Agribusiness Performance: Beyond the bottom line

1. Agribusiness Performance: Beyond the bottom line Can we maximize returns for profit, people, and the planet?

2. “Green Investing Is Paying Off: Eco-friendly investments, from individual stocks to mutual funds and ETFs, have outperformed the Dow and S&P 500 this year” (11/09)

3. WHY ARE FIRMS USING GREEN MARKETING? • Organizations perceive environmental marketing to be an opportunity that can be used to achieve its objectives • Organizations believe they have a moral obligation to be more socially responsible • Governmental bodies are forcing firms through legislation to become more responsible • Competitors' environmental activities pressure firms to change their environmental marketing activities • Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behavior

4. Agribusiness • Corporate sustainability and responsibility • Corporate sustainability • http://www.winwinpartner.com/Who%20We%20Are/index.html • Dow Jones Sustainability Index • Energy • Pollution management • Environmental stewardship • Workforce development • An investable concept?

5. GreenAgribusiness Winslow Green Growth Fund 1994-2008 • Green marketing • Winslow Green Growth Fund seeks capital appreciation through environmentally responsible investing. The fund normally invests at least 80% of net assets in equity securities of domestic companies that create products or provide services that offer solutions to environmental problems and promote a healthier environmental future or integrate the principles of waste management, pollution prevention, or efficient use of natural resources into its business practices. • Winslow Management • Top Ten Holdings • 09/30/2010   • First Solar, Inc. Bioexx Specialty Proteins inc American Superconductor Corporation Waterfurnace Renewable Energy Inc Horsehead Holding Corporation Schnitzer Steel Industries, Inc. A Rubicon Technology, Inc. Nalco Holding Company ProLogis Trust Wabtec

6. Winslow Fund – recession proof? Reorganized as Brown Advisory Sustainable Growth in 2012 Struggles, like other green funds, to keep up with S&P 500 Source: MSNBC.com financial charts, Nov 2011

7. Some Agribusiness Examples • P-R Farms (CA tree fruits & nuts) • Solar Energy Implementation • Fair Oaks Dairy, Koetsier Farm • Anaerobic digesters • Weyerhaeuser • Recycled packaging • Sustainable products from forests • Weyerhaeuser | Growing Ideas

8. More interesting examples • Green mountain energy – branding “eco-friendly” electricity • Green Mountain Energy Company • California Energy Company now servicing 7 states • More expensive (5-6%) • Purchase power on-line

9. What about investments in alternative energy? • Is ethanol going to work? • Subsidies? • Use mandates? • See Terry Kasten’s report

10. Scarce Energy Chronology 1859: Drake discovers oil in Pennsylvania 1879: USGS formed to deal with running out of oil 1882: 95M bbl remain (Institute of Mining Engineers) 1918: 3 million cars on the road 1919: auto industry shouldn’t ignore that only 20 years left (Scientific American) 1926: 4.5B bbl left in the U.S. (Federal Oil Conservation Board) 1930: 18 million cars 1932: 10B bbl left in U.S. (Federal Oil Conservation Board) 1944: 20B bbl left in U.S. (Petroleum Administrator for War) 1950: 100B bbl left in world (American Pet. Inst) 1980: proven oil reserves 648B bbl 1993: proven oil reserves 999B bbl 2000: proven oil reserves 1016B bbl 2007: proven oil reserves 1317B bbl Source: Adapted from Terry Kasten, Kansas State Univ

11. Wind Farming?

12. Another example… • Forest Stewardship Council • Integrated Supply Chain Controls • Branding targeted to the green consumer

13. Values driven supply chain • poulet de Bresse • Label Rouge • Scottish salmon industry • Economic benefits • Tea & Coffee and child labor • http://www.teaandcoffee.net/0102/special2.htm

14. Social impacts of international marketing • Do food and agribusiness firms have an obligation to developing communities to “get the product right”? • Nestle Infant Formula • Misuse of formula • Promotion impacts on feeding programs in poverty areas – samples, media • World Health Organization (response to protestors) • Nestlé & WHO

15. The Cocoa Plan Ecuador In Action Winning consumer References on 60/40+ Managing the supply Chain and monitoring Critical control points Purchasing beans with Arriba taste Supporting farmers through “Farmer Connect” Linking back to producer through claims towards health, origin, and purity Nestlé Corporate Agriculture

16. Nestlé “Farmer Connect” sourcing of agricultural raw materials around the world Interacting with nearly 700,000 farmers in more than 50 countries Nestlé Corporate Agriculture

17. Our “Sustainable Agriculture Initiative Nestlé” (SAIN) • To ensure supply we have to smarter use natural resources by • Not wasting • Not polluting • Not destroying • and a good start is eradicating the worst and promoting better • Sustainable Agricultural Practices. • Producing more food from the same area of land while reducing the environmental impacts requires what we call “Sustainable intensification of Agriculture”. LAND WATER ENERGY CLIMATE PEOPLE NO FOOD WASTE Nestlé Corporate Agriculture

18. Source: The Food Institute Report, Oct 18, 2010, The Packer, Oct 11, 2010

19. Agribusiness and sustainability:Profits, people, and planet • Relating to an environmentally conscious generation – mixed results in the market • Working with interest groups, technology and supply chains to deliver differentiated products – new value nets • Adapting products and marketing approaches to account for economic and cultural differences

20. Planning for the McDonald’s Case How does sustainability impact McDs? Is there sound business justification for McDs to pay attention to sustainability for supply? Is McDs too big? Scale dis-economies and sustainability What is your perception of them as a consumer? Are they reaching the LOHAS folks? How does McD’s need to look at profits, people, and planet long term? What conflicts might they expect to emerge? Accounting jargon uses the term ‘viable going concern’ fairly narrowly. Does the definition need to be broadened? McDonalds Brazil

21. FIRM MANAGEMENT CHANNEL MANAGEMENT STRATEGY MANAGEMENT