jesuits, who run universities worldwide). Ordained in 1969, he continued his studies, on to the doctorate in Germany. He taught philosophy in university.

His personal motto is miserando atque eligendo, chosen when he was first a bishop — meaning “lowly but chosen;” in Latin. He was appointed archbishop, then cardinal, and in March 2013 Jorge Mario Bergoglio was elected Pope — the first from the Americas.

As priest – bishop – archbishop – parish priest – teacher – cardinal — Francis has been focused on serving the poor, social justice, the authenticity of the church in matters of faith and morals, and the need for humankind to be stewards of nature. He took the name Francis noting the inspiration of St. Francis of Assisi, the great spiritual leader and protector of nature.

Biographer Ivereigh, who presumably has his necessary contacts in the Curia, predicts Pope Francis will issue his “climate change” encyclical in March.  The Holy Father is scheduled to visit Sri Lanka and The Philippines — both of which suffered great damage and human loss in recent storms that many experts attributed (the intensity) to climate change..

Topics to be included may be deforestation (a system that encourages to much inequality), And “consumerism,” which encourages damage to the environment.

Consider this:  the foundation of the document is predicted to be [that] the scientific consensus is that climate change is real…and momentum if needed to bring about action to address the challenges.

And then we should consider the impact / outcome of the enormous resources of the global Roman Catholic Church and all of its communication organs (including parish pulpits) are brought to bear on climate change issues.  With Pope Francis on point, corralling other religious, governmental and NGO communities to join his 21st Century crusade.

We’ll be watching – this will be a game changer, for sure.

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To see Amy Goodman report:  http://m.democracynow.org/stories/14898

 

 

 

 

Top 10 GRI Sustainability Aspects for the Food & Beverage Sector

Sustainability – What Matters in the Food & Beverage Sector

Recent research conducted by the Governance & Accountability Institute attempts to answer important questions for company managements in the Food & Beverage Sector, by examining the disclosure practices of 96 global peer organizations publishing GRI reports in the sector.

The top 10 Global Reporting Initiative (GRI) aspects that were determined to be material by the managements of reporting organizations in the Food & Beverage Sector are:

  1. Customer Health and Safety
  2. Marketing Communications
  3. Products and Services
  4. Transport
  5. Public Policy
  6. Product and Service Labeling
  7. Materials
  8. Water
  9. Energy
  10. Emissions, Effluents and Waste

Results:  The complimentary report examining 35 sectors including top 10 GRI aspects, and top/bottom 10 GRI performance indicators can be downloaded here:
www.ga-institute.com/sustainability-what-matters

The full rankings for all 84 GRI performance indicators and all 37 GRI Aspects for each of the 35 sectors examined are available for purchase at:
www.ga-institute.com/getall84

Organizations included in the Food & Beverage Sector study are:

AB Anders Löfberg, Alko, Alpina, Alsea, Altia, Amorim, Anheuser-Busch Companies, Asia Pacific Breweries Limited (APBL), Autogrill, Axfood, Barry Callebaut AG, BFS Group Limited, BONDUELLE SAS, BRF (Brasil Foods), Brown-Forman Corporation, Bunge Brazil, C.D.A. di Cattelan srl, Campbell Soup, Carlsberg Group, CCU, CELLER VEGA AIXALA, Cermaq, Chicken of the Sea, Coca-Cola Company, Coca-Cola de Argentina, Coca-Cola Femsa, Coca-Cola Germany, Coca-Cola HBC Switzerland, Coca-Cola Hellenic, Coca-Cola Hellenic Russia, Coca-Cola Hungary, Coca-Cola İcecek Turkey, Coca-Cola UK, Colombina, ConAgra Foods, Cuauhtémoc Moctezuma, Danone Group, Danone Poland, Darden Restaurants, Diageo, Dr Pepper Snapple Group, Erre de Vic, FEMSA, Ferrero International, Florida Ice & Farm Company (FIFCO), General Mills, Goodman Fielder, Grupo ARCOR, Grupo Bimbo, Grupo Marfrig, Grupo Nutresa, Heineken N.V., Heineken Spain, Hershey’s, Hormel Foods, ICI,Joh. Barth & Sohn GmbH & Co. KG, Kärntnermilch, Kellogg, Kooperativa Förbundet Ekonomisk Förening (KF), Lantmännen, LVMH Group, Mahou-San Miguel Group, Marine Harvest, McDonald’s Australia, McDonald’s Corporation, McDonald’s Deutschland Inc., Zweigniederlassung München, MoliNos Río de la Plata, Nestlé, Nestle Hellas, Nestlé Hungária, Nestlé Poland, Nestlé Portugal, OLEUM FLUMEN, Pacific Andes International Holdings Limited, Palsgaard, PRONACA, Riopaila Castilla S.A., Royal Wessanen, SABMiller UK, SanCor Cooperativas Unidas Limitada, Sanford, Simplot Australia, Smithfield,Spendrups Bryggerier AB, Starbucks Coffee Company, Sunny Delight, Tim Hortons, Unilever Brazil, Unilever Israel, Union de Cervecerias Peruanas Backus y Johnston, Vaasan, Vöslauer, Wesfarmers, Westfleisch, ŻYWIEC ZDRÓJ S.A.

About G&A Institute (www.ga-institute.com)
G&A Institute is a New York-based, private sector company providing sustainability-focused services and resources to corporate and investment community clients, including: Issue Counseling & Sustainability Strategies; Sustainability Reporting; Materiality Assessments; Stakeholder Engagement; Benchmarking; Investor Relations; Communications; Coaching, Team Building & Training;  Issues Monitoring & Customized Research; Third Party Recognitions.  G&A is the exclusive Data Partner for the GRI in the United States of America, the United Kingdom and the Republic of Ireland.

Editors
On the G&A Institute web site there is additional information available on the Fact Sheet: What Matters Project (www.ga-institute.com/research-reports/sustainability-what-matters/fact-sheet).  The resulting “most important” to “least important” ranking for the 35 sectors is available to media on a case-by-case basis please contact:  Peter Hamilton (phamilton@ga-institute.com).

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New York’s Stone Barns Farm and Restaurants

251668_10100267398792507_212975_n (1)MBA Candidate 2014, Sustainability and International Business

Baruch College, Zicklin School of Business

Jamie Reinhardt currently works at the Governance and Accountability Institute in NYC, New York. She is working as a Global Reporting Initiative report analyst and exploring different trends in GRI reports from S&P 500 companies. As an MBA-candidate at Baruch College, Jamie is the president of the Sustainable Business Club, which is Baruch’s Net Impact chapter. Previously, she worked for the Center for Creative Leadership on the Latin American Intern Initiative and for an international shipping company in operations and logistics. She hopes to combine her past and present experiences to make a real difference in the future with regards to sustainability in the corporate environment.

New York’s Stone Barns Farm and Restaurant … Worth a visit!

As part of my work this summer on a sustainable development project, I visited a farm called Stone Barns outside of NYC. Stone Barns is an education center for food and agriculture, as well as a working farm. A colleague and I took a train that runs along the Hudson River up to the farm’s location in Pocantico, NY. It’s hard to believe that only 25 miles outside of Manhattan you can Stone Barnsfind such a pristine natural setting.

Driving up to the entrance of Stone Barns is beautiful. The green rolling pastures are laid out in front of you and the main structure is a barn made out of stone, hence the name. The main building is gorgeous. It looks like original old stone, but the structure is well kept and has been updated so that it is very modern inside. There is a large open courtyard in the middle which was full of school children at the time we were there, since a huge part of their mission is to teach young kids where their food actually comes from. My colleague told me a story about how one of her friend’s children refused to eat carrots from a farmers market since they were dirty and “from the ground”. The child wanted to go get the “clean” carrots from the store. I’m pretty sure I had similar feelings when I was a child which only shows how important Stone Barns’ mission to educate children, really is.

“There is a disconnect that exists between the food we eat and its origins that needs to change in order for us all to live sustainable and healthy lifestyles.”

— Jamie Reinhardt

There are two restaurants, Blue Hill Cafe and Blue Hill at Stone Barns, on the premises that are farm-to-table and absolutely delicious. You can taste the freshness in the food that has surely just been picked not long before it showed up on your plate. As well as the fabulous restaurant, the farm is completely open to the Stone Barns Flowerspublic and you can take your own self-guided tour to visit the green houses and animals. The staff is extremely friendly and was happy to

give us a tour of the chicken areas and give us tips on how to raise sustainable chickens both for meat and for eggs. All of their animals seemed very healthy and are well cared for. When we arrived at the main chicken area, where they have egg mobilesto ensure the chickens’ happy and healthy lifestyle, the whole flock ran over to check us out. I have never seen so many friendly chickens! It was a true testament to the kindness and care of the farmers at Stone Barns.

I could talk about this place and our trip so much more, as it was such a positive experience, but I really suggest that you take a visit yourself if you are ever in the NYC area. At least check out their Sunday farmers market to buy some of their delicious, organic produce and meat. It’s a positively lovely way to spend the day.

PHOTO CREDITS: Jamie Reinhardt